Case Study 1 Copy 1

Case Study 1 Copy 1

Unequal Foreign Negotiation [1]

When two parties enter into an unequal negotiation, in terms of the power they bring to the table, the interests or goals of either party can have a dramatic influence on the positions they adopt in the negotiations. Sometimes this can have the affect of giving the weaker negotiating power the opportunity to gain advantages, and similarly, this unequal status can also be influenced by their interests to their detriment. The negotiation case study of the U.S. – Indonesian negotiations over the Conditions of Aid is an example of both possibilities.

The takeover of China by the Communists in 1949 added a new geopolitical concern to the interests of the United States in the Far East. Two theories of strategic concern were the Domino effect of potential Communist takeover of countries near to China’s mainland, and the Leapfrog theory, where it was considered the Communists might try to gain control of a country within the protected geographic sphere, and deemed a protectorate or ally of the Unites States. Of considerable concern was the potential threat to Indonesia.

In the Mutual Security Act of 1951, the U.S. committed its government to providing aid to foreign countries but only in regards to that foreign government’s return commitment to U.S. long term interests. The U.S. used trade embargoes against Communist countries, and in particular China, especially as the U.S. became engaged in the Korean conflict. A foreign country could not expect any foreign aid if it were to engage in any form of trade with a member of the Communist bloc.

Indonesia considered itself a neutral country. It was responsible for roughly 40% of the world’s exports in rubber. Indonesia was very strong nationalistic country and resented foreign intrusion into its affairs. There were many radical elements within Indonesia that sympathized with Communist China. The Indonesian government did not want to provide the same level of commitment required by U.S. policies. Its goals consisted of the demand that the U.S. provide assistance in the stabilization of the international price of rubber and tin. It also wanted considerable compensation in the form of foreign aid to beef up its own internal security and infrastructure. The interests of both countries were at cross purposes and posed a challenge for the negotiation that followed.

U.S. Ambassador, Merle Cochran and the Foreign Minister of Indonesia, Subardjo signed an agreement that did not have the support of the Indonesian Cabinet. As matters developed, it became clear that if the Americans were to use the purchase of large quantities of rubber and tin conditional on Indonesian acceptance to the American interests, this perceived obedience to American policies and interests would meet with stiff opposition within Indonesia. In fact, the Indonesians made it quite clear they would walk rather walk than submit to any attempt at coercion by the U.S. Potentially, Indonesia could have traded with China instead.

As a result, Indonesia signed a very agreeable deal, known as the Cochran-Subardjo agreement that was signed on January 5, 1952. Indonesia did not have to commit to any mutual defence treaty with the U.S. However, when the agreement became public, a huge outcry erupted from the Indonesian nationalists. Subardjo was removed form his office as was the pro U.S. Indonesian cabinet.

At the insistence of the new Indonesian negotiators, negotiations were now conducted in Washington. The more militant Indonesian negotiators gave up some very lucrative military grants to satisfy the nationalistic concerns of its people, but they did so through their own choice. In other matters, the Indonesian gained many of their other objectives, but the overall aid they could have procured was considerably diminished. U.S. objectives were watered down in the ensuing agreement because in the end, Indonesia held a stronger hand due to their indifference to the influence of foreign aid as an inducement to comply with the U.S. position.

Case Study 1 Copy 2

Unequal Foreign Negotiation [2]

When two parties enter into an unequal negotiation, in terms of the power they bring to the table, the interests or goals of either party can have a dramatic influence on the positions they adopt in the negotiations. Sometimes this can have the affect of giving the weaker negotiating power the opportunity to gain advantages, and similarly, this unequal status can also be influenced by their interests to their detriment. The negotiation case study of the U.S. – Indonesian negotiations over the Conditions of Aid is an example of both possibilities.

The takeover of China by the Communists in 1949 added a new geopolitical concern to the interests of the United States in the Far East. Two theories of strategic concern were the Domino effect of potential Communist takeover of countries near to China’s mainland, and the Leapfrog theory, where it was considered the Communists might try to gain control of a country within the protected geographic sphere, and deemed a protectorate or ally of the Unites States. Of considerable concern was the potential threat to Indonesia.

In the Mutual Security Act of 1951, the U.S. committed its government to providing aid to foreign countries but only in regards to that foreign government’s return commitment to U.S. long term interests. The U.S. used trade embargoes against Communist countries, and in particular China, especially as the U.S. became engaged in the Korean conflict. A foreign country could not expect any foreign aid if it were to engage in any form of trade with a member of the Communist bloc.

