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Having examined the situation thoroughly and analyzed the position of Rose at FML and my own position at NEL, I concluded that Rose has the following types of power over me:
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legitimate power authority to demand obedience (Cellich, 2012. p. 81). Since she is a manager at FML, she is legally enabled to take decisions that may have a serious impact on my company such as canceling the contract between companies. At the same time, I am only a customer service specialist, and I am not in such a position towards her, as well as my company is in no position to cancel the contract. The only kind of decision I can possibly make is to choose the best way of assuaging Roses worries and handling her complaint.
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coercive power the ability to impact the behavior of others through the threat of punishment. Rose threatens to switch suppliers, which she has enough authority to do: as it is clear from the text, it is she, who decides what brand to select when the time comes to buy new equipment for FML. Such an action could be presented as a punishment for my company, as it would lead to revenue losses. Conversely, I cannot make any actual decisions regarding FML, which gives Rose a position superior to mine (SIM University, 2016. SU3-11).
Such a conclusion means that Rose is in a higher position than me. However, it is known that no single type of power can ensure the prevalence of a negotiator. The only thing that can guarantee a beneficial outcome is an effective strategy. Having identified the types of power that Rose has over me helps me to build a basis for an effective strategy of negotiation. Such a strategy would give me an advantage over her in the negotiation process and secure the outcome that would satisfy both companies.
To make Rose more willing to participate in an integrative negotiation process with me, I have worked out two possible ways of dealing with her that are both beneficial and effective:
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Separate the person from the problem. It means that I have to identify the substantial issues in the problem, such as the malfunctioning equipment, sales loss and possible damage to the reputation of both companies, and separate them from people problems such as possible communication problems in our conversation, Roses anger and upset about sales loss and her concern about her professional reputation. Dealing with substantial problems and people problems separately can be really helpful in solving this conflict (Dessler & Phillips, 2007. p. 457). During the conversation, I will demonstrate my ability to solve conflicts in a confident manner, as well as my awareness of the fact that our companies, in fact, have coinciding interests. I can refer to her rich experience in problem-solving (which was mentioned in the text) as a guarantee that, in combination with NELs loyalty to its customers, the two of us are able to solve the problem. Such tactics may bring her on my side and make her willing to negotiate (Hames, 2011. p. 87-88).
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Present her a full evaluation of the problem, with a clear description of the interests and concerns of all sides, including the fact that my company is not planning to pay to FML. Even though Rose will probably react negatively to the notification that NEL refuses to pay compensation, it would be better to tell her the whole truth, so that she can bear all the significant details in mind and think about the right solution along with me. This approach may widen her outlook and make us more likely to find an acceptable solution.
To plan the negotiation process and work out an appropriate solution, I have identified the interests of the parties.
At first glance, it seems that the primary interest of FML in this situation is receiving $200,000 from NEL as compensation for its losses of revenue. However, the company has deeper interests that are much more serious. First of all, FML needs to be sure that such a collapse would not happen again, i.e. that the equipment will work stably, and revenue losses would be prevented. It is also important that, despite Roses threats to change a supplier, it is known that FML is one of NELs top customers. Therefore:
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FML has most likely been NELs customer for a long time (since it managed to become a top customer);
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NEL has already fulfilled numerous orders for FML and, until recently, there were no major complaints;
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FML is probably treated specially as a top customer (receives special propositions, discounts, is notified of best options, etc.).
It means that switching suppliers is probably less convenient to FML that reaching an agreement with NEL.
The interests of Rose overlap significantly with those of her company since she is a loyal manager, who has been working at FML for a long time. Nevertheless, she definitely has her personal interests as well. First, she has the reputation of an efficient employee. It means that she is most likely enraged with this situation and feels that she should have prevented it. This fact should be taken into consideration while building negotiation tactics. Second, she is known as a manager, who is incredibly good at problem-solving. Therefore, her superiors expect her to handle this problem as soon as possible and to the benefit of the company. It can be a good pressure point: if solving this problem is important to her, then I can hint that insisting on the necessity of compensation is not going to solve the problem.
NEL is interested in handling this conflict without paying out money to FML. More importantly, NEL is interested in keeping FML in its list of customers since the loss of this client would lead to serious revenue losses that can exceed $200,000. NEL is also interested in preserving its reputation: if FML refuses to continue their partnership, the news will most likely leak out, and other customers may cancel their contracts or stop partnering with NEL. Worse, FML can sue NEL, which, in the case of any judicial outcome, will damage NELs reputation. Despite these facts, I cannot agree with Rose that NEL should pay to FML for the following reasons.
First, I am in no position to influence my companys decisions. Second and more important, admitting to having provided FML with malfunctioning equipment will damage NELs reputation as well. These considerations can be presented to Rose to make her more understanding of the specificities of the problem.
Having estimated the interests of the parties, I developed a strategy based on the four main steps of an integrative negotiation process:
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Defining the problem in an accurate way: the equipment is malfunctioning, and this fact is unsatisfying for both companies (Lewicki, Barry, & Saunders, 2011. p. 66-69). The problem puts the companies long-term partnership at risk. Not knowing the reason for the breakdowns of the equipment is an obstacle to the goal, which is a reasonable agreement between the two companies.
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Comprehending the problem and bringing up the interests (Lewicki, Barry, & Saunders, 2011. p. 69-71). The problem lies in the complication in the companies relationship. The substantive interest of each company is continuing to serve its customers without obstacles. The process interests of both companies declare that the dispute is settled through mutual agreement rather than legal action. The companies are interested in preserving their relationship.
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Work out alternative solutions (Lewicki, Barry, & Saunders, 2011. p. 72-78). Rose and I can divide problems into several issues so that FML gains more in one issue and NEL in another (Maude, 2014. p. 92). For instance, one issue is that NEL is not willing to pay, and another one is that FML wants their equipment to function well.
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Evaluate the possible solutions and make a choice (Lewicki, Barry, & Saunders, 2011. p. 79-82). We should exclude the options that are unacceptable for one of the sides (for example, paying compensation) and choose the one that is most satisfying for both companies. A good possible solution is to retain independent experts to identify the reason for the malfunctioning of the equipment. In case if the reason turns out to be the new ingredients of overexploitation of the equipment (FMLs fault), the problem is solved. If the fault is NELs, the latter can provide FML with new equipment and compensate the losses with a discount for the next purchase or provide more sophisticated and expensive models of equipment than the initial ones as a compensation. Such a solution takes into consideration the interests of NEL, FML and Rose and proposes a compromise that can satisfy all these interests.
References
Cellich, C. (2012). Practical solutions to global business negotiations. New York City, New York: Business Expert Press. Web.
Dessler, G., & Phillips, J. (2007). Managing now. Wadsworth, California: Cengage Learning. Web.
Hames, D.S. (2011). Negotiation: Closing deals, settling disputes, and making team decisions. London, UK: SAGE Publications. Web.
Lewicki, R., Barry, D., & Saunders, D. (2011). Essentials of negotiation (6th ed.). New York City, New York: McGraw-Hill. Web.
Maude, B. (2014). International business negotiation: Principles and practice. New York City, New York: Palgrave Macmillan.Web.
SIM University (2016). BUS356 Business Negotiation study guide (5CU). Singapore: McGraw-Hill. Web.
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