Stages of negotiation
The first stage of negotiations is to prepare. According to (Brett, 2017, p88) the preparation stage involves researching the discussions of both parties. Determine what outcomes they desire and what they do not desire. After research creates a list of the possible concessions you would like to use. A conflict between two companies about their contract, a negotiator should read the contract and analyze it. Understand the problem, and make a list of possible solutions.
The second stage is exchanging information. In this stage, the two companies exchange their talk about their positions and the underlying issues. (Brett, 2017, p88) highlights they should also talk about their desired solution and what they would like to aim uninterruptedly. The two companies should talk about what their issue with the contract and what they would like is changed in the contract. This stage helps the negotiator to understand both parties and find a middle ground and common goals.
The third stage is the clarification stage where both sides continue discussing their issues and sharing information about their claim. In this stage, (Zohar, 2015, pp.540-548) pinpoints that if one party does not agree to what the other party is saying, they should discuss it with calmness. The companies will explain their issues in-depth, if the other party does not agree with the terms they are to discuss it calmly. These will help them to reach an understanding of the terms of the contract that are displeasing and have been bridged.
The next stage is bargaining and problem-solving. according to (Zohar, 2015, pp.540-548) in this stage, the negotiator proposes different solutions while still trying to maintain calmness. A negotiator needs to have good communication skills to be successful. All the solutions should provide a win-win situation for both companies. The two companies with the issue about the contract will be prevented with solutions that benefit both companies. These will help solve their issues and avoid unnecessary losses from the conflict.
The last stage is to conclude and implement. Once a solution that is acceptable to both parties is found, the parties should thank each other for a successful discussion. (Zohar, 2015, pp.540-548) highlights that expectations of each party should be highlighted to avoid future conflicts. The two companies will agree on the solutions and discuss what they expect from each other to have a long-term relationship.
The main objectives of firms
The five main objectives of a firm include profit maximization, sales maximization, growth maximization, social environment concern and output maximization. Profit maximization involves giving the stakeholders a higher dividend. According to (Jakobsen & Clausen, 2016, p. 140) that the more profit a firm makes if is capable to do research on the market and expand. It also protects it from takeovers and enables the firm to give its employees a high salary. The firm will also be able to invest more for more profits in the business.
Sales maximization involves the desire of the firm to increase its market share. These are sometimes at the expense of making a lesser profit. The company’s desire to increase market share may be to increase monopoly power and allow the firm to increase prices of products hence increasing profits. The firm also becomes attractive to labours because they give higher salaries compared to other firms (Jakobsen & Clausen, 2016, p. 140).
Growth maximization involves expansion through takeovers and mergers. (Jakobsen & Clausen, 2016, p. 140) highlights that the company is sometimes willing to have a lesser profit margin and invest heavily to have a bigger gain and size in the market. These will also help in increasing monopoly power and increasing the ability of the firm to have a high price setter. Growth maximization will also involve expansion in other cities and countries.
A firm’s objective also includes avoiding products that are not suitable for the environment. These include products that may affect the health of a person or animal. They mostly avoid such products because of the laws that protect the environment. (Jakobsen & Clausen, 2016, p. 140) pinpoints that some organizations are also concerned about charitable organizations and activities in the community. They can build a reputation and in some cases, the firms use charity and environment concerns to brand themselves.
Output maximization is a firm’s objective because most firms measure their success by the physical output they have. Revenue occupies the second position in a business. A firm desires to maximize its output, therefore, spending its funds on increasing its production while decreasing cost on inputs. Output maximization with no losses shows the strength of an organization to market its products. The organization’s priorities may not involve advertising its products. However, organizations advertising is still important to create a larger market.
Key factors for the success of cross-border alliances
One key factor for a strong cross-border alliance is the strength of the parties involved. (Krammer, 2018, pp 930-943) pinpoints that allying with a party with equal strength has more chances of success compared to those with weak partners. Some companies seek to make alliances with weak companies for control. These strategies do not have good benefits since one party will incur losses. A US pharmaceutical company paired with a weak company from Japan country to expand. The alliance was not successful because the Japan country was unable to compete in the market with other strong companies despite the availability of the product from the US pharmaceutical company.
