• Uncategorized

Negotiation Project Analysis

NegotiationProject Analysis

InstitutionAffiliation

NegotiationProject Analysis

Thecase

Negotiationis a process through which differing individuals and parties settletheir differences through compromise and agreement to avoid disputes.The modern world is filled with people, corporations, and entitieswho are different and who pursue diverse goals and objectives. Hence,it is inevitable that in such a setting, the competing interests willclash leading to conflicts and disagreements from time to time. Suchconflicts, brought about by the unique needs, wants, aims, andbeliefs of people can escalate if not effectively resolved. Effectiveresolution can only be attained through negotiation. Therefore, thenegotiation process is important since, without it, disputes willlead to more arguments and resentment resulting in negative outcomesfor one or all of the parties involved. However, through negotiation,favorable agreements can be reached without causing futurecommunication barriers or ruining relationships. The aim of thisproject analysis report is to examine the tobacco negotiation casestudy and relate it to relevant class topics so as to demonstrateproficient understanding of class concepts.

Thesituation

Thetobacco negotiation case is a classic example of a creative andshrewd coalition building strategy. The overall situation is that alltobacco manufacturers in the United States have been directly causingharm to a significant portion of the population but none of them hadever taken liability for their actions. Specifically, there has beenmounting evidence that correlates cigarette smoking with a myriad ofhealth complications such as lung cancer (Wheeler &amp Levenson,2002). In addition, tobacco smoking is one of the leading preventablecause of death among in the US. Besides, numerous information hiddenby the tobacco companies have surfaced incriminating them for doingnothing while aware that tobacco smoking causes certain seriousillnesses, for varying the levels of nicotine in cigarettes to makethem more addictive, and for targeting teenagers. However, despitethese disturbing information, federal attempts to regulate theindustry have been unsuccessful while no private lawsuit has goneagainst the tobacco companies in the past 40 years. Therefore, byshouldering the health burden of tobacco related illnesses andcomplications through the Medicaid program, taxpayers were unfairlybearing a burden that is not as a result of their actions, but theactions of the tobacco companies who, ironically, were going scotfree.

Issuesunder negotiation

Thereare a number of negotiations going on within the case includingnegotiations between Liggert and the Castano lawyers over what kindof settlement would be sufficient to cater for their damages.However, the main negotiation is on the issue of a global settlementplan where tobacco companies would pay damages for past and futureliability. After the state coalition expanded, and more lawsuits werefiled, the tobacco companies loosened their stance and, insteadshowed interests in participating in some kind of a nationalsettlement. However, each party had a different idea of what a trulynational settlement plan should entail, and, therefore, negotiationswere conducted to bridge such differences and ensured that aneffective and fair agreement has been reached. Among the major issuesthat were negotiated upon included the companies’ willingness toaccept FDA regulations to regulate tobacco advertising and forcedisclosures (Wheeler &amp Levenson, 2002). Also, the issues of howmuch the companies will pay as settlement, how this amount will beapportioned among the various companies, and the nature and period oftime for complete settlement were discussed. Finally, the issues ofwaiver of suits against the companies also formed part of thenegotiation process. The tobacco companies were adamant that, sincethey were accepting national settlement of damages due to healthcomplications caused by tobacco smoking, they should also be given areprieve in the form of immunity from current and future lawsuits.Other issues like mandatory education of consumers were alsonegotiated.

Negotiatingparties, goals and objectives

Thenegotiating parties included lawyers and regulators representing thesmokers, representatives of the state coalition, representatives ofthe tobacco companies, and government representatives from theWhitehouse. The initial global settlement talks included the senatemajority leader George Mitchell, CEO’s from two tobacco companiesand their lawyers, Myers, a few Castano lawyers, and representativesfrom Butterworth (Florida), Woods (Arizona), and Gregoire(Washington) as well as Moore and Scruggs (Wheeler &amp Levenson,2002). Some of the issues that were being negotiated upon includedacceptance of FDA rules by the tobacco companies, setting aside ofsufficient funds for educating the public, especially young people,about the dangers of smoking, and payment of billions of dollars tostates as a reimbursement of the huge Medicaid bills of tobaccorelated health complications. Also, negotiations were held onwhether, in return to concession on the above issues, the industrywill receive protection from private lawsuits and state’s tobaccoattacks. Later discussions also centered on the above negotiationissues but only dug deeper. The Texas round of negotiations discussedthe extent of the FDA regulation of nicotine use, how, and in whatmanner, would the tobacco companies pay the settlement, and theextent of immunity to be granted to industry players. The main goalsof the state negotiators were to ensure that the industry adequatelycompensates for past and future health effects, comply with FDAregulation, and does not get unfair immunity. The industry, on theother hand, was driven by the primary objective of putting an end tothe multiple state tobacco attacks once and for all, and giving valueto stock by reducing the uncertainty of future adverse judgements.

