Reference no: EM131904484

Conflict Crosses the Border: Negotiations between Mexicans and Americans

Two companies were vying for a lucrative contract from the Mexican government. And, both firms, one from the United States and another from Sweden, had already jumped several hurdles in efforts to get the business. Each was invited to Mexico City to present proposals to Ministry officials as a start to the process of negotiating the terms of the proposed deal.

The Americans put a lot of effort into producing an impressive high-tech and hard-hitting presentation, working hard to assemble a team of senior technical experts, lawyers, and interpreters from the New York office. Their bottom line was clear: "We can give you the most technically advanced equipment at a price the others can't match." The team met several times with senior management before the presentation to discuss possible concessions and they were given latitude to make decisions on the spot if need be. The team flew down for a week, staying at one of the top hotels in the city.

Arrangements for a fancy hotel conference room were made so that they could make the best possible presentation to the Ministry officials. In a demonstration of due diligence and to impress their potential customer, they brought all the necessary equipment with them and had mailed outlines of the presentation to officials two weeks ahead of time. Likewise, they proposed a detailed schedule and other arrangements in a memo to the officials along with the presentation. For their part, the Mexican officials dutifully thanked the Americans for their information and said they looked forward to meeting with them and finding out more about their proposal and their firm. They provided information about the history of their agency and the top members of the current Ministry.

The presentation began with informal introductions of the team members by the presenter. The presentation itself was flawlessly delivered, thanks to endless practice put in. But, about 20 minutes into the presentation, the Minister himself, with an entourage of other officials, walked in. When he figured out what was going on, his demeanor turned unpleasant. Angrily, he asked the Americans to start the presentation over; they complied and started again. Once more, the presentation was going well until about 10 minutes later when an aide arrived with a message for the Minister that was delivered in hushed tones. Not wanting to anger him again, the American presenter stopped to wait until the message was delivered. But, the Minister signaled for him to continue, and he did. But a few minutes later, a number of audience members were talking among themselves. By this time, the Americans were very frustrated, but slogged on and finished. At the end, when invited to ask questions, the Minister's only comment was to wonder why the Americans had focused so much on the technical details-why had they told the Mexicans so little about their firm's history?

Later during lunch, the Americans felt that they had to be very forceful about keeping the conversation focused on the topic at hand-the contract and any outstanding issues or problems they could address. Most of the conversation was again seemingly casual, having little or nothing to do with the business at hand, not unlike what happened earlier during the presentation. The Americans were surprised by the many questions about their individual backgrounds and personal experience, including their qualifications. The Minister breezed in during the lunch, had a brief but casual conversation with the American team leader and then left, not to return.

Over the next several days of their time in Mexico City, the Americans repeatedly contacted the Mexican officials for follow-up. Were there additional questions about the specs? How about the technical features of their implementation? What were the initial reactions and was more information needed? They reminded Ministry officials of the schedule they shared ahead of time and the fact that they needed to return to New York soon. In short, they wished to start the negotiation process. The Mexican response was the same to all these forays across the rest of the week: "We need time to examine your proposal among ourselves here first." The Americans got more and more angry; at the end of the week, this turned to plain frustration. After all, the Ministry officials had the proposal for several weeks before the meeting and had multiple opportunities for elaboration of the specs and other elements. They left Mexico empty handed.  Later they found that the contract was awarded to the Swedish firm.

1. What is your diagnosis of the problem here and the reasons for the breakdown in the process? Consider cultural differences between the US and Mexico.
2. How could each side have been better prepared for the negotiation?
3. Could the Americans have done anything to salvage the situation even after the minister took offense?