Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Agile Electric: Quality Issues in a Global Supply Chain case study is a Harvard Business School (HBR) case study written by Dhruv Dar, Sanjay Kumar, Vijay Aggarwal. The Agile Electric: Quality Issues in a Global Supply Chain (referred as “Automek Agile” from here on) case study provides evaluation & decision scenario in field of Strategy & Execution. It also touches upon business topics such as - negotiation strategy , negotiation framework, Strategy.
Negotiation strategy solution for case study Agile Electric: Quality Issues in a Global Supply Chain ” provides a comprehensive framework to analyse all issues at hand and reach a unambiguous negotiated agreement. At Oak Spring University, we provide comprehensive negotiation strategies that have proven their worth both in the academic sphere and corporate world.
What’s my BATNA (Best Alternative To a Negotiated Agreement) – my walkaway option if the deal fails?
What are my most important interests, in ranked order?
What is the other side’s BATNA, and what are his interests?
The case describes issues related to supply chain quality and how they evolve in the context of a multi-tiered global supply chain. The case involves a global multi-tier automotive supply chain made up of one of the world's largest automotive original equipment manufacturers (OEMs), its tier 1 supplier that is also a U.S.-based global corporation and the tier 2, tier 3 and tier 4 suppliers based in India. With Automek's engineering support, Agile had developed many parts successfully for the OEM in the past. Based on this experience with the company, Automek buyers placed an order with Agile for a new product (an actuator assembly). In developing this product with little support from Automek, Agile was concerned due to its lack of knowledge concerning the suppliers for the actuator assembly components and the critical requirements. To allay its concerns, Automek promised to support Agile by (a) locating the critical global suppliers for specialized components and (b) assessing and validating the critical suppliers based in India on behalf of Agile. Agile then invested in the assembly line and developed the actuator assembly. When supplies started, the OEM reported many quality problems that were traced to the tiered suppliers. Along with the quality and part supply issues, the issues of subsequent liability in the case of a recall by the OEM were faced by the members of the supply chain. Agile felt that since Automek had selected or approved the suppliers, and also as Agile had no knowledge of the product, that Automek should take the responsibility of resolving the quality problems arising from the supplier base. To complicate matters, some of the tiered supply chain members were not willing to invest time and effort in implementing improved manufacturing and process control practices as desired by Automek.
By interests, we do not mean the preconceived demands or positions that you or the other party may have, but rather the underlying needs, aims, fears, and concerns that shape what you want. Negotiation is more than getting what you want. It is not winning at all cost. Number of times Win-Win is better option that outright winning or getting what you want.
Options are the solutions you generate that could meet your and your counterpart’s interests . Often people come to negotiations with very fixed ideas and things they want to achieve. This strategy leaves unexplored options which might be even better than the one that one party wanted to achieve. So always try to provide as many options as possible during the negotiation process . The best outcome should be out of many options rather than few options.
When soft bargainers meet hard bargainers there is always the danger of soft bargainers ceding more than what is necessary. To avoid this scenario you should always focus on legitimate standards or expectations, clearly understanding the arbitrage . Standards are often external and objective measures to assess the fairness such as rules and regulations, financial values & resources , market prices etc. If the negotiated agreement is going beyond the industry norms or established standards of fairness then it is prudent to get out of the negotiation.
Every negotiators going into the negotiations should always work out the “what if” scenario. The negotiating parties in the “Agile Electric: Quality Issues in a Global Supply Chain” has three to four plausible scenarios. The negotiating protagonist needs to have clear idea of – what will happen if the negotiations fail. To put it in the negotiating literature – BATNA - Best Alternative to a Negotiated Agreement. If the negotiated agreement is not better than BATNA (Negotiations options), then there is no point in accepting the negotiated solution.
One of the biggest problems in implementing the negotiated agreements in corporate world is – the ambiguity in the negotiated agreement. Sometimes the negotiated agreements are not realistic or various parties interpret the outcomes based on their understanding of the situation. It is critical to do negotiations as water tight as possible so that there is less scope for ambiguity.
Many negotiators make the mistake of focusing only on the substance of the negotiation (interests, options, standards, and so on). How you communicate about that substance, however, can make all the difference. The language you use and the way that you build understanding, jointly solve problems, and together determine the process of the negotiation with your counterpart make your negotiation more efficient, yield clear agreements that each party understands, and help you build better relationships.
Another critical factor in the success of your negotiation is how you manage your relationship with your counterpart and other people doing the mediation. According to “Dhruv Dar, Sanjay Kumar, Vijay Aggarwal”, the protagonist may want to establish a new connection or repair a damaged one; in any case, you want to build a strong working relationship built on mutual respect, well-established trust, and a side-by-side problem- solving approach.
According to
Harvard Business Review
, there are three types of negotiators – Hard Bargainers, Soft Bargainers, and Principled Bargainers.
Hard Bargainers – These people see negotiations as an activity that they need to win. They are less focused less on the real objectives of the negotiations but more on winning. In the “Agile Electric: Quality Issues in a Global Supply Chain ”, do you think a hard bargaining strategy will deliver desired results? Hard bargainers are easy to negotiate with as they often have a very
predictable strategy
Soft Bargainers – These people are focused on relationship rather than hard outcomes of the negotiations. It doesn’t mean they are pushovers. These negotiators often scribe to long term relationship rather than immediate bargain.
Principled Bargainers – As explained in the seven elemental tools of negotiations above, these negotiators are more concern about the standards and norms of fairness. They often have inclusive approach to negotiations and like to work on numerous solutions that can improve the BATNA of both parties.
Open lines of communication between parties in the case study “Agile Electric: Quality Issues in a Global Supply Chain” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Dhruv Dar, Sanjay Kumar, Vijay Aggarwal (2018), "Agile Electric: Quality Issues in a Global Supply Chain Harvard Business Review Case Study. Published by HBR Publications.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Agile Electric: Quality Issues in a Global Supply Chain
Services , Real Estate Operations
Consumer/Non-Cyclical , Fish/Livestock
Basic Materials , Gold & Silver
Basic Materials , Gold & Silver
Technology , Electronic Instr. & Controls
Capital Goods , Misc. Capital Goods
Financial , Misc. Financial Services
Capital Goods , Misc. Capital Goods
Services , Restaurants
Basic Materials , Metal Mining