Sample Post Negotiation Report 2

7/21/2019 Sample Post Negotiation Report 2

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Tropicalia B:Sample Post Negotiation Report

University of Kentucky

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I. Post-Negotiation Strategy/Entry Report

Entry Mode

Initially the Tropicalian government ante! to focus on improving the strength of our localfirms" increase e#ports from our country" an! increase the technology transfer ithin our country$It as important to uphol! the esta%lishe! relationships e have %uilt ith the local corporations$This relationship as not only important for us" %ut also even more important for the local

corporations$ &If you !on't have someone lea!ing the %usiness (locally)" you !on't getgovernment contacts" e!ucation contact an! political contact* +,hite - Trachten%erg" .//0$Some specific points liste! in our initial policies !irectly relate! to entry mo!e of multinationalcorporations +2N3s inclu!e the folloing:

1$ 4#port level of any 5oint venture must not go %elo ./6.$ 7oans ill %e availa%le for 5oint venture pro5ects %eteen 2N3s an! local firms

+for a full policy report" please see figure 1

8fter initial negotiations" e ere not successful in initiating an international 5oint venture%eteen our local firms an! a multinational corporation$ 8t first" our strategy as to approach

Tanaka an! 4uro!ata as soon as possi%le an! e#plicitly esta%lish are government policies+figure1$ ,e !i! not mention anything a%out negotiating our policies !uring our first contactith 4uro!ata or Tanaka" %ut ere illing to change several policies in or!er to lan! a !eal to%enefit our country's economic situation$ 8fter %eing re5ecte! or %lon off %y %oth 4uro!ata an!Tanaka" e 9uickly realie! e might have to make amen!ments to our e#isting entry mo!estrategy an! relate! policies in or!er to achieve our ultimate goals$

8lthough our government as not supportive of holly one! su%si!iaries +,;S in ourcountry" e ere approache! ith a !eal e coul! not pass up$ 8fter %eing re5ecte! %y %oth4uro!ata an! Tanaka" 2egatronics" Inc$ as illing to negotiate a !eal ith us" %ut only if theycoul! operate as a ,;S in our country$ Keeping in min! the roots of our policy" e initiallyhesitate! a%out this %ecause e ere not sure if this oul! %e the %est entry mo!e strategy an!

the %est choice for our government an! our local firms$ 8fter a %rief !iscussion" hoever"2egatronics state! they 5ust ante! to %uil! a finally assem%le plant in Tropicalia rather than afull pro!uction plant$ This !eal oul! create 5o%s for our citiens an! at the same time" increaseour e#ports an! strengthen our currency$ 8ll of these issues ere congruent to our initial strategy" the firm oul! have a%etter opportunity to enter into an international 5oint venture ith 2egatronics" Tanaka or4uro!ata$ The => %eteen SysTrop an! Tropimatics oul! later ork to our a!vantage henSysmatics ma!e a %i! on the ne technology +please see figure A for specifics of !eal$

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International Strategy

8lthough our government !i! not e#plicitly create an international strategy" it as important tohave certain goals in min! hen e approache! %usiness !eal$ ,e !eci!e! all !ecisions an!contracts forme! oul! support a transnational approach$ ,e ha! to keep in min! that e notonly ante! to help out local firms" %ut also ant to improve our country's economic state$ 8transnational approach oul! allo us to focus on glo%al !evelopment" as ell as local

!evelopment$ Ultimately our overall goal as to focus on alloing certain amen!ments in ourpolicies in or!er to cater to %oth our local nee!s an! glo%al nee!s$ @or e#ample" e agree! toloer the corporate ta# rate for Sysmatics in the first ten years of their pro!uction agreementith 2egatronics Inc$ in or!er to increase e#ports form our country an! to create numerous 5o%sfor our country$ If e ere unilling to negotiate on the ta# rate" Sysmatics oul! have face!possi%le %ankruptcy an! it oul! have !estroye! our local economy$

8s a government" it as also important e keep in min! several leveraging factors that eoul! %e a%le to use as part of our strategy$ ,e serve! as %oth a threat an! an opportunity forthe local firms an! the 2N3s$ There ere several factors e ha! to keep in min! !uringnegotiations to use in our favor$ The folloing actions potentially ha! an affect on %oth the local

firms an! the 2N3s:1$ regulation e ha! to a%ility to increase or !ecrease costs.$ ta#ationC e ha! the a%ility to increase returns for our government" %ut also the a%ility to

create a competitive a!vantage for firms over their competition0$ e#pen!iture our government coul! create a competitive a!vantage or !isa!vantage