According to (Krammer, 2018, pp 930-943) Autonomy and flexibility is an essential key factor in alliances. Flexibility will allow the parties to adapt to changes and overcome the arising problems while autonomy is important to build loyalty among customers and employees. autonomy also helps in the clarifying of the alliance’s goals and expectations. A Japan company venture into recycling plastic but was unable to meet the costs. They partnered with an Automotive Company to reduce the cost. They went through more serious losses because their input cost was higher than the output
Establishing a board to deal with the alliance. (Krammer, 2018, pp 930-943) pinpoints that lack of establishing this board will lead to delays during decision making. These delays will be caused by following the chain of command in consulting and implementing the process. An example is during the merger of China Road Building company and the Kenyan Government. The government selected a few specialists who supervised and ensured the provision of resources during construction while the China company sent a specialist to foresee the construction. According to (Krammer, 2018, pp 930-943) a board that will govern the alliances reduces the chances of problems arising. It will also improve the management increasing chances of success.
An ownership structure should be carefully formed. An alliance with fifty-fifty ownership is more likely to be successful. Financial ownership and managerial control should be separated and well defined to avoid conflicts. Fifty-fifty ownership prevents control of one company over the other company’s interest. An example is an alliance between a clothing company in the US and a textile company in Europe. The companies had fifty-fifty ownership. They contributed 50% each in investment and incurred each 50% losses.
Key indicators it is time for a structural change in an MNC’S Organization
The company’s performance will indicate whether there is a need to implement structural changes. A multi-national organization is faced with various obstacles, however, if the structure does not help to overcome these challenges it is, therefore, necessary to change. (Mäkelä, Andersson, & Seppälä, 2012) claims that the change will involve reallocating personnel and experts to deal with the problems. A manager should also conduct performance evaluation in the different countries to enable him/ her finding which structure will fit the organization best. If the organization performance has greatly deteriorated research needs to be done to find out why there is such a performance.
According to (Mäkelä, Andersson, & Seppälä, 2012. p.87) another indicator is the presence of new technology worldwide. Ensuring that the MNC organization has the best production technology is essential so that it could reduce input cost. Introducing new technology may require training, hiring of new personnel and the need to restructure the organization. this is because it may lead to some employees been laid off. Mergers and partnership may raise the need to restructure an organization. The organization will face a lot of changes in times of leadership and have a joint goal with other organizations. To have a long term relationship it is important to have a structure that supports and strives to achieve both organizations goal. Another indicator is if the current structure does not state every worker’s task which leads to conflict. These will raise the need to have a structural change.
Another indicator is when the structure is no longer suitable for long-term purposes. If an organizations structure no longer benefits it should be changed. (Mäkelä, Andersson, & Seppälä, 2012. p.87) pinpoints that the business market is changing at different rates in different nations. It is important to have a structure that is flexible and fits every branch of the organization. these will help the organization to be sustainable and maintain relationships with their partners. It will also increase its chances to improve monopoly power in the nations. The organization will also be able to maintain its reputation and maximize profits when the structure fits its needs. A structure that helps an organization will help to increase monopoly power. It will also improve relationships between the host country and the organizations. Good relationships will increase profits and improve the market margin.
factors that influence the employment policies of international firms in the host country
Political and legal factors influence employment policies. (Griffith, & Macartney, 2014, pp.135-150)pinpoints that An international firm requires researching a countries political stability and legal implications related to employment. A countries legal system determines the minimum wage each employee should receive. (Harrison & McMillan, 2011,p. 856) highlights that The constitutions of a countries labour laws influence the policy. The policy which involves the working hours, wage, requirements and expectations should not be contrary to the laws of the host country. These may lead to suing of an international firm which may tarnish its reputation.
Economic factors also influence employment policy. (Griffith, & Macartney, 2014, pp.135-150) highlights that the economic factors are closely related to the cultural, political and legal issues in the host country. Foreign exchange is a major revenue entry for a country and it affects employment. Therefore if a country the foreign exchange is high the country’s economy is good. A good economy leads to a good investment and high productions. These should, in turn, lead to good wages as well as good working conditions of the employees. The international firm should consider how a countries economy is doing to avoid losses.
The social-cultural factors greatly affect the human resource department in international firms. An international firm should understand the research on the culture of the host country. These are because this will affect their employee’s motivation as well as output. The culture of the people involves their norm, believes, values, behavior and what influences their personality. Understanding their culture and having an employment policy that fits their culture is important. Every international firm should try and employ people from different ethnic groups and religions(Griffith, & Macartney, 2014, pp.135-150).
The social values of employees influence their relationships and the kind of job they feel comfortable doing. According to(Griffith, & Macartney, 2014, pp.135-150) social values include the peoples believe in inequality and equity in a country. Social values affect the employee policies since it determines the gender roles, authority attitudes which differ from country to country. The social values also influence the decisions and innovations individuals would be willing to make in an organization. the social values also determine the products people are willing to help develop and introduce to the market of their country