Indonesia considered itself a neutral country. It was responsible for roughly 40% of the world’s exports in rubber. Indonesia was very strong nationalistic country and resented foreign intrusion into its affairs. There were many radical elements within Indonesia that sympathized with Communist China. The Indonesian government did not want to provide the same level of commitment required by U.S. policies. Its goals consisted of the demand that the U.S. provide assistance in the stabilization of the international price of rubber and tin. It also wanted considerable compensation in the form of foreign aid to beef up its own internal security and infrastructure. The interests of both countries were at cross purposes and posed a challenge for the negotiation that followed.

U.S. Ambassador, Merle Cochran and the Foreign Minister of Indonesia, Subardjo signed an agreement that did not have the support of the Indonesian Cabinet. As matters developed, it became clear that if the Americans were to use the purchase of large quantities of rubber and tin conditional on Indonesian acceptance to the American interests, this perceived obedience to American policies and interests would meet with stiff opposition within Indonesia. In fact, the Indonesians made it quite clear they would walk rather walk than submit to any attempt at coercion by the U.S. Potentially, Indonesia could have traded with China instead.

As a result, Indonesia signed a very agreeable deal, known as the Cochran-Subardjo agreement that was signed on January 5, 1952. Indonesia did not have to commit to any mutual defence treaty with the U.S. However, when the agreement became public, a huge outcry erupted from the Indonesian nationalists. Subardjo was removed form his office as was the pro U.S. Indonesian cabinet.

At the insistence of the new Indonesian negotiators, negotiations were now conducted in Washington. The more militant Indonesian negotiators gave up some very lucrative military grants to satisfy the nationalistic concerns of its people, but they did so through their own choice. In other matters, the Indonesian gained many of their other objectives, but the overall aid they could have procured was considerably diminished. U.S. objectives were watered down in the ensuing agreement because in the end, Indonesia held a stronger hand due to their indifference to the influence of foreign aid as an inducement to comply with the U.S. position.

Case Study 1 Copy 3

Unequal Foreign Negotiation [3]

When two parties enter into an unequal negotiation, in terms of the power they bring to the table, the interests or goals of either party can have a dramatic influence on the positions they adopt in the negotiations. Sometimes this can have the affect of giving the weaker negotiating power the opportunity to gain advantages, and similarly, this unequal status can also be influenced by their interests to their detriment. The negotiation case study of the U.S. – Indonesian negotiations over the Conditions of Aid is an example of both possibilities.

The takeover of China by the Communists in 1949 added a new geopolitical concern to the interests of the United States in the Far East. Two theories of strategic concern were the Domino effect of potential Communist takeover of countries near to China’s mainland, and the Leapfrog theory, where it was considered the Communists might try to gain control of a country within the protected geographic sphere, and deemed a protectorate or ally of the Unites States. Of considerable concern was the potential threat to Indonesia.

In the Mutual Security Act of 1951, the U.S. committed its government to providing aid to foreign countries but only in regards to that foreign government’s return commitment to U.S. long term interests. The U.S. used trade embargoes against Communist countries, and in particular China, especially as the U.S. became engaged in the Korean conflict. A foreign country could not expect any foreign aid if it were to engage in any form of trade with a member of the Communist bloc.

Indonesia considered itself a neutral country. It was responsible for roughly 40% of the world’s exports in rubber. Indonesia was very strong nationalistic country and resented foreign intrusion into its affairs. There were many radical elements within Indonesia that sympathized with Communist China. The Indonesian government did not want to provide the same level of commitment required by U.S. policies. Its goals consisted of the demand that the U.S. provide assistance in the stabilization of the international price of rubber and tin. It also wanted considerable compensation in the form of foreign aid to beef up its own internal security and infrastructure. The interests of both countries were at cross purposes and posed a challenge for the negotiation that followed.

U.S. Ambassador, Merle Cochran and the Foreign Minister of Indonesia, Subardjo signed an agreement that did not have the support of the Indonesian Cabinet. As matters developed, it became clear that if the Americans were to use the purchase of large quantities of rubber and tin conditional on Indonesian acceptance to the American interests, this perceived obedience to American policies and interests would meet with stiff opposition within Indonesia. In fact, the Indonesians made it quite clear they would walk rather walk than submit to any attempt at coercion by the U.S. Potentially, Indonesia could have traded with China instead.

As a result, Indonesia signed a very agreeable deal, known as the Cochran-Subardjo agreement that was signed on January 5, 1952. Indonesia did not have to commit to any mutual defence treaty with the U.S. However, when the agreement became public, a huge outcry erupted from the Indonesian nationalists. Subardjo was removed form his office as was the pro U.S. Indonesian cabinet.

At the insistence of the new Indonesian negotiators, negotiations were now conducted in Washington. The more militant Indonesian negotiators gave up some very lucrative military grants to satisfy the nationalistic concerns of its people, but they did so through their own choice. In other matters, the Indonesian gained many of their other objectives, but the overall aid they could have procured was considerably diminished. U.S. objectives were watered down in the ensuing agreement because in the end, Indonesia held a stronger hand due to their indifference to the influence of foreign aid as an inducement to comply with the U.S. position.

Case Study 2 Copy 1

The Negotiation Problem [4]

One of the biggest stumbling blocks encountered by a negotiator is to clearly understand the real issues as the root cause and basis for the negotiation in the first place. All too many times, negotiators take insufficient time to clearly identify and frame the problem or issues to be resolved and negotiated. This is the crucial first step to any negotiation. If this first phase of the negotiation process is not addressed properly, than it is quite likely that the rest the whole negotiation process will unravel because the core issues were not properly understood at the outset.

Let’s look at an example case study which emphasizes the need to define and identify the problem. In this example, a substantial electronics firm face considerable difficulties in one of their subassemblies. The root core of the problem revolved around certain types of fittings and pins that were becoming bent and distorted by the operation of the machinery. Units which were being produced were damaged and had to be rejected because of imperfections. These rejected components were put aside and then re-worked later on in the month.

This duplication of effort resulted in increased costs as workers had to work overtime to meet their quotas. These extra costs for the extra work performed had not been considered in the manufacturing budget. The manager of this subassembly line did not want be charged with these overhead expenses because he felt it was not their responsibility. Likewise, the manager who was the overseer of the final assembly department also refused to accept the increased costs to his budget. He argued that the extra costs were a direct result of the poor work of the personnel in the subassembly department as this was where the problem originated.

The subassembly department manager countered this argument by claiming that the parts were in good condition before they left his department and that the damage must have occurred in the final assembly manager’s department instead. Both parties had reached am impasse.

Some time passed before a resolution to the matter was worked out that was agreeable to both parties. What both parties were really seeking was to find a long term solution to this dilemma. It was only when they truly understood the nature of the problem they were able to negotiate a reasonable solution that was acceptable to both of them.

It was ascertained that the subassembly workers had some slack time available during every working month. The damaged parts were returned in small batches form the final assembly plant so that the subassembly personnel could work on them during these slack periods. Also, when they examined the problem in more minute detail, the managers learned that some of the personnel in the final assembly plant may not have been adequately trained and may have also been partially responsible for the damaged incurred. These personnel were identified and were sent to the subassembly plant to further their training and to learn more about what transpired in that department.

The resulting solution addressed the increased cost concerns of both departments on the one hand. On the other hand, overtime was reduced by allocating the personnel where and when they most needed and finally, because of the enhanced training, the number of damaged parts was considerably reduced.

The lesson to be drawn here is that the two managers were only able to address the problem when they were able to understand the real issues that lay beneath the problem as the cause for their cost overruns.

Case Study 2 Copy 2

The Negotiation Problem [5]

One of the biggest stumbling blocks encountered by a negotiator is to clearly understand the real issues as the root cause and basis for the negotiation in the first place. All too many times, negotiators take insufficient time to clearly identify and frame the problem or issues to be resolved and negotiated. This is the crucial first step to any negotiation. If this first phase of the negotiation process is not addressed properly, than it is quite likely that the rest the whole negotiation process will unravel because the core issues were not properly understood at the outset.

Let’s look at an example case study which emphasizes the need to define and identify the problem. In this example, a substantial electronics firm face considerable difficulties in one of their subassemblies. The root core of the problem revolved around certain types of fittings and pins that were becoming bent and distorted by the operation of the machinery. Units which were being produced were damaged and had to be rejected because of imperfections. These rejected components were put aside and then re-worked later on in the month.