Business Negotiation Report: Videomart & Osatech Negotiation Analysis

This report examines the failed negotiation between Videomart (American) and Osatech (Japanese) from an international business perspective. The introduction highlights the cross-cultural differences in negotiation styles, where the Americans aimed for quick deals while the Japanese priorit...Read More

Running head: BUSINESS NEGOTIATION-AN INTERNATIONAL PERSPECTIVE
Business Negotiation
Name of the Student:
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Executive Summary
This case is about a failed negotiation between Japanese Company Osatech and American
Company Videomart. The problems about the case are discussed in introduction. The things that
went wrong in perspective of international communication due to cultural difference between
Japan and America are discussed in first part of discussion, the second part of discussion deals
with suggestions as a CEO of the United States Co that would be implanted in the planning
process of negotiation, setting of climate of the negotiation and at the framing stage of
negotiation. The report ends with a conclusion which recommends many measures which could
have made the negotiation process between Osatech and Videomart successful.

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Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Planning.................................................................................................................................................6
Setting the Climate...............................................................................................................................8
Framing of Negotiation........................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
The case is about the issues that evolved during negotiation between Videomart which is
America’s top video-game company and aims to get a license agreement which will enable them
to sell software to Osatech, the renowned video software company of Japan The issues described
in this case are related to the cross-cultural difference between the Americans and Japanese
which also determine the difference between the negotiation styles between these countries. The
Americans plan to strike a business deal really fast and that is why in the second meeting with
the Japanese Company, the Americans discussed about the market share, projected sales,
profitability, product needs, delivery date and time schedule. However, the Japanese style of
doing business is to exchange information and establish relationships. Japanese are cautious
about striking a business deal as they prefer to build trust before doing business. The cultural
difference between the two countries resulted in a failed negotiation (Adair et al. 2001)
Discussion
1) From an intercultural communication perspective there are various things that went
wrong in this case. The Japanese team brought with them an engineer who is also a translator.
Though the Americans did not understand and speak Japanese, yet they did not bring a translator
in the second round of negotiation meeting. The presence of an engineer and translator in the
Japanese team clearly demonstrates the high-context culture of Japan and in this case Japanese
team wanted to discuss engineering challenges and analyze whether American Company
Videomart will be the right choice for them to do business. However, the presence of two vice
presidents in the American team of sales and marketing clearly reflects the low-context culture of
America where they divulge information faster than the Japanese and are eager to sign a business

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deal really fast without gaining trust or building relationship with the other party. The Americans
are anxious to strike the deal with Japan, thus they talk about market share, projected sales and
profitability of their organization in the first meeting (Hofstede, Geert and Jean-Claude 2003).
Figure 1: The Context of International Negotiation
Source: (Pavlenko, Aneta, and Adrian 2004)
The Japanese tend to seek information and build trust which is clearly reflected as they
ask probing questions about product specification to check the compatibility and enquire about
delivery dates. It is important for the Japanese to see the blueprint of the products of Videomart
to gain trust.
Things went wrong with respect to international communication perspective as the
Americans used contending strategy (win-lose) and a distributive strategy for negotiation. A

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problem solving and collaborative approach should be adopted by the Americans to achieve a
win-win situation with the Japanese and conflicts should be avoided. Lack of Integrative
negotiation technique, lack of a field analysis of the Japanese culture and absence of an
interpreter in the American team resulted in failed negotiation (Cavusgil et al. 20014).
Figure 2: The Dual Concerns Model
Source: (Hurn 2007).
2) The ideal negotiation process should have 7 phases, preparation, relationship building,
gathering of information, using information, bidding, and closure of the deal and implementation

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of the agreement. As a Chief Executive Officer of the United States Co, the negotiation will be
handled by me in following ways
Planning
i) Define the goal
The American Company Videomart has specific goal and that is to achieve distribution and
market share by striking the deal with Osatech.
ii) Defining the major issues- Videomart should create a list of issues like scope of the
agreement, item costs, pricing, structure of profit sharing, product specification, delivery date,
time schedule and payment method.
iii) Defining the importance of each issue- As a CEO, the relative importance of the issues
should be understood. The culture and importance of Japan should be clearly understood. And
thus issues related to profitability, projected sales and market share should be discussed in the
second meeting of the negotiation process. The first meeting should focus on sharing of
information. Priorities of Osatech like product specification and product blueprint should be
identified to reach a win-win situation (Cellich, Claude and Subhash 2004).
iv) Define the interests- Before conducting the process of negotiation, the needs and interests of
Osatech should be clearly identified
Two methods could be adopted by Videomart to explore the interests of Osatech. Questions
could be asked by Videomart or listening and observing the non-verbal clues of Osatech will
enable Videomart to understand the perspective of Osatech.

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v) Knowing the Alternatives-The strategy formulation process during the planning stage of
negotiation, a business plan should be developed with focus on the long-term orientation of
Japan. The business plan of Videomart should focus on building trust and long-term goals. The
Best Alternative to Negotiated Agreement (BATNA) should be accessed before the negotiation
commences and an understanding for BATNA of Japan will result in adoption of a successful
strategy for negotiation. Videomart has several alternatives like inviting Osatech to study the
plant facilities of Videomart in the USA or to bring a technical engineer to reveal product
specification only after signing a non-disclosure agreement (Stahl and Rosalie 2015).
vi) Define the resistance point- A resistance point should be developed even in the absence of
BATNA to halt the negotiation process.
vii) Analyzing other parties’ goals, interests and resistance point – It should be clearly
understood that Osatech will not sign a deal without knowing about the product specification. As
a CEO, the ZOPA or Zone of possible Agreement should be identified at this stage (Kremenyuk
et al. 2002).
viii) Setting one’s own target and opening bids- The target of Videomart should be to protect its
intellectual property right before revealing about its products blueprint. A non-disclosure
agreement should be signed with Osatech and a license agreement should be opening bid.
viiii) Assessing the social context of negotiation-In this case, as a CEO of Videomart, a meeting
with CEO of Osatech would help in understanding the compatibility of the two companies. Also,
few informal meetings by Videomart should be conducted to gain trust of the Japanese. An ice-
breaking session is important and mentioning about the lawyer will make the Japanese feel

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uncomfortable. A field analysis on social context of Japan is important as Japan has a
collectivistic society and Americans are individualistic in nature (Huang 2010)
ix) Presenting the issues to the other party: Substance and Process-The Japanese wanted to see
the product blueprint of Videomart. It is of prime importance for Videomart to include a product
specialist in its team to reveal information about the product blueprint to gain trust of the
Japanese. There should be a clear agenda of meeting and Videomart should invite the engineer of
Osatech to study facilities of Videomart in the USA and to understand technical details of
product (Gelfand et al.2001).
Setting the Climate
There should be an interpreter who understands the culture of Japan in American team
who can tackle culturally-sensitive situation. The product information should be prepared in
detail in Japanese language with help of the interpreter .The presence of a technical engineer in
team of Videomart would enable them to answer product specification query of the
Japanese .Videomart should have his own interpreter instead of relying on the Japanese
translator. Videomart should invite the Japanese team to study their plant in the USA and should
not discuss details about profitability in the first meeting. Also there is no need to include a
lawyer in the first meeting; lawyers can be involved in later stages of negotiation during the
consensus process (Gunia et al. 2011).
Framing of Negotiation-
The negotiation should be framed positively to achieve positive outcomes and should
follow the following steps

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I) Building trust – Trust can be build with the Japanese with an extended period of face-to-face
discussions.
II) Task-related information exchange- The task related information exchange should focus more
on product specification and technical details in the second meeting of negotiation, information
about profitability and market share should be discussed by Videomart in later stages of
negotiation (Spector 2012).
III) Persuasion- The persuasion process should be slow. The presence of president and vice
president in the second meeting of negotiation is not mandatory as in Japan the decision making
process is slow and a consensus should be reached among group members before making
decision. The persuasion should not be done in Western style (Triandis et al. 2001)
IV) Concession and Agreement- The importance of a legal contract s in America should be
communicated to Japanese clearly (Reynolds et al. 2003).
Conclusion
As a CEO, the members of the Board of Videomart should be educated that it would be
time consuming to do a deal with Japanese as they would prefer to build trust and long-term
relationship. The members of Board should be aware that it would take a number of meetings to
strike a deal with Japan, so that there is no pressure from the Board to close the deal. A translator
should be present in the team of Videomart because none of the Americans understand Japanese.
After the second meeting of negotiation, the Japanese engineer should have been invited to the
study the facilities in America and discuss technical issues and other commercial staffs should be
invited to America to build a long-term relationship with Japan. A meeting should be arranged

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between the CEOs of Videomart and Osatech to build trust. An integrative negotiation technique
should be adopted instead of a distributive one.

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References
Adair, Wendi L., Tetsushi Okumura, and Jeanne M. Brett. "Negotiation behavior when cultures
collide: the United States and Japan." Journal of Applied Psychology 86, no. 3 (2001): 371.
Cavusgil, S. Tamer, Gary Knight, John R. Riesenberger, Hussain G. Rammal, and Elizabeth L.
Rose. International business. Pearson Australia, 2014.
Cellich, Claude, and Subhash C. Jain. "Global business negotiations." Mason Ohio: Thompson-
Southwestern (2004).
Gelfand, Michele J., Lisa H. Nishii, Karen M. Holcombe, Naomi Dyer, Ken-Ichi Ohbuchi, and
Mitsuteru Fukuno. "Cultural influences on cognitive representations of conflict: Interpretations
of conflict episodes in the United States and Japan." Journal of Applied Psychology 86, no. 6
(2001): 1059.
Gunia, Brian C., Jeanne M. Brett, Amit K. Nandkeolyar, and Dishan Kamdar. "Paying a price:
culture, trust, and negotiation consequences." Journal of applied psychology 96, no. 4 (2011):
774.
Hofstede, Geert, and Jean-Claude Usunier. "Hofstede’s dimensions of culture and their influence
on international business negotiations." International business negotiation (2003): 137-153.
Huang, Liangguang. "Cross-cultural communication in business negotiations." International
Journal of Economics and Finance 2, no. 2 (2010): 196.