GB526 Unit 8 Negotiation Analysis Example

A Volume Minimum Both Sides Signed and Read Differently: A Unit 8 Negotiation Analysis

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Purdue University Global

GB526: Global Management and Leadership

Unit 8 Negotiation Analysis

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[Date]

The sensor maker, the trading company, the agreement and its figures are composite; the negotiation research and sources cited are real.

The Negotiation

Prairie Sense, a composite Saskatoon company, makes wireless sensors that monitor temperature and moisture in grain bins. It wanted a distributor for Japan, where grain importers, feed mills and cooperatives store large volumes. Over four months it negotiated with Kaneshiro Trading, a composite Japanese trading company with a strong agricultural division.

The Canadian team found the early months slow. Kaneshiro's team held several meetings that covered the companies' histories, visited the Saskatoon plant and introduced senior executives, while the Canadians pressed to discuss price and volume. The final agreement set an annual minimum of 12,000 sensors at C$180 each, three-year exclusivity, and a clause committing both parties to consult in good faith on matters the contract did not foresee.

The Dispute

In the second year, a poor harvest in several supplying countries cut the grain volumes moving into Japanese storage, and Kaneshiro's customers delayed purchases. Kaneshiro asked to revisit the minimum, proposing 7,000 sensors for the year, and cited the consultation clause. Prairie Sense pointed to the signed figure and noted that it had added production capacity for the Japanese volume. Kaneshiro's managers were surprised by what they saw as an inflexible response; Prairie Sense's managers were surprised that a signed number was being reopened.

Prairie Sense read the minimum as the agreement and the consultation clause as a detail; Kaneshiro read the relationship as the agreement and the minimum as a figure set under conditions that had changed.

Applying Salacuse's Framework

Salacuse (1998) identified ten ways culture can shape negotiating style, including whether the goal is a contract or a relationship, whether communication is direct or indirect, how parties regard time, and whether they prefer general or specific agreements. Four of the ten explain much of the dispute.

Goal: contract or relationship. Prairie Sense treated the signed document as the outcome of the negotiation. Kaneshiro treated the agreement as the start of a relationship whose terms would adjust as the partners learned. The long early meetings, which the Canadians saw as delay, were Kaneshiro's investment in that relationship.

Form of agreement: specific or general. Prairie Sense valued the specific minimum because it planned production around it. Kaneshiro valued the general clause because it provided a way to handle what neither party could predict. Consultation clauses of this kind are common in Japanese commercial contracts and are often meant seriously.

Communication: direct or indirect. During the negotiation, Kaneshiro's team raised concerns about harvest variability in general terms, and the Canadians took this as background rather than as a request for flexibility. A more indirect style can signal a concern without stating it as a demand.

Sensitivity to time. The Canadians wanted to sign quickly and start selling. Kaneshiro took time to build trust and expected that trust to be used when problems arose.

Salacuse cautions that the factors describe tendencies, not rules, and that individuals vary. But the pattern explains why both sides felt that the other was departing from what had been agreed.

Two Kinds of Trust

Meyer (2014) distinguishes trust built through tasks, earned by delivering on commitments, from trust built through relationships, earned by time spent together and personal knowledge of the other side. Prairie Sense's managers trusted Kaneshiro because a contract had been signed and would be performed. Kaneshiro's managers trusted Prairie Sense because of the visits and meetings that preceded the contract, and they expected that trust to make the partners willing to adjust together. When Prairie Sense pointed to the contract, Kaneshiro heard a statement that the relationship counted for less than the document, which threatened the basis of their trust.

Applying Brett's Approach to the Dispute

Brett (2014) sets out three routes out of a dispute: meet the parties' underlying needs, settle who is entitled to what under the contract or the law, or let the stronger side prevail. Prairie Sense has started with rights: the contract says 12,000. Kaneshiro has started with interests and the relationship. If Prairie Sense insists on its rights, it may win the argument and lose the partner; Kaneshiro could simply fail to sell the sensors, and enforcing a minimum against a distributor in another country would be slow and costly.

An interests-based approach asks what each side needs. Prairie Sense needs to recover the cost of the added capacity and to keep a foothold in Japan. Kaneshiro needs to avoid holding unsold stock in a weak year and to keep its customers' trust. Both want the relationship to last beyond the current season.

Recommendation

Prairie Sense should agree to consult, as the contract allows, and propose a resolution based on interests:

This year: reduce the minimum to 8,500 sensors, with the 3,500-sensor shortfall carried into the next two years' minimums.

Support: Prairie Sense provides a joint marketing program to Kaneshiro's feed mill customers, with Kaneshiro sharing the cost.

Price: hold the price, so the adjustment is about timing rather than value.

In composite figures, the reduction delays about C$630,000 of revenue rather than losing it, and preserves exclusivity and the relationship.

Changes to the Agreement

The dispute shows that the agreement left too much unsaid. Three changes would help. First, a harvest-linked adjustment: if an agreed index of grain imports falls by more than a set percentage, the minimum adjusts by a formula. Second, a written description of what the consultation clause requires, such as a meeting within thirty days and a joint proposal. Third, an annual review meeting at senior level, which Kaneshiro would see as maintaining the relationship and Prairie Sense as an early warning system.

Lessons for the Next Negotiation

Prairie Sense's team should ask, during negotiations, how the other side expects specific terms to work when conditions change, and should treat general concerns raised by a counterpart as possible requests. Taking the relationship-building phase seriously, rather than as delay, would also give the team information it needs. The broader lesson is that a signature can mean different things to the people who sign it, and that those meanings should be discussed before the ink dries.

Conclusion

The dispute is not about bad faith on either side. Each company acted on its understanding of what the agreement meant. Salacuse's framework explains why those understandings differed, and Brett's approach suggests a way through: resolve the dispute by interests, preserve the relationship, and rewrite the agreement so that its next test does not depend on unspoken assumptions.

References

Brett, J. M. (2014). Negotiating globally: How to negotiate deals, resolve disputes, and make decisions across cultural boundaries (3rd ed.). Jossey-Bass.

Meyer, E. (2014). The culture map: Breaking through the invisible boundaries of global business. PublicAffairs.

Salacuse, J. W. (1998). Ten ways that culture affects negotiating style: Some survey results. Negotiation Journal, 14(3), 221-240. https://doi.org/10.1111/j.1571-9979.1998.tb00162.x