Maria Arzola
WRI 118
April 10, 2012
Luna Negotiation Case Analysis
After reading the Luna Pen case, I did not think that Erika’s approach was the best
one. All of her actions, although I know were strategic and worked best for her, were
somewhat unwise. For example, I though that the first mistake she made was in the
very first situation, when she initially decided to contact Feng. She made the
decision to start with an open approach, but she failed to realize that there might be
cultural barriers. Although her tone was neutral, by giving him a lot of information
through fax, I think that she limited herself from a strategic point of view. Some of
the things she mentioned in her fax, I feel, should have been spoken about in person.
Tones and emotions can often be misinterpreted: Even the simplest sentence can
sound like a threat if the opposing party is in the wrong mood. This move, overall,
gave Feng the upper hand on the situation, because it gave him time to think his
strategy over.
The second mistake that I think Erika made in her approach came in situation 2, her
move right after Feng responded to her initial fax. Erika gave into her emotions and
lost her temper a bit. She wrote Feng notifying him of the company’s intent to sue
and told him of their attempt to find other potential business partners for a Luna
venture. Once again, I think this gave Feng the upper hand. Not only did he write to
the president of Erika’s company, but he now had the upper hand because he had
the time to go to the balcony, while Erika lost that opportunity.
The third thing that Erika did that stood out to me was in the third situation. She
ultimately let Feng be the leader in the negotiation and let him take the next move.
At first I thought that this was a mistake. By choosing this strategy and taking this
risk she left herself in a vulnerable position. In the end it worked o tot her
advantage, but it could have easily gone the other way.
I personally do no think that she got the best deal either. However, she did manage
to get something that was satisfying to both her and her company: The company got
their monetary compensation (or so they thought at first), and she was able to
establish her new position in the company. It seemed that her company initially did
not even want anything out of the Luna Pen name, since it actually abandoned the
production of the pen. They also had no incentive to try to regain control of the
company and begin producing it once again.
In my opinion, culture played a major role in this negotiation. To begin with, each of
the parties belonged to cultures with completely different traditions and different
attitudes towards interaction. Erika was German. Feng, on the other hand was
Chinese. Both of these cultures have different ways of dealing with business and
negotiations and many of the characteristics of these cultures are present in this
case.
For example, I think that the Chinese negotiation strategy is a mixture of
competition and a bit of cooperation. However, what I think is most important in the
negotiation process, for the Chinese culture, is trust. Throughout the Luna Pen case,
I could not help but thinking that Feng was using quite a bit of strategies, such as
those learned in Getting Past No. At times it even seemed as if he was negotiating
deceptively (such as in the first situation when he had his secretary fax Erika on the
exact day she was leaving for her business trip). I think that this has a lot to do with
the fact that the Chinese negotiator can fluctuate his strategy according to the
situation and the level of trust between he and his partner. In this case, each choice
that the Erika made was crucial to how Feng reacted and read their relationship.
In contrast to Chinese, Germans do not need a personal relationship in order to do
business. Germans are more interested in your credentials and how you look on
paper (i.e. the credibility of a company, or your own credibility and position in the
company). This can be seen in this case, since Erika tries to demonstrate her
position and establish her authority in the matter to Feng multiple times. Germans
are also skeptical when it comes to business. That is, they are suspicious if
something seems to good to be true. They also like to communicate through writing
in order to keep records and are very blunt: They like to get straight to the point.
DGG as well as Global Services both had strong BATNAs. I think that DGG’s strongest
BATNA was taking back the Luna Pen name and continue manufacturing it, although
it would not have necessarily been the wisest move in monetary terms. However,
they were really only interested in receiving some sort of monetary compensation
from Global Service for selling the Luna Pen for issues such as brand integrity, not to
mention the possible revenue that could be made from selling those pens. Erika’s
interests simply included wanting to look good in her company. This was the first
major task she had to do and she wanted to come off as professional and efficient.
I think that Global Service’s BATNA was to participate in the lawsuit—if they did
their research right then they would’ve known that DGG was better off not suing and
in fact they would lose more money (bluff). Their interests included keeping the
Luna pen name and continuing their business and making revenue.
I mostly scored as Asserting on the matrix. This means that I am mostly concerned
with my own well being rather than other party’s interests. This can be good in a
way because you can probably ultimately achieve your goals. However, it is also
something that needs to be worked on since you must also accommodate the other
party in some sort of way in a negotiation. In this particular case, I do not think this
method would have worked overall. In some parts of the negotiation, if I were in
Erika’s position, it would have been a good way to approach Feng. But overall, I
think that this type of approach could have harmed the negotiation even more
because it could potentially have added more tension to the culture barrier that
existed.