Sunday, February 14, 2016

Crawley and Phillips Negotiation Review Relating to Assigned Readings


The in class negotiation, Universal Computer Company, favored a collaborative outcome and was easily resolved using the approach geared to reconciling interests.  My role was the Crawley Plant Manager, who was to negotiate with the Phillips Plant Manager on the issue of defective modules.   The company is vertically integrated and the modules that come from the Crawley plant are used by the Phillips plant in the next steps of manufacturing a final product.  Crawley has an acceptance level of 95% overall, and produces 42 individual modules.  Phillips plant has been experiencing quality issues with 12 of the modules produced and supplied by the Crawley Plant.   The defective modules have caused several issues for the Phillips plant including, delayed production, added inspections, and customer complaints.  Even though both plants work for the same parent company, each plant is individually responsible for the production of their products and each manager has the interest of their plant in mind and future evaluations by their higher ups are most likely performance based.  Failure to come to an agreed upon solution could cause trouble for both managers.  The success of a collaborative agreement is based on the relationship which has present and future value and a focus on the outcome, this method of negotiation will result on a win-win for each party.

My negotiation partner and I began the discussion by laying out the concerns.  Going in to the negotiation, my interpretation was that Crawley was lacking in their product inspections and rather then become defensive it was better overall to work with the other party to gain ideas and to better the production process as a whole.  Empathizing with the Phillips manager and trying to place yourself in their position helps to better identify the underlying problem and find a solution suitable for both parties.  If I were the Phillips Manager and my production line was suffering due to defective modules, I would be upset by being put in a position where I could not control the modules I was receiving and in turn it was effecting the overall success of my plant.  Being that the company is integrative, the Phillips plant manager does not have the option to negotiate with a different supplier to provide the same modules that Crawley is supplying.   Crawley may have a 95% overall acceptance rate, but they can increase the acceptance rate by better screening the 12 commonly defective modules and help Phillips become more productive at the same time.  If Crawley can use the advice and ideas from the Phillips manager than both plants will operate more efficiently.

We started by finding common ground and agreeing that the 95% acceptance rate, even if it was not defined as such in the background give in the case, should be defined as the acceptance rate for each module individually.  This opened the negotiation up to further collaboration.  My main goal was not to have Crawley fully responsible for the repair cost associated with the current defective modules that Phillips was holding, as it could reflect negatively on the Crawley balance sheet and in turn give top management an unfavorable view of the Crawley Manager’s production.   My partner had a valid argument that Crawley should be responsible for the repair cost but we were able to meet in the middle since the 95% acceptance rate was not clearly defined.  Since we agreed early on that the production and inspections prior to shipment to Phillips should be more closely monitored my partner was more open to negotiating splitting the repair costs.  Since relationship was important in this negotiation, I agreed that moving forward Crawley would be held financially responsible for repair costs incurred if the acceptance rate fell below 95% on any individual module.  The agreement to hold each module to 95% was meant to establish trust, and if I agreed to hold Crawley responsible in the future than my partner was more open to splitting the initial cost.  Such agreement made him believe that I had a sincere intention to remedy the problem of defective modules.  We also agreed to have a Phillips manager present at the Crawley plant to aid in the extra inspections needed on the faulty 12 modules.  In Hein site I’m not sure how this was beneficial to Phillips, and Crawley could run the risk of appearing incompetent to upper management but at the time it seemed like a good idea, but an unnecessary one.  Perhaps it was a way to make the Phillips Manager feel as though he was in a power position to allow him or his direct employees to aid in the module inspections at Crawley. In the end we were able to come to a mutually acceptable agreement which each party deemed fair and kept the relationship in tact which could lead to future mutually favorable negotiations.  I feel we both understood the need for collaboration and followed the steps accordingly by starting out not pointing fingers but trying to understand the problem, generate solutions, and select the best solution which lead to each party leaving the negotiation feeling as though the agreement reached was fair for both Plants.   

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