This report analyzes the case of breaching in negotiation between Skutis and TNE, including key issues, mistakes made, chances of winning compensation, and suggestions for future operations.
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Executive Summary In the following report, the key consideration has been generated in terms of the breaching in negotiation between Skutis and TNE. In this regard, the key facts that have been analysed in the given case is related to the key issues that have been converted into such problems, identifications of the mistakes made by Jurgens and his team, chances of Skutis for winning the compensation in a legal case, certain suggestions for the company in terms of their operations. Beside this, the decisions that should be considered by the management in this regard have also been suggested in this given respect.
Introduction In the given segment, a case study have been presented with regards to the business between Skutis, a start-up company for automobile productions and TNE, the manufacturer of automobile products. The owner of the company Skutis was interested in manufacturing their products in China and sells them in the Asian market. Beside this, a contract was made between these two companies over emails and no contract took place. The key consideration was being generated when the malfunctioning products were being supplied to Skutis for test driving and the manufacturer was reluctant to provide any further support. Eventually, it was found that the only English speaking representative of the company TNE was engaged with certain malpractices in order to obtain certain benefits through the transactions. Beside this, certain other considerations were incurred when the representative named Lim tried to defame the company in terms of its marketing engagement with the company Beat-up for further promotions. A huge loss was incurred by the company Skutis which not only damaged their financial status, but also affected their goodwill and reputations for further practices. In this respect, the key considerations related to it is that, how can the company deal with such situation and what steps should be taken by the company before engaging with another manufacturer for further production. Question 1 The key considerations of the problems were emerged when the company Skutis started to discover that the problems incurred in the sent prototypes of the company into three different places. The company was supposed to expect a more compact and error free models with regards to their designs and expectations. But in this case, the contrary was the matter. In every aspect of the production, certain deficiencies were being found due to the designs, performances and raw materials. Apart from this, the company was forced to contact with TNE for such deficiencies in the production procedure of the prototypes and asked for further helps to deal with such problems. But the response from the company TNE was reduced over the time and took a form of argument eventually. Beside this, when the act reached a point of suspicious activities from TNE, or specifically from Lim, the owner of Skutis appointed one of his German friends who have a working knowledge in the mandarin language in order to
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communicate with the higher authority of TNE (Gao, Yu & Cannella Jr, 2016). At this point, it was found that the whole transaction which was taken place in between was only operated by Lim and TNE had no knowledge about these. The company TNE strictly suggested that due to the fact that the deal was made without their knowledge, they can do nothing about it except from demoting Lim on the first place (Gao, Yu & Cannella Jr, 2016). Due to the fact that Chinese market is essential for the cost efficiency for outsourcing the manufacturing procedure, certain strategies should be taken by Skutis for developing the relationship with another company in their upcoming operations. The first thing which should be taken into consideration is an appropriate legal contract under which, each and every obligations in terms of delivering the services by the entities will be enlisted. Beside this, the on-site visit and dealing with the highest possible authority of the company is also required in terms of engaging with further contracts (Gao, Yu & Cannella Jr, 2016). Thus, the companies should take into consideration regarding the proper negotiation procedure in terms of the Chinese culture for avoiding any further inconvenience for their operations. Question 2 Despite the fact that Lim was the key unethical mind engaged in this case, certain mistakes were also made by Jurgens and his team for dealing with the Chinese company. The first point which should be taken into consideration in this respect is that, Jurgens and his business partners were totally unaware about the Chinese market on the concurrent scenario. Thus, making such a huge deal related to their start up with a company by based on the words of one individual was not a wise decision. Apart from this, the management did not consider a legal contract for their negotiation procedure which states the fact that the management neglected the legal considerations from which they may seek help in terms of any such inconvenience in this case (Hassan, 2016). Beside this, the management has not yet seen the site of production or contacted with the person face to face. The management has not even negotiated with any other representative of the company except from Lim. This was also another great mistake done by the management. As it can be seen in the given case, certain effects of the outcomes of such failed negotiation have been seen upon the goodwill and reputations of the company. The key consideration which have been stated in this case is the failed marketing contract with the German company Beat-Up where the proposal of Skutis were being rejected due to the fact that the company
have been already engaged in a controversy with a off-shore entity. Such impact can last long for the future occurrence of the company for negotiating with other entities (Hassan, 2016). Beside this, if the case leads to a legal battle between these two companies, the reputation of the company will be damaged further in this given respect. Along with this, such controversy and loss can also affect the decision making procedure of the investors in this given respect. Question 3 Due to the fact that there was no legal contract existed between the company named Skutis and TNE, it is not likely that the company will be able to gain the desired compensations from their losses from the company TNE. In case Skutis sue TNE in legal court, TNE can easily revert the case against Lim due to the fact that the negotiation was made against the policies of the company and only one person was involved in this case unknowing to the knowledge of other members. Thus, TNE can most likely escape from the legal consideration of the case made against them by Skutis. In terms of the strengths of the company, the key consideration which has been emerged in this respect is the number of emails that had been exchanged between them. Thus, the company can prepare a translated copy of the emails and present it to the court in order to defence their case. Due to the fact that all the negotiating terms that were promised by Lim exists in the emails, the Judge in the court can obtain a clear perspective regarding how the breaching was made and how much of loss does the company incurred during this transaction with the company. With regards to the weaknesses of the company, the entity obtains a number of difficulties due to their errors in the negotiating purpose. For the first instance, the company lacked a legal negotiation contract which is essential to sue a company for their legal obligations. Beside this, the company had only negotiated with a representative of the company who have made all the promises (China Business Review, 2019). Due to the fact that there is a certain lack of legal considerations, the company may or may not be obliged to pay the compensation prices that have been alleged against them by Skutis.
