3-2 Case Study: Power Balance Assignment

MINI-CASE: Power balance? Sometimes, reaching a negotiated agreement is the only way in which the parties can achieve their goals. That was the case in the 1980s when IBM embarked on negotiations with the Mexican government about establishing production plants in Mexico. Before detailed negotiations began, the two sides had to educate each other, in formal and informal discussions, about computer technology and local conditions respectively. The negotiations themselves were conducted both by means of informal discussions and through a process of formal proposals and responses. At the time of the initial negotiations, IBM’s willingness to contribute resources and technological know-how to the proposed project gave the company great negotiating power. This was matched, however, by the power of the Mexican government whose negotiators were given power to authorise the project – or to turn it down. The resulting power balance led to protracted and complex negotia- tions. Numerous actors, ranging from individuals, groups and departments, to organisations and groups of organisations, were involved at various times in the negotiations. Both sides also went through constant internal negotiations. Eventually, however, a final agreement was reached. A wholly owned IBM operation would produce 603,000 PCs over five years, and transfer new tech- nology within six months of its US debut. Source: Weiss (1996)

Review the Mini-Case: Power Balance (found on page 60 of the textbook). Answer the following questions:

Develop an argument to show that an imbalance of negotiating power probably existed between the parties during the negotiations. Identify the factors accounting for the imbalance.
Identify strategies that either party could have used to increase its negotiating power in this particular negotiation.

For additional details, please refer to the Case Study: Power Balance Guidelines and Rubricdocument.