Application:Relevant topics

Negotiationtype and process

Whennegotiations are categorized by the number of parties involved, thereare two types of negotiations two-party and multi-party. A two-partynegotiation involves only two parties whereas a multi-partynegotiation encompasses multiple independent parties. The tobacconegotiation is a multi-party negotiation. Maude (2014) noted thatnegotiations involving multiple parties are complex in nature sincethey have to deal with multiple interests and issues on a morefrequent basis as compared to two-party negotiations. The negotiationdealt with representatives from the participating states, private lawfirms, government and FDA representatives, and tobacco industryrepresentatives. Each party had its own interest and objectives. Thenegotiations were marked with procedural and strategic complexity andthree separate rounds on negotiations had to be held, two inWashington and one in Dallas. In addition, clandestine talks wereheld in Chicago, Washington, and North Virginia.

Thetobacco negotiation was a typical negotiation process that includedall the three phases of a negotiation process. The pre-negotiationstage is usually characterized by coalition forming, identificationof participants, definition of member roles, agenda construction, andissue orientation. The initial global settlement talks held inWashington involved many parties divided into two homogenouscoalitions. On one side, there were CEO’s from two tobaccocompanies who were accompanied by their lawyers and former majorityleader George Mitchell (Wheeler &amp Levenson, 2002). The othercoalition was made up of representatives from the state coalition(Moore, Scruggs, Woods, Butterworth, and Washington) as well as Myers(TFK0 and a number of Castano lawyers. This initial meeting laid thegroundwork for the negotiation process as each party expressed theirwillingness to participate in the process and a draft of issues to benegotiated was developed. The formal negotiation phase followed insubsequent weeks and months. The agenda was pursued and modified aseach party tried to accommodate other’s interests. All relevantinformation was considered and conflict effectively managed.Afterwards, the negotiations reached the agreement phase where, aftercareful consideration of scenarios, the best solution was arrived atand an action plan developed. Only the implementation part remains.

Thespecial problem of handling ultimatums

Whenhandling negotiations, it is inevitable that the process will bedonned with situations and issues where none of the parties wants tocompromise leading to a stalemate in the negotiations. Therefore, toresolve such issues and force quick decision-making on negotiationissues, parties resort to the use of ultimatums. Ultimatums usuallyentail a demand, an attempt to create an urgency, and, sometimes, athreat of punishment if the other party does not comply with thedemand. On a number of occasions, ultimatums were used within thetobacco negotiations to force the other parties into concessions sothat the negotiation process can continue. After the tobaccocompanies showed willingness to enter into talks for a globalsettlement, the Whitehouse put pressure on Moore to initiate thetalks. Also, during the later stages of the negotiations, mediahouses were informed of the impeding agreement long before anyagreement was made. This was used as a strategy to force concession.Furthermore, at the close of the negotiation process, the tobaccocompanies had refused to drop their lawsuits against thewhistleblowers. Moore threatened to pull out of the process if hisdemands were not complied with. The tobacco companies eventuallyconceded and the negotiations were concluded.

Abilitiesin negotiations, superior behavior

Cognitiveability, emotional intelligence, and perspective taking ability wereperfectly demonstrated all through the negotiation process. Bothparties demonstrated effective reasoning, sound decision-making,perfect information processing capacities, and exemplary capabilitiesto adapt to changes. Moore and the other state coalition members knewbetter than to drop their independent lawsuits against the tobaccocompanies while the industry representatives also understood that anational settlement would be the best way to settle everything andearn some goodwill in the process. Emotional intelligence ischaracterized by accurate perception and expression of emotions.Although Moore was infuriated by attempts to leak the specifics ofthe negotiation process to the public, he still maintained his calmby carefully assessing and analyzing his emotions to ensure that theydo not affect his thinking. Perspective taking ability is thecapacity to comprehend other peoples’ perspectives and predicttheir tactics. Moore and Scruggs demonstrated exceptionalperspective-taking ability. Although they recognized that theindustry was in the talks only for the immunity, they still pursuedtheir human rights goals (Wheeler &amp Levenson, 2002). Moorerecognized that immunity will add value to the tobacco stock due toadded certainty. Therefore, to avoid a situation where the settlementis seen as a bailout to the industry, he proposed payment of largesums upfront to avoid the companies paying the settlement from futurebusiness. This ensured that the industry is actually paying for pasthuman rights violations.

