3-2 Case Study: Power Balance

Explain the difference between hard power and soft power negotiating strategies in the context of international business negotiations. Share an example from recent news (within the last one or two years) that demonstrates either a hard power or soft power negotiating approach, and describe the negotiation outcome. Was it a success or failure?

Provide a thorough response in one or two paragraphs, using appropriate terminology from the chapter.

In response to your peers’ posts, discuss how you think the approaches they described contributed to the success or failure of the negotiation and why. Engage your peers in a meaningful discussion on the module topics. Use at least one scholarly reference.

Refer to the Discussion Rubric for directions on completing these discussions.

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)