Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Hartalega: Taking off the Gloves? case study is a Harvard Business School (HBR) case study written by Philipp Meyer-Doyle, Siddharth Poddar. The Hartalega: Taking off the Gloves? (referred as “Hartalega Hartalega's” 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, Growth strategy, Innovation, Manufacturing, Succession planning.
Negotiation strategy solution for case study Hartalega: Taking off the Gloves? ” 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?
Malaysian publicly-listed Hartalega has grown to become one of the world's largest nitrile glove manufacturers. Still predominantly managed by the founder's family, it is renowned for its innovation and quality. Its growth and operational achievements have translated into a stellar financial performance, boosting its stock price 20-fold since 2008 (while the Malaysian stock market has been flat). Among other factors, its success is the result of a commitment to innovation and technology, as well as a competitive strategy that builds upon Hartalega's strengths. Having grown into a billion-dollar company (by market capitalization) and one of the largest glove manufacturers in the world, Hartalega still has ambitious plans to almost triple its production capacity in the next four years. However, the planned expansion comes at a challenging time. First, Hartalega's competitors are enjoying substantial economies of scale and are investing in technology and product quality to rival that of Hartalega. Second, if the expected increase in supply outstrips that of demand, there is a possibility of overcapacity in the glove market, which could shrink margins and harm profitability. In this regard, Hartalega's margins have already fallen by approximately seven percent since 2011. Finally, as Hartalega embarks on its ambitious plan, given its size and complexity, it must transform itself from a traditional family business into a business with a professionalized management and a more formalized structure and governance. Thus, despite its great success, Hartalega is faced with substantial challenges.
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 “Hartalega: Taking off the Gloves?” 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 “Philipp Meyer-Doyle, Siddharth Poddar”, 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 “Hartalega: Taking off the Gloves? ”, 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 “Hartalega: Taking off the Gloves?” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Philipp Meyer-Doyle, Siddharth Poddar (2018), "Hartalega: Taking off the Gloves? Harvard Business Review Case Study. Published by HBR Publications.
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