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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