Reference no: EM133085094

Negotiation in Business: Apple and Samsung's Dispute Resolution

For two days in late May 2012, Apple CEO Tim Cook and Samsung CEO Gee-Sung Choi met with a judge in the U.S. District Court of Northern California in an attempt to reach a settlement in a high-profile U.S. patent case, a sobering example of negotiation in business.

Back in April 2011, Apple had filed a lawsuit accusing Samsung of copying the "look and feel" of the iPhone when the Korean company created its Galaxy line of phones.

Samsung countersued Apple for not paying royalties for using its wireless transmission technology. Since then, the number of patents under dispute has skyrocketed, according to the Korea Times, as has the number of courts involved in various countries. The two companies have repeatedly accused each other of copying the appearance and functions of their smartphones and tablet devices. The companies showed some willingness to compromise in an effort to avoid going to court: at the California court's suggestion, they cut the number of disputed patents in half. But even as the CEOs sat down at the table for their mediation, which was urged by the court, Apple filed a motion asking the presiding judge to bar the sale of Samsung's Galaxy Tab 10.1 on the grounds that the tablet was designed to "mirror" Apple's second-generation iPad.

Both sides had said they hoped to avoid a legal battle. Given that Samsung is one of Apple's biggest suppliers, the companies had a strong incentive to move beyond their dispute and build on their ongoing partnership. Yet the two-day mediated talks between the CEOs in late May ended in an impasse, with both sides refusing to back down from their arguments. The suit later went to trial twice, with Apple ultimately winning more than $409 million.

Mediation between Business Negotiators and Chances of Success As this example of negotiation in business suggests, mediation as a dispute resolution technique between business negotiators is far less likely to succeed when the parties are grudging participants than when they are actively engaged in finding a solution. When negotiators feel they have spent significant time and energy in a case, they may feel they have invested too much to quit. Moreover, the longer they spend fighting each other, the more contentious and uncooperative they are likely to become. The lesson? When a business dispute arises, you should always do your best to negotiate or mediate a solution before taking it to the courts. We tend to assume that only truly ruthless people behave unethically in negotiation. In fact, research by Harvard Business School professor Francesca Gino and others shows that most people are willing to cheat now and then in negotiation and other realms when they have a financial incentive to do so and believe they won't be caught. We find ways to justify suchbehavior, whether by telling ourselves that the other party won't feel the loss or by denying that we've done anything wrong. It's important for all of us to stay attuned to ethical pitfalls in negotiation and avoid letting ourselves off the hook for even seemingly minor infractions that go against our moral code.

Answer the following questions based on case study above entitled 'Negotiation in Business: Apple and Samsung's Dispute Resolution'.

1. What in your views are the three barriers to negotiations between APPLE and Samsung? Which in your opinion is the most critical of the barriers you have identified? Why?

2. What are the BATNAs for each side? Describe and illustrate using relevant examples.

3. What are the possible ethical implications for both Samsung and APPLE? Examine and discuss.