Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. case study is a Harvard Business School (HBR) case study written by Erica Berte, Christine Vujovich. The Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. (referred as “Cummins Decree” 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, Competitive strategy, Corporate governance, Organizational culture, Social responsibility.
Negotiation strategy solution for case study Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. ” 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?
In 1998, the United States Environmental Protection Agency (EPA) and US manufacturers of heavy-duty diesel engines signed a consent decree which included among other things, pulling forward ("pull ahead") by 15 months a new nitrogen oxide (NOx) emission standard. By early 2002, Caterpillar and Detroit Diesel were requesting EPA to delay the "pull ahead". Cummins was being pressured by its competitors to join in this request. On the other side, the Environmental Protection Agency (EPA) and several environmental organizations wanted Cummins to adhere to the requirements of the consent decree. Cummins was navigating through a very difficult economic time and could not afford to make a mistake. Joe Loughrey, Cummins Engine Business President and his team needed to make a strategic decision. Would they a) agree with the competitors' position asking EPA to delay the consent decree which required the company to pull ahead an expensive environment requirement, thus allowing manufacturers to continue using the established engine technology that had customer support, or b) accept the terms of the consent decree and continue to develop a new engine technology against the wishes of many in the industry and thus face possible market retraction. Both strategic decision options had substantial consequences and needed to be carefully evaluated. Not only was the future of Cummins Engine Business in jeopardy, but as we learn later, this decision impacted the future of the whole industry.
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 “Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.” 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 “Erica Berte, Christine Vujovich”, 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 “Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. ”, 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 “Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision.” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Erica Berte, Christine Vujovich (2018), "Balancing Stakeholder Interests and Corporate Values: A Cummins Strategic Decision. Harvard Business Review Case Study. Published by HBR Publications.
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