Strategic Corporate Negotiations: A Framework for Win-Win Agreements

132 Pages·2019·1.672 MB·English

by  Andrea Caputo

Strategic Corporate
Negotiations
A Framework for Win-Win
Agreements
Andrea Caputo
Strategic Corporate Negotiations
Andrea Caputo
Strategic Corporate
Negotiations
A Framework for Win-Win Agreements
Andrea Caputo
University of Lincoln
Lincoln, UK
ISBN 978-3-030-15478-3 ISBN 978-3-030-15479-0 (eBook)
https://doi.org/10.1007/978-3-030-15479-0
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To my family and to my friends, who always supported me.
F
oreword
Written by Richard Cyert and James March in 1963, A Behavioral Theory
of the Firm still represents, without doubt, a catalyst book in the study of
how dominant coalitions take strategic decisions; in fact, since its publica-
tion, many strategic choices have started to be substantially considered as
negotiated processes. On this basis, and especially because of the current
hyper-complexity featuring our socio-economic system, understanding
how strategic negotiations de facto happen, and how they could happen
better, represents an important and lively area in the research on and prac-
tice of corporate decision-making.
Win-lose and win-win scenarios, BATNAs, Reservation Prices, and
third parties, but also heuristics, cognitive biases and the personality of
who negotiates: in this exciting, constantly evolving, scientific context,
this book written by Andrea Caputo (Lincoln Business School) contrib-
utes to the addressing of these simple, but meaningful, research questions:
How can negotiations be currently conceived? How and why do they
occur? How can the strategic negotiations be improved, in terms of results
for all (not just some of) the parties involved?
The reading of this book can be enjoyable for both scholars and practi-
tioners. The former can find it useful because it constitutes an appropriate
mix of theory and empirical evidence; this is also, thanks to the reported
qualitative case study analysis, regarding the important negotiation that
recently occurred between Fiat and Chrysler. The latter, at the same time,
can find it valuable because it represents an easy-to-read, instructive, tool-
kit for enlarging the pie in many of the daily negotiations that happen in
the corporate world at the top decision-making level.
vii
viii FOREWORD
Andrea has been the first graduate, then doctoral student, whom I have
supervised at the University of Rome Tor Vergata; he has a passion for and
interest in negotiations that started when he was a boy. I am so proud and
happy that this passion, together with hard work and intellectual curiosity
over time, has supported him in achieving international recognition in
this field.
Rome, Italy Gianpaolo Abatecola
January 30, 2019
reFerence
Cyert, R. M., & March, J. G. (1963). A Behavioral Theory of the Firm. Englewood
Cliffs, NJ: Prentice Hall.
P
reFace
This work is intended as an attempt to answer the following questions,
through a careful analysis of the literature and the study of a business case:
How can strategic corporate negotiation support competitive advantage?
What is the effect of the entry of third parties in a strategic corporate
negotiation initially configured as bilateral? Can such entrance of third
parties bring the strategic corporate negotiation from distributive to
integrative?
The book consists of six chapters.
The first chapter, based on a review of the current literature on negotia-
tion, provides the theoretical basis for the concept of negotiation. The
concept of negotiation could be defined as a joint decision-making pro-
cess, between two or more individual or collective actors, which identifies
the features that characterize the negotiations and the fundamental ele-
ments of the negotiating structure: the parts, the subjects, and the interests.
The second chapter reflects on the possibility of strategically manipulat-
ing the elements of the negotiating structure, deepening the theme of
multilateral negotiations. The doctrine has identified three dimensions
with respect to which multilateral negotiations differ from bilateral nego-
tiations: scope, complexity, and heterogeneity. Multilateral negotiations
therefore appear to be complex social interactions due to, on the one
hand, the configuration of the preferences of several parties and, on the
other hand, interpersonal dynamics that increase in complexity in line with
the increase in the parties involved. Negotiators can benefit from ampli-
tude, complexity, and heterogeneity. The existence of a negotiating con-
figuration with several parties, often having different and mostly
ix
x PREFACE
complementary interests, leads to the achievement of very satisfactory
agreements.
The third chapter investigates the relationship between strategy and
negotiation, contextualizing the importance of negotiation for strate-
gic success.
The fourth chapter introduces the industry in which the business case
is introduced: the automotive industry. This industry analysis is carried out
starting from the elements of structural weakness in the sector. Strategic
steps for crisis management are identified, deepening the theme of cross-
sectoral cooperation. A theoretical analysis of this topic is provided, based
on existing literature and historical analysis, investigating past cooperation
agreements in the automotive sector.
Once the reference context has been identified, the analysis of the business
case is introduced in the fifth chapter, with an illustration of the methodology
adopted and of the most relevant results achieved about the negotiation, and
therefore the role of the third parties, between Fiat and Chrysler.
From the experience of Fiat and Chrysler, it is possible to draw interest-
ing research cues for the future, regarding the role played by third parties
in negotiation, presented in the concluding sixth chapter.
Lincoln, UK Andrea Caputo
December 2018
c
ontents
1 A Theoretical Framework for Negotiation 1
2 Multilateral Negotiations 29
3 Contextualizing Negotiation in Strategy 47
4 Cooperation in the Automotive Industry Prior to the 2009
Fiat–Chrysler Agreement 65
5 Case Study: The Fiat–Chrysler Negotiation in 2009 83
6 Conclusions 117
xi