%ase! on ho e aar! grants an! loans toD$ privatiation e ha! the potential to increase competitionE$ consultation e provi!e! %usinesses the opportunity to influence government policy or

an opportunity for the government to manipulate the local firms+Source: International 2anagement" 3hapter 1.CStrengthening International Fovernment Relations

8t times !uring the negotiations" e realie! that e ere %ecoming too involve! in negotiations

%eteen local firms an! 2N3s an! nee!e! to step %ack a little$ 8lthough e ere concerne! a%outcertain issues +i$e$ ta# rate" tariff rate in possi%le contracts %eteen local firms an! 2N3s" e ha! toremem%er our goals an! o%5ectives as a government an! focus on e#ports" 5o%s an! tariffs$ By esta%lishinga transnational approach as a gui!e !uring our negotiations" e ere a%le to stay on tract an! negotiatespecific issues relating to our government policies$

Organizational Structure

8 government can not !etermine! the specific structure of a firm or the specific organiationalstructure of a 5oint venture" %ut e suggeste! gui!elines e oul! like the local firms an! 2N3sto honor$ ,e %elieve a mistake e ma!e in our preCnegotiation policies as that e !evelope!our policies almost as if e ere a local %usiness" rather than a government$ Instea!" e shoul!

have put less emphasis on e9uity onership an! specific value chain activities" an! put moreemphasis on tariffs" ta# an! e#port strategies$ @inal !ecisions on organiational structures of the=> of SysTrop an! Tropimatics ere to %e !eci!e! ithin the organiation$ Goever" e haveconstructe! an overall country organiational %usiness structure" hich creates a picture of hoour country's %usiness structure has !evelope! from preCnegotiation +figure . to postCnegotiation +figure 0$ The structure inclu!es the => of SysTrop an! Tropimatics an! the outCsourcing !eal ma!e %eteen 2egatronics an! Sysmatics$

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Future Policies Package

Before negotiations starte!" e ante! to take a strong stance an! only negotiate specificpolicies hen force! to$ 8s mentione! earlier" e 9uickly foun! out this oul! not %e the %eststrategy for our government an! e !etermine! e oul! have to take a more negotia%le role in

or!er to %enefit in the long run$ Belo are specific policy packages constructe! !uringnegotiations$

Policy Package with Megatronics

Huring negotiations" there ere %asically to policy packages that ere create!" %ut in the en!"the to !eals merge! an! colla%orate! into one large policy package$ The first !eal as thepackage assem%le! for 2egatronics$ 4ssentially" e starte! off the negotiation trying to keep aD/6 import tariff" a 0/6 corporate ta# rate ith no ta# holi!ay" an e#port level of at least AE6"re9uire a social responsi%ility program" an! !eman! that 2egatronics remain in our country forat least 1 years$ 8fter a rather frien!ly negotiating process ith 2egatronics" there ere severalamen!ments to the initial contract$ ,e ere a%le to negotiate a policy package that oul! %e%eneficial to 2egatronics an! to us$ Specifics of the !eal ill %e later !iscusse! in the transaction

report$ +see figure D - E to compare pre an! post contract ith 2egatronics Inc$

Policy Package with Sysmatics

The secon! policy package as negotiate! %eteen Sysmatics an! ourselves$ Sysmatics ante!us to !ecrease corporate ta# rate to 1/6 over a perio! of ten years" ith an increase in ta# rateover the ne#t five years until it reach 0/6 %y year fifteen$ Sysmatics also insiste! that econtact the ,T; in or!er to re!uce tariffs %eteen Tropicalia" =apan" 4U an! US$ ,e ere a%leto negotiate the 1/6 for ten years ith Sysmatics %ecause of the amount of 5o%s that oul! %ecreate! an! the increase in e#ports from our country$ By increasing e#ports" e ill %e a%le tostrengthen our currency an! compete on a glo%al scale$