Superiornegotiation behaviors were also clearly and succinctly demonstratedwithin the negotiation. Superior behavior during the pre-negotiationstage include actions such as consideration of multiple outcomes,extensive search for areas of common ground, and evaluation oflong-term consequences. Moore understood that the process he wasstarting was going to be an expensive process and there will beimmense pressure. Therefore, he looked for areas of common ground andsold the idea of a coalition to the other states’ attorneys.Counterproposals, defend-attack approaches, and use of weak reasoningwhich diluted arguments were avoided during the formal negotiationprocess. Such actions demonstrate weak behavior. Thus, theiravoidance is a sign of superior behavior.

BestAlternative to a Negotiate Agreement (BATNA)

Hames(2011) state that the best alternative to a negotiated agreementrefers to the best alternative available to each negotiated party inthe case that the negotiations does not yield an agreement. BATNA’sare an essential part of any negotiation process as they facilitatedecision making. Without a BATNA, it is illogical for any party toparticipate in a negotiation, or accept a negotiated agreement,unless, and until they become aware of their alternatives. A proposedagreement that is not better than your BATNA should be rejected whileone that is better that the BATNA should be accepted. Also, BATNAenables the negotiating parties to identify their walk away point, orrather, a situation where they cannot improve the negotiationagreement to make it better than the BATNA. Therefore, BATNA isimportant since it allows a party to push the other side harder andnot concede too much hence increasing the negotiating power. Failureto identify and improve your BATNA might land a party in a very shakysituation where they lose control of the negotiation process. Allparties to the tobacco negotiations effectively identified andapplied their BATNAS’s to their respective advantages and, as aresult, ended up reaching an agreement that is better than theirrespective BATNA’s.

Impasseand Difficult negotiations

Impassesis a point in the negotiation process where no progress can be made.For example, when Moore demanded that the companies drop theirlawsuits against all whistleblowers but the tobacco companies wereunwilling to do so. Such a situation presents a deadlock in theprocess and can lead to negotiation breakdown if not resolved.Impasses lead to difficult negotiations. Difficult negotiations areusually brought about by behavioral and philosophical choices of theother parties or as a result of skill inadequacy among the parties.Therefore, to be an effective negotiator, one needs to be able toknow how

togo around impasses.

WhatI would change

Thenegotiation process described in the case is a classic example of aneffective negotiation process where each party to the process gavetheir best in terms of competence negotiation. There isn’t much tochange since it was an almost flawless process. However, if I wasMoore, I would have practiced more openness with regard to otherstate stakeholders and coalition members. The coalition almost brokedown after information about the settlement talks surfaced in themedia. Other members were aggrieved since they felt left out of thediscussions. Therefore, I would have ensured openness and totalhonesty.

Conclusion

Thispaper examined the tobacco negotiations, a shrewd negotiation processwhere state coalitions, FDA representatives, and private law firmsreached an agreement with the tobacco companies. In return forimmunity from constant state and private lawsuit attacks, the tobaccocompanies agreed to abide by FDA regulation, drop past lawsuitsagainst all whistleblowers, and compensate states for Medicaidexpenses resulting from tobacco-related illnesses. In addition, thepaper also examines class topics that are relevant to the case.Examples of such topics include BATNA’s, phases of the negotiationprocess, negotiation types, difficult negotiations, impasses,superior negotiation behaviors, and abilities in negotiation.Understanding these topics is important to ensure competentnegotiation.

References

Hames,D. (2011). Negotiation:Closing deals, settling disputes, and making team decisions.Thousand Oaks: SAGE Publications, Inc.

Maude,B. (2014). InternationalBusiness Negotiation: Principles and Practice.Palgrave Macmillan

Wheeler,M., &amp Levenson, G. (2002, April 17). TobaccoNegotiations.Harvard Business School.