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demand refunds or a reduction in rates due to the inconvenience. Hotel de la Playa is a hotel, which emphasizes night life and has discos and bars. Sun and Fun Tours has booked young couples and singles, who will be quite disturbed by early morning construction noise. Thus, they made a request to Hotel de la Playa for the guests to be relocated at the chain's five star hotel at no extra cost, but this hotel was fully booked. As that alternative was not possible, Sun and Fun Tours is requesting a 30 percent reduction for the period until the hotel wing is completed. In this event, Sun and Fun Tours plans to inform their customers of the problem and offer to pass the 30 percent reduction on to them.
When confronted with Sun and Fun Tours' demands, the management of Hotel de la Playa claimed force majeure and reminded Sun and Fun Tours that the contract contained no terms of compensation if the construction was not completed on schedule. They feel that the cause of the problem was beyond their control and that they are not legally responsible and should not have to compensate for any problems the delay may cause. They further add that the rooms are completed and perfectly habitable. They have promised to limit construction time to the period 9 AM to 5 PM. However, Sun and Fun Tours is skeptical about the management's ability to deliver on this promise and knows from previous experience that many of the guests like to sleep late.
Sun and Fun Tours has suggested that they will consider canceling the contract altogether, which at this late date (one month before the season starts) would make it difficult to fill the rooms. Hotel de la Playa countered by stating that they would keep the 30 percent advance payment. Both sides have strengths on which they can draw in the negotiations. Sun and Fun Tours books 20 percent of the rooms in Hotel de la Playa through four months of the winter season. It would create some extra expense for the hotel if they had to find new tour operators for the next season. Hotel de la Playa caters to young English tourists, and if the word got out that Sun and Fun Tours had pulled out due to their dissatisfaction, it might be difficult to get another English tour operator to take over the 50 rooms. Furthermore, the emphasis on the "sun and fun" profile of the hotel limits the possibilities for Hotel de la Playa to fill the vacant rooms with other segments such as families or pensioners.
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On the other hand, Hotel de la Playa is extremely popular with the sun and fun set and is always the first hotel to be booked. Thus, Sun and Fun Tours adds 10 percent to the normal full package price (transportation, hotel, and half pension) for reservations at Hotel de la Playa. The combination of the site, right on the beach, and the popular discos in the hotel, plus the hotel management's tolerance of noise have created an excellent reputation for the hotel among Sun and Fun Tours' clientele. Most of the bookings are repeat bookings a year in advance. Sun and Fun Tours have had a 98 percent booking rate over the last five years with their allotment at Hotel de la Playa, which is by far the highest rating for all of Sun and Fun Tours' allotment-based contracts. In addition, the contract is on an allotment basis, which means that Sun and Fun Tours has the responsibility to fill the rooms or bear the losses if they remain empty, which is a favorable situation for Hotel de la Playa. Finally, Sun and Fun Tours would have to cancel half of the bookings due to the difficulty of finding accommodations at this late date.
The main item to be negotiated is the 30 percent price reduction. However, other items on the agenda below are, (second in priority) some other possible means of compensation if the full 30 percent is not granted (the Hotel de la Playa team has placed this on the agenda suggesting that they are not willing to give a full 30 percent or perhaps no discount at all).The last item concerns the renewal of the contract and its length if a satisfactory agreement is reached. The Sun and Fun Tours team has seen the agenda and asked for another item to be placed as number 3 on it, a guarantee that work will be limited to the hours between 9 AM and 5 PM with compensation to be negotiated if the guarantee is broken. In order to avoid an unfortunate situation for both parties, they have decided to meet and try to negotiate a settlement.
Select groups to play both sides in the negotiations and try to negotiate a mutually satisfying settlement.
The Case Sequence
1.WRITTEN COMMUNICATION: This case will begin with communication between representatives of the two parties concerned. The manager of Hotel de la Playa, Raphael Fuentes, will write a letter to the tour manager in charge of the booking, Mrs. Margaret Smith, explaining the situation, including that there will be construction
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noise such as electric saws and hammering in the hallways. The duration of construction should be through the first two months of the winter season and will be limited to 9:00 AM to 5:00 PM. Naturally, Mr. Fuentes will express his regrets and say that he will do everything in his power to limit the impact on the guests. Consider using expressions such as the following:
We recently heard from our contractor ...
not meet the deadline
We are sorry ... / We regret ...
due to
some construction noise
We will do our utmost to ...
2. TELEPHONE CONVERSATION: Margaret Smith will respond to Mr. Fuentes' letter by calling him and discussing the situation as she sees it. In her preparation for her telephone call, Ms. Smith will have to decide what her strategy will be and the corresponding tone she will choose to express that strategy. This will be carried out in pairs, with one member of each team playing the respective roles of Margaret Smith and Raphael Fuentes. The two will not be able to reach agreement over the telephone, and a meeting will be set at Hotel de la Playa. The division of costs for the meeting (air fare, hotel, meals) will be determined over the telephone. After preparing in pairs, some pairs will perform the conversation in front of the class. After each telephone call, the class will evaluate the students' performance on the basis of (1) diplomatic tone (was a tone established which will aid the settling of the disagreement in a mutually satisfying manner), (2) professionality (were the positions presented clearly and firmly without resorting to aggression) and (3) language, both level of sophistication and grammatical correctness.
Ms. Margaret Smith should respond to the telephone conversation with a letter describing what was determined during the telephone conversation with Mr. