1) Read the following two cases (Source: Cellich – Jain: Global Business Negotiations) and answer the questions after each case. You can do this either individually or with a partner. Assessment Pass/Fail. 2) Culture has a great impact on different types of negotiations. Find out the general features of business culture in your home country and how you negotiate in your own culture.
Brown Casual shoes, Inc. located in Houston, Texas, is a second-generation family-owned company that specializes in casual footwear for men, women, and children. The company has been in operation for 30 years and has manufacturing facilities in Houston, Texas and Cincinnati, Ohio. Over the years, the company has expanded its operations throughout the United States and Canada. It sells directly to retail shoe stores such as Payless, to discount stores such as Wal-Mart and Kmart, and to wholesale outlets such as Costco. The company prides itself on manufacturing its shoes solely in the United States. Over the past five years, the company has felt the impact of cheap labor on the manufacturing of today’s shoes. Local and international competition is making inroads on the company’s niche markets. Sales have been down for the past two years. The president of the company Robert Brown, Jr., is concerned that if the downward trend in sales continues, the company may be forced to close its doors. Labor costs in the United States have been a major concern. Mr. Brown is aware that the US athletics footwear industry does most of its manufacturing in Asian countries such as China, South Korea, and Indonesia, where labor costs are appreciably lower. The company must now find cheaper ways to manufacture its shoes, and it needs to expand its sales by entering the international marketplace. Mr. Brown called a board meeting to review his options. After much discussion, the board decided China was a good place to begin for a number of reasons: 1)The country has a cheap labor market, 2) The country already has footwear manufacturing contracts with US companies, 3) China represents a potential new market with a population of 1.3 billion people, and 4) China has been moving toward a free-market economy since the late 1970s. Mr. Brown decided he would visit China and bring with him Harry Livingstone, his senior vice president of operations, and Roberta Jackson, manager of the company’s marketing department. Mr. Livingstone was given the job of setting up the visit. He contacted business associates who had done business internationally to get some ideas of how to go about planning the visit. Mr. Livingstone also contacted several athletic footwear trade associations and was able to identify several Chinese companies interested in talking to his company about a business arrangement. One company, Chang Manufacturing, was located outside Beijing; the other company, Chung Sun Manufacturing, was located in Shanghai. After some discussion with Mr. Brown, the two of them decided to visit the Shanghai company because Shanghai was one of China’s Special Economic Zones and would be supportive of Western ideas and business practices. The Beijing company was attractive, but Mr. Brown was somewhat concerned about the political and social risks of being so close to the country’s capital and the seat of government. Mr. Livingstone contacted Chung Sun Manufacturing and was eventually directed to Mr. Li Kim Son, who handled international business development for the company. Mr. Li spoke fluent English and had been involved in negotiating several footwear manufacturing contracts with US companies. Mr. Livingstone explained Brown Casual Shoes’ interest in wanting to manufacture its products in China. Mr. Li indicated that his company would be willing to discuss a business arrangement and invited Mr. Livingstone’s company to visit Chung Sun facility in Shanghai. Mr. Livingstone was elated to hear this and immediately informed Mr. Brown. The meeting was...
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