Having finished university a few years ago your friend Matt felt an insatiable urge to exercise your entrepreneurial spirit and establish a new business located in Australia. After excelling in his studies and being aware of the dismal state of the manufacturing industry in Australia, Matt wants to help boost local industry. He is an incredibly lucky individual who is not only intelligent but also possesses artistic and creative flair. As a result he has been working over the last three years to establish a new Australian fashion brand - "Cosmo Clothing". He has been able to secure financial backers and initial signs are that he has captured a niche segment of the market with his sophisticated and stylish designs.
Despite establishing a manufacturing base here, Matt decided to source fabrics from Chinese suppliers. Matt has never engaged in commercial dealings with Chinese textile firms before and is concerned about how to negotiate an effective deal. Matt has made contact with one supplier "Red Star Holdings" and has had some preliminary discussions about his textile needs. He decided to talk to Red Star Holdings as they are the exclusive producers/importers of a rare fabric that allows his clothes to repel food and ink stains due to its unique qualities. Red Star Holdings is also keen to establish some brand recognition within Australia as they have no customers based here. However, after having an initial discussion with Ms. Zhang, a representative from Red Star Holdings, Matt felt uneasy about how things might progress. Ms Zhang was unwilling to respond to a lot of his questions regarding costs, timing of deliveries and the like. Instead she just nodded in recognition of his points. She also indicated that future enquiries and discussions should be conducted by email and one of her team will respond. Matt was slightly offended by what seemed a lack of interest in discussing his plans to import fabrics from Red Star Holdings. Aware that Matt needs to get his clothes into production so they are ready for a winter launch in 2016, he really needs to prepare how to negotiate a deal for fabric orders.
After conveying his experience with Red Star Holdings to a friend, Matt learns that there have been reports of some shirts with repellent like qualities causing severe rashes on people who wear the items. Matt's friend who happens to work at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) tells him Page 2 of 2 that finding the cause of these reactions can take up to two years. Matt doesn't say anything to his friend but he quietly thinks to himself what the consequences would be if his fabrics caused the same reaction. At present, Matt plans to make considerable revenue from his endeavours. However a two-year delay due to carrying out further testing of certain fabrics he plans to use in his range could bankrupt him.
Matt remembers how you told him that you are an expert negotiator and he has come to you for some advice on how to proceed: Using your knowledge of negotiation theory and materials provide Matt with advice on the following:
1. Using negotiation knowledge and theory gained in this course, what type of negotiations would you recommend Matt to pursue with Red Star Holdings? Why?
2. If Matt was to proceed with negotiations with Red Star Holdings, how could Matt effectively prepare for negotiations considering the international context of engaging with business partners from China? Use appropriate theories to justify your answers.
3. What strategies and/or tactics could Matt choose to use in negotiating with Red Star Holdings? Have cultural considerations influenced your choice? How?
In your answer you may consider the following:
a. Do you think that Matt will/should overcome Ms Zhang's unwillingness to engage in face to face negotiations? Why?
b. Are there other alternatives available to Matt that can help him succeed in launching Cosmo Clothing? Justify your answer
4. Are there any ethical considerations that should be considered in Matt's predicament? If so, what advice would you give him in attempting to address these ethical issues?