Question 4 In order to improve the present situation, certain aspects can be taken into consideration by Jurgens and his team in the given scenario. In the first consideration, Jurgens should personally go to China for visiting the site of production by himself of send his business partner for brief investigation about the business procedure. The one of the false promises that had been provided by Lim regarding another imaginary production house of the company can be caught on the scene and the malfunction implemented by Lim could also be interpreted. Beside this, another key consideration which should be taken into consideration by Jurgens is to hire a translator or interpreter regarding carrying on the conversation or the negotiation procedure directly with the higher authority of the company irrespective of any further mediators. Due to this, a clear concept of the demand and limitations for both of the parties could be exchanged in this respect. Another key recommendation for the key actions of Skutis in this respect is related to the ground work of researching related to the key legislations of Chinese legislations and the upcoming outcomes emerged from it (China Business Review, 2019). Due to the fact that Jurgens and his team were never able to meet the executives of TNE personally, certain ground research could be much beneficial for the company for carrying on their business with this purpose. Beside this, the key considerations related to the transaction was emerged from the fact that no legal agreements took place between these two entities with regards to the negotiation took place between them. Apart fromtheemailsthatwerebeingexchangesbetweentheentities,nofurtherlegal considerations were being taken into account which resulted a much more confusions when it comes to the breaching of the contract and the considerations related to the compensations? Question 5 Due to the fact that Jurgens and his team were completely new to the Chinese market, the first considerations that should be taken in this by Jurgens were to consult with a Chinese financial expert for the negotiation procedure. Thus, certain considerations are needed to be understood in this respect with relation to the situation, intentions and capabilities of the negotiating parties. First of all, within the negotiation procedure, the company Skutis should be able to familiar with the context of the deal in terms of the local context, informations and insights of the company with regards to the staffs, contacts and external advisors. Apart from this, knowing the company with which the entity is going to make a deal is also essential. Thus, Skutis needs to be familiarising with its partners for its interpersonal and organisational
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level in order to verify the credibility of the company. Along with this, the organizational transparency of the entity and understanding their counterparts is also essential. Beside this, knowing the strengths and weaknesses of the own organisation is also essential. Certain clarityshouldbeobtainedbythemanagementfortheobjectivesofthecompany, commitments towards the resource management and managerial support is essential in this given regard. Beside this, the companies should be aware of the strengths and weakness of the organisation for the preparation of negotiation strategy (China Business Review, 2019). The value of the products and the price should be briefly discussed by the management in this given respect. Apart from the internal factors of the company, the external factors should also be considered in this given regard for enhancing the quality of the negotiation procedure. Beside this, the operational readiness of the company should also be considered by the entities for the discipline, cohesive negotiation team and the communication plan of the entity for better negotiation procedure. Question 6 In order to take the strategic decisions in the operations of the company, certain key considerations should be taken in this respect with regards to the strategic planning meeting ofthecompanyintheyear2017.Thefirstconsiderationthatshouldbetakeninto consideration by the entity is related to the choice of proper manufacturer in this given respect. Due to the fact that a huge amount of money have been lost in this given respect, the entity must take into consideration certain aspects where the choice of manufacturer are proper and save the hazards in productions that the company have incurred in the past occasions. Apart from this, due to the fact that the management of the company have incurred a huge amount of loss due to this incident, certain efforts should be made for finding more investments in the operational procedure of the company. Certain loan amount can be allocated by the management from the bank, or the company can take into consideration regarding getting a new investor for carrying on their operation at a larger scale. Beside this, the marketing procedure of the company should also be revised in the strategic planning meeting of the company in the year 2017. Due to the fact that a big marketing company named Beat-up has declined to work with the company, certain other considerations should be prioritized by the management for carrying on the promotional activities of the product. By this way, it will not only help to increase the brand recognition of the entity, but also help the organisation in terms of gaining the lost reputation by engaging in such controversy.
Certainconsiderationsshouldalsobeemergedinthisgivenrespectforthelegal considerations related to TNE for receiving the compensations for the losses incurred by the entity due to the breaching in the contract. Thus, the probable steps that will be considered by the management in terms of their operations should be considered. Conclusion Byanalysingallthekeyaspectsoftheentity,itcanbestatedthatduetocertain misunderstanding and negligence by Jurgens and his team, a foreign sales executive was able to take the unfair and unethical advantages due to the lack of proper communication between two of the engaged negotiators. Due to the fact, the company have incurred a huge loss both financially and in form of their reputations. By analysing the case study, it has been established that such loss could be avoided if the organisations had taken certain precautions such as preparing a legal contract or visiting the site by them. Reference: Gao, H., Yu, T., & Cannella Jr, A. A. (2016). The use of public language in strategy: A multidisciplinary review and research agenda.Journal of Management,42(1), 21-54.
Hassan, S. (2016).Combating Cult Mind Control: The# 1 Best-selling Guide to Protection, Rescue, and Recovery from Destructive Cults. Freedom of Mind Press. Negotiations,ChineseStyle-ChinaBusinessReview.(2019).Retrievedfrom https://www.chinabusinessreview.com/negotiations-chinese-style/