Reference no: EM133166819

Introduction:

You work for the Life Oxygen Company Limited location in Yangon Region as the fabrication manager of the Dagon Seikkan Plant. You are going to negotiate some arrangements with another plant manager from the East Dagon Plant. You are in a potentially competitive situation where cooperation is clearly desirable. Your task is to find some way to cooperate as a confrontational situation or argument might seem to put you at a disadvantage.

Background Information:

The Life Oxygen Company Limited is a newly formed business and due to the high demand of oxygen and other life support products, it has quickly become one of the nation's major producers of preassembled oxygen tanks, flowmeters, ventilators, and humidifiers. The Life Oxygen Company has several plants in the company which tend to specialize in producing a single line of products or, at the most, a limited range of products. The company has considerable vertical integration. Parts made at one plant are assembled into components at another, which in turn are assembled into final products at still another plant. Each plant operates on a profit center basis.

Your Dagon Seikkan plant produces flowmeters, regulator valves, and flow regulators, which are shipped to other company plants. In addition to these numerous components, the Dagon Seikkan plant makes more than 40 different modules for the East Dagon plant. The two plants are about 10 kilometers apart.

The Quality Problem:

Production at the East Dagon plant has been plagued by poor quality. Upon examination, it has been found that a considerable portion of this problem can be traced to the quality of the modules received from your Dagon Seikkan plant.

Your Dagon Seikkan plant maintains a final inspection operation. There has been considerable dispute between the two plants as to whether the Dagon Seikkan plant is to maintain a 95 percent overall acceptance level for all modules shipped to the East Dagon plant, or to maintain that standard for each of the 40 modules shipped. The East Dagon plant manager has insisted that the standard must be maintained for each of the 40 individual modules produced. You as the Dagon Seikkan plant manager maintain that the requirements mean that the 95 percent level must be maintained overall for the sum of modules produced. Experience at the East Dagon plant shows that while some module types were consistently well above the 95 percent acceptance level, 10 types of modules had erratic quality and would often fall far below the 95 percent level. As a result, while individual types of modules might fall below standard, the quality level for all modules was at or above the 95 percent level. This raised serious problems at the East Dagon plant, since the quality of its products is controlled by the quality of the poorest module.

The Interplant Dispute:

The management of the East Dagon plant felt that the quality problem of the modules received from your Dagon Seikkan plant was causing them great difficulty. It caused problems with the customers, who complained about the improper operation of the products that contained the Dagon Seikkan modules. As a result, the East Dagon plant operation had earlier added secondary final inspection of its completed products. More recently it had added an incoming inspection of 10 poor-quality modules received from the Dagon Seikkan plant. There were times when the number of modules rejected was large enough to slow or even temporarily stop production. At those times, to maintain production schedules, the East Dagon plant had to work overtime. In addition, the East Dagon plant had the expense of correcting all the faulty units received from your Dagon Seikkan plant.

Ideally, the management of the East Dagon plant would like to receive all modules free of defects. While this was recognized as impossible, they felt that the Dagon Seikkan plant should at least accept the expense of repairs, extra inspections, and overtime required by the poor quality of the parts.

Since installing incoming inspection procedures on the 10 modules, the East Dagon plant had been rejecting about MMK 1,500,000 worth of modules a week. For the most part, these had been put into storage pending settlement of the dispute as to which plant should handle repairing them. Occasionally, when the supply of good modules had been depleted, repairs were made on some of the rejected units to keep production going. The East Dagon plant had continued to make repairs on the remaining 30 types or modules as the need for repairs was discovered in assembly or final inspection.

From your perspective, the Dagon Seikkan plant felt that it was living up to its obligation by maintaining a 95 percent or better-quality level on all its modules shipped to the East Dagon plant. Further, you pointed out that using sampling methods on inspection meant that some below-standard units were bound to get through and that the expense of dealing with these was a normal business expense that the East Dagon plant would have to accept as would any other plant. You pointed out that when buying parts from outside suppliers it was common practice in the company to absorb the expenses from handling the normal level of faulty parts.

The East Dagon plant management argued that the Dagon Seikkan plant management was ignoring its responsibility to the company by forcing the cost of repairs onto their plant, where only repairs could be made-rather than having the costs borne by the Dagon Seikkan Plant, where corrections of faulty processes could be made.

Planning for Negotiations

Your objective is to develop a plan for that negotiation. The purpose of the planning process is to make sure you consider all of the major factors that may impact the upcoming negotiation, and assemble information, arguments, or analysis so that you can be more effective in achieving your goals in that negotiation. The readings in your textbook may offer additional help in considering how to plan most effectively. Refer to Pages 517-519.

THE MIDTERM ASSIGNMENT

Develop a Negotiation Planning Guide by carefully and considering all aspects of the negotiation process by answering all 10 questions.

1. What are the issues to be negotiated?
2. What are the priorities among the issues in the bargaining mix?
3. What are the primary underlying interests?(4 stragegies ) 
4. What are my limits on each issue-walkaway points and BATNAs?
5. What are my target points and opening requests on these issues?
6. What do I know or can assume about the other negotiator's interests, negotiating style, and personal reputation?
7. What overall strategy do I want to pursue?
8. What do I need to assemble-research, documents, charts and graphs, and so on-to make the most effective presentation on what I want to achieve? What tactics will I use to present my arguments or defend against the other negotiator's arguments?
9. What protocol is important for this negotiation: where we negotiate, when we negotiate, who is present for the negotiation, agenda to be followed, note taking? Also, what is my backup plan if this negotiation fails?
10. CONCLUSION:
    1. What did you learn from this midterm assignment?
    2. What impact did this midterm assignment have on developing your communications and negotiation skills?
    3. What are some of your thoughts and reflections on this midterm assignment?
    4. What part of the midterm assignment did you find to be the most challenging and how did you overcome it?