Future Negotiations and Policy Packages

In future negotiations ith other 2N3s ho ant to enter our market" e ill %e more illing toork on specific issues in or!er to have a inCin situation$ ,e have realie! through thise#perience that e may have to approach negotiations in a less concrete manner$ ,e illcontinue to %e consistent ith certain issues" such as ta# holi!ays" %ut ill %e more lenient inother areas such as tariff re!uctions$ Ultimately" e ant 2N3s to %e a%le to form future =>ith our firms" in or!er to use the technology that are local firms ac9uire! in an effective manner$,e are also committe! to allocating fun!s to %uil! a government one! R-H facility$ Thefacility ill %e availa%le to local firms an! ill hopefully help re!uce our country's !epen!encyon 2N3s for technology$ ;ur ultimate goal is to !evelop a state of the art R-H facility" an!allo our local firms to function ithout !epen!ing on a 2N3 for technology transfer$ ,e illuse a percentage of the money earne! on ta# revenue to put toar!s a ne facility$ 4ach policy

package offere! in the future to other local firms ho start up %usinesses or other 2N3s hoant to enter our market ill %e in!ivi!ually tailore! accor!ing to our nee!s at that specific time$Hepen!ing on ho our relationship continues ith 2egatronics" e may not see a nee! to %uil!other ma#i plants in our country$ Instea!" e may have to fin! partners ho oul! %e illing to%uil! a mini or stan!ar! plant" hich ill continue to serve our local economy an! a!! 5o%s$

There are several policies e have chosen to amen! for future negotiations:

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Re!uction of import tariff to ./6 in or!er to %e competitive ith other countries in

4#otica +may negotiate !epen!ing on priority of pro5ect ,illing to accept a ta# %reak for high priority pro5ects +i$e$ 1/6 for ten years" %ut ill

only allo ta# holi!ays for high priority pro5ects an! ill only allo up to a ECyear ta#holi!ay$ Stan!ar! corporate ta# rate ill remain at 0/6

8ll firms +local an! 2N3s ill implement a corporate social responsi%ility program

4#port levels ill %e set at J/6 +this may %e negotia%le !epen!ing on the pro!uct

Value !ain "cti#ities

It is !ifficult to comment on value chain activities %ecause e are not aare of specific activitiesnegotiate! ithin Sysmatics" an! the !eal they constructe! ith 2egatronics$ 8lthoughmarketing activities" human resource activities an! hea! 9uarters' location are not as important toour o%5ectives as government" pro!uction activities an! R-H activities are very valua%le to ourcountry an! these activities nee! to continue to %e !evelop over the ne#t ten years$ It is necessarythat Sysmatics continues to e#pan! their R-H facilities an! also maintain 9uality an! efficientpro!uction in Tropicalia$ ,ith the future R-H facility e are constructing" as ell as the

technology ac9uire! %y Sysmatics" Tropicalia ill hopefully %ecome a technology lea!er in themicroanalyer market$

II. Negotiations

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Monday $/%&/'(

3ontact 2o!e: In personParties: @INS Roun! B" minus 2egatronics BTime?Place: 1.:0/ P2" B-4 B8 1/ classroom@orm: 2ultilateral SummitIssues:

The Para!iso governments suggeste! a free tra!e agreement" hoever no specific !etailsere put on the ta%le" nor as there an effort to create any specific !etails$

,e !istri%ute! our government policies to the 2N3s an! local firms$ ,e approache!

Tanaka B a%out the possi%ility of creating a => ith a Tropicalian local firm$ ,e ereimme!iately re%uffe! for our economic policies" ith no effort to negotiate any points$4uro!ata B ignore! any our efforts to speak ith them$

;ur local firms ere also ignore! %y the 2N3s an! the Para!iso players" so all

Tropicalian players left an! convene! in a room across the hall$Strengt!s: ,e entere! ith a !efine! list of government policies,eaknesses: Summit very !isorganie!" our policies seeme! to concrete an! possi%ly scare!aay the 2N3s$

Issues ,on?7ost: ,on none$ 7ost no 2N3s oul! !eal ith us" technology transfer policyvehemently oppose!$

$/%& )continued*

3ontact 2o!e: In personParties: Tropicalian 4mpire" SysTrop" TropimaticsTime?Place: 1:// P2" B-4 across the hall from the summit@orm: 2ultilateralIssues:

,e tol! the local firms they ha! our full support an! our !esire to help them ac9uire ne

technology so they coul! %ecome a ma5or microanalyer firm" there%y creating 5o%s"

increasing e#ports" an! helping to sta%ilie the economy +an! accomplish our overallstrategy$

SysTrop an! Tropimatics !eci!e! to create a 5oint venture together calle! Sysmatics an!

collectively %argain as one firm for the rest of the @INS negotiations$

Tariff policy as negotiate! ith Sysmatics$

Plans ere ma!e to contact Tanaka an! 4uro!ata" even though they ignore! us" an! see

hat kin! of Tropicalian government package they nee!e! in or!er for them to consi!erSysmatics as a => partner$

Strengths: 8ll parties ante! to help each other out$Issues ,on?7ost: ,on Kept tariff on importe! su%assem%lies an! complete microanalyers atD/6$ 7ost Tariff on components re!uce! to 1/6$

+uesday $/$'/'(

3ontact 2o!e: 4mailParties: Tropicalian 4mpire an! SysmaticsSu%stance: Sysmatics informe! us they oul! %e meeting ith 2egatronics" Tanaka" an!

4uro!ata in!ivi!ually on 0?01 at 1.:0/ in B-4 on the thir! floor$

,ednesday $/$/'(

3ontact 2o!e: In person


7/21

Parties: Tropicalian 4mpire" Sysmatics" 2egatronics" TanakaTime?Place: 1.:0/ P2" B-4 thir! floor@orm: 2ultilateralIssues:

,e put forth an effort to encourage a => ith Sysmatics$ ,e ante! to kno if there

as anything the government coul! !o to persua!e 2egatronics to create a => ith

Sysmatics$ 2egatronics firmly tol! us they oul! only !o a hollyCone! su%si!iary+,;S in Tropicalia if anything at all$

,hile Sysmatics !iscusse! among themselves" e 9uietly set up a meeting time ith

2egatronics to !iscuss the possi%ility of a ,;S an! negotiate our re9uirements$

,hen Tanaka arrive!" they tol! us they alrea!y signe! a !eal ith Para!iso$ Goever"

they oul! still consi!er a => if Sysmatics on the technology %i!$

,e tol! Sysmatics e oul! help them finance their %i! ith a government loan$

Strengths: 8ll parties ere illing hear each other out$Issues ,on?7ost: No issues ere on or lost" merely !iscusse!$

$/$ )continued*

3ontact: TelephoneParties: Tropicalian 4mpire an! SysmaticsIssue: Sysmatics informe! us they ran some num%ers an! ha! an amount they ante! to %orro$

The amount as reasona%le an! e agree!$ Tenty minutes later" e receive! anothercall from Sysmatics" ho tol! us they ante! to %orro more than they ha! previouslytol! us$ ,e ha! faith in them an! ante! them to in the %i!" so e agree! to the neamount$

Strengths: 2utual cooperation an! aligne! goals$Issues ,on?7ost: Both parties on$ The loan amount as reasona%le an! oul! help the local

firms compete

+!ursday (//'(3ontact 2o!e: In personParties: Tropicalian 4mpire an! 2egatronicsTime?Place: 1/:0/ 82" 2B8 3enter@orm: BilateralIssues:

This as a !eparture from our inten!e! strategy of technology transfer from a =>$

Goever" having hear! Sysmatics on the technology %i! an! knoing it re!uce! thenum%er of potential 5o%s to %e create!" e !eci!e! to allo 2egatronics to create ,;Sin or!er to create 5o%s in Tropicalia$

,e negotiate! the ta# holi!ay" ta# rate" e#port amount" an! tariffs$ 8 press release as

sent out to announce our ne agreement ith 2egatronics +@ig $ 8 contract as signe!+@ig E$

Strengths: ,e ere ell prepare! an! !i! not allo 2egatronics to !ominate$,eaknesses: ,e felt e nee!e! 2egatronics more than they nee!e! us$Issues ,on?7ost: ,on e#port amount of J/6$ 7ost ta# rate issue" alloe! a ,;S instea! of

inten!e! =>$

(/ )continued*

3ontact 2o!e: In person


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Parties: Tropicalian 4mpire" Sysmatics" Tanaka" an! 4uro!ataTime?Place: 1:DEP2" 2B8 3enter 7ounge@orm: 2ultilateralIssues:

,e ha! one minister at the meeting to support Sysmatics$ Goever" no significant issues

concerning the government arose hile the minister as present$

Sunday (/(/'(

3ontact: In personParties: Tropicalian 4mpire an! SysmaticsTime?Place: :0/ P2" B-4 computer la%@orm: BilateralIssues:

,e negotiate! the ta# policy ith Sysmatics$

4mail sent to ,T; to re9uest tariff re!uction %y US" 4U" an! =apan$

Strengths: Gigh level of cooperation %eteen partiesIssues ,on?7ost: ,on ta# issue$ 7ost nothing$

se o Media

,e use! the Fatton Press three times$ @irst" announcing our !eal ith 2egatronics+figure $ Secon!" announcing our plan ith the ,T; to re!uce tariffs %eteen the US" 4U"=apan" an! Tropicalia +figure 1.$ Thir!" e sent the Fatton Press the final !etails of ourinvolvement in the SysmaticsC2egatronics !eal$ ,e !i! not actively seek out the press or usethem to !istri%ute information other than our announce! !eals" as e felt they provi!e!inaccurate an! untruthful information in their nes releases$

nresol#ed Issues

;ur only unresolve! issue at the en! of the simulation as the Para!iso governments ha! notgotten %ack to us a%out our proposal to the ,T;$ ,e nee!e! the approval of at least one of thePara!iso governments in or!er for the ,T; to approve the !eal$ Goever" !uring the @INS!e%riefing" it %ecame apparent to us that neither government oul! have approve! the !eal$

+please see figure 11 for !etaile! timeline of our negotiations

III. Post-Negotiation +ransaction Report

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"gree0ents/ontracts

Megatronics,e" the 2inisters of Tropicalia B" met ith the 2egatronics representatives at the secon!4#otica B Summit on 2arch 01" .//D$ ,e ha! not inten!e! to meet ith 2egatronics" %ut hen!eals ith 4uro!ata an! Tanaka ere not coming to fruition" e !eci!e! to see hat2egatronics ha! to offer$ ,hen e ent into the negotiation" our intent as for the 2N3 to

form a 5oint venture ith one or %oth of our local firms$ The company as a!amantly oppose!to this an! oul! negotiate over nothing other than a ,;S$ Because e currently ha! no otheroptions on the ta%le" e agree! to negotiate$ ;ur strategy as to help the local firms ithtechnology transfer" increase e#ports" an! help the economy" so e kne that ithout any2N3s" none of our goals for the country oul! %e achieve!$ 8t the Summit" e !iscusse! theoptions of a ,;S +final assem%ly only" a ta# holi!ay" an! a large percentage of pro!uction%eing e#porte!$ 2egatronics ha! not yet met ith the Para!iso government an! ante! to !o so%efore they signe! a contract ith us$ ,e !eci!e! to meet the ne#t !ay to propose an offer to the2N3$

The meeting on 8pril 1 as a huge success< a contract as !ran up an! signe! +see figure E$

The main purposes of the pro5ect from our point of vie ere: to increase e#ports" minimie the2N3s interference?competition ith local firms" increase the num%er of 5o%s in Tropicalia" an!increase the strength of our ne currency" the Palma$

8s a result of the !eal" 2egatronics ill operate a ,;S +ma#i plant in our country" ith half ofthe materials for plant an! e9uipment %eing purchase! ithin Tropicalia$ ,e ante! this in thecontract so more sectors of the economy" for e#ample construction" ill reap the %enefits of the!eal$ 8lso" a si#Cyear ta# holi!ay has %een impose!" %ut not ithout an agreement to stay inTropicalia for at least 1 years$ ,e !i! not ant the 2N3 to collect profits ta#Cfree for si# yearsan! then close the plant< that coul! %e !evastating for our economy$ In year seven" a 1E6corporate ta# ill %e applie!" folloe! %y a ./6 ta# in year J" reaching the stan!ar! 0/6 for

each year after that$

8 re!uction of tariffs as very important to 2egatronics$ ,e agree! to eliminate tariffs onimporte! items use! in the manufacture of e#porte! items %ecause increasing e#ports as" an! is"one of our main concerns$ Goever" a E6 tariff ill %e applie! to all importe! parts use! topro!uce microanalyers that ill %e sol! in Tropicalia$ This as !one to protect our local firms

Documents

Sample Post Negotiation Report 2