Skutis and TNE Case Study: Analyzing a Cross-Border Business Deal

This case study examines a negotiation breakdown between Skutis, an automobile start-up, and TNE, a Chinese manufacturer. The issues arose from faulty prototypes, poor communication, and unethical practices by a TNE representative, leading to financial and reputational damage for Skutis. The analysis identifies Jurgen's team's mistakes, including a lack of due diligence in understanding the Chinese market and the absence of a formal legal contract. It assesses Skutis's chances of winning compensation and suggests improvements for future international negotiations, such as conducting thorough site visits, engaging directly with high-level executives, and seeking expert consultation on Chinese business practices. The study concludes with strategic decision recommendations for Skutis to avoid similar pitfalls in future operations.

Name of the Student
Name of the University
Author Note

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.

Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Question 1..................................................................................................................................3
Question 2..................................................................................................................................4
Question 3..................................................................................................................................5
Question 4..................................................................................................................................6
Question 5..................................................................................................................................7
Question 6..................................................................................................................................7
Conclusion..................................................................................................................................8

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

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
from the emails that were being exchanges between the entities, no further legal
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

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
clarity should be obtained by the management for the objectives of the company,
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
of the company in the year 2017. The first consideration that should be taken into
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.

Certain considerations should also be emerged in this given respect for the legal
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
By analysing all the key aspects of the entity, it can be stated that due to certain
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, Chinese Style - China Business Review. (2019). Retrieved from
https://www.chinabusinessreview.com/negotiations-chinese-style/