Crisis Management, Negotiation Techniques, and Case Study Analysis

Part A

1.What is a crisis? What types of crises might affect an organisation?
2.How can/should organizations respond to a crisis?
3.Discuss the impact of and importance of social media and online communication during a crisis.

Part B

At the negotiation table, what’s the best way to uncover your negotiation counterpart’s hidden interests? Ask questions, then listen carefully. Even if you’ve decided to make the first offer and are ready with a number of alternatives, always open by asking and listening to assess interests. Note that if your style of listening isn’t sufficiently empathetic, it won’t elicit honest responses.
Furthermore, you’ll have to ask a lot of questions to get a clear picture of someone’s interests. And to model the type of response you’re seeking; you must be willing to reveal your own interests. Practitioners often assume that exposing their interests will give the other side an unfair advantage, but this is rarely true.
If your efforts to uncover the other party’s interests fail, try a new tack. Suppose that you’re a lawyer negotiating with a potential client on behalf of your firm. You ask, “Are you more concerned about the cost or the quality of our services?” His reply: “Both!”
You might then inquire, “Would you like us to assign our most senior attorney to your account? Her hourly rate is a bit higher than anyone else’s, but she’s one of the best in the field.” The client’s response will reveal whether he’s more concerned about price or quality.
Here’s another way to probe the same person’s interests: “Other clients have raved about the incredible devotion of our junior associates – and we only hire the best – to their cases.  Giving them a prominent role would allow us to give you a lower hourly rate. Would you like to talk to some of the clients who have benefitted from this approach?”
Sometimes negotiators snag on an underlying value difference.

When this happens, bridge the gap by identifying overarching values that could provide a motivation to work together. Suppose that a community organization is challenging your company, a manufacturer, to pay more attention to the health concerns of local residents. Rather than arguing that your company has to stay focused on the bottom line, point out that you share the neighbors’ commitment to environmental improvement. Then consider proposing an effort to replace aging, polluting equipment with more efficient production technologies that save your firm money in the long run while simultaneously reducing the community’s health risk. Such value-creating opportunities can be uncovered by searching for a common interest, such as commitment to

environmental improvement, rather than letting the differences that exist between you dominate the discussion.
1.Which negotiation approach is being described in the article above?
2.Describe the differences between Distributive and Integrative Bargaining.
3.What effect does framing have on negotiations?

 

Part C – Case Study

The Australian – Japanese Sugar Negotiations

 

In the late 70s a famous misunderstanding between Australian sugar cane growers and Japanese sugar refiners occurred. It rumbled on for years. Both parties were indignant and perplexed at the other’s “bad behavior”, as they saw it.
The Japanese refiners had signed a ten-year, long-term contract to buy Australian sugar at the then market price, less $5 a ton. The Australians would get the security of a ten-year sales agreement. The Japanese would get guaranteed supplies at a competitive price vis-à-vis other refiner. Everyone seemed happy and the deal was signed.

 

Hardly was the ink dry on the paper than the price of sugar on world markets crashed by $10 a ton. The Japanese refiners faced the prospect of paying more for their raw sugar than anyone else, a cost that would fatally impact on the price of refined sugar and everything made from it.
Up to this point, both cultures probably saw eye to eye. It had been a good deal but now circumstances had changed and the Japanese refines faced genuine difficulties. The cultural split occurred over what to do about this. The Japanese suggested to the Australians that the contract be renegotiated. After all the Australians could not possibly wish their partners to lost money; mutual satisfaction and lasting relationships were surely the ideal.

 

The Australians pointed out that a contract was a contract. The Japanese had given their work. Fluctuations in the world price of sugar were not unusual. All business involved risks. Had the price risen, not fallen, the Australian growers would have been the losers. You cannot go crying to your partner every time the markets shift.
1.What cultural factors have played a role in the negotiation process?
2.Why does each party believe the other is in the wrong?
3.What actions could be proposed for the conflict to be reconciled?