Negotiation Case Study

Introduction

A negotiation is going to be taken place between Top Class Fashions, a clothing manufacturer, and Swift Holdings, a European fashion designing company, regarding price rise and compensation for poor quality jeans. The relationship between both parties has worked well and been highly profitable as well. I am going to assess the potential for the creation of value in this negotiation. From my perspective, I am convinced that values are highly likely to be created if integrative negotiation is utilized as the negotiation stately rather than distributive negotiation. In this essay, I will first start from the definition of integrative negotiation. After that, I am going to analyze why it is crucial to use integrative negotiation approach to create values and demonstrate the comparison between distributive and integrative negotiation. Then, I would like to apply these theories to real case and elaborate strategies and challenges each party would face. At the end of this essay, a conclusion would be drawn.

Definition

Integrative negotiation is also named ‘problem-solving,’ ‘value-creating’ or ‘win-win’ negotiation is the inventive and cooperative negotiation based on the ‘value creation’ concept^[1]. It illustrates that mutual problem solving (in contrast to ‘distributive negotiation’ that may resulting in an impasse or collapse in negotiations) will bring significant gains to both parties.

It is also called an expanded-pie approach (as opposed to distributive fixed-pie approach) since negotiators look for better proposals than the obvious ones that meet only their own interests. Integrative approach involves a clear understanding of issues; open sharing of information and the joint exploration of solutions that benefit both parties^[2]

Importance of creating value in negotiations

Integrative negotiation approach challenges both sides to create as much as value as possible. Creating value means inventing resolutions that are benefit to both parties so that they can expand the scope of mutually beneficial options available to the negotiation parties. Integrative negotiation approach to creating value maximizes the possibilities that both sides reach an agreement that meets all of their interests, and even meets their aspirations.^[3]

There are two important goals in the negotiation process claiming value and creating value. ^[4]Claiming value is mainly about using powerfulness and influence to meet individual interests today whereas the other goal “creating value” is about understanding the problem-solving aspect of negotiation. It is also about establishing and maintaining business relationships and reputations, therefore it is more tend to future rather than today. Some individuals or companies try to claim value instead of create value, and that is a mistake. Generally speaking, value to be gained from connections and reputations is far more than what can be obtained from the current trade. Creating value is more than making a deal; it is the process of sharing information, looking for the solutions, and determining how each party can help the other. It does not mean that people are in a weak position if you focus on developing relationships, because when they are looking into a long term perspective, such as a contract renewal or a promotion, then creating value is no doubt a better approach than claiming value.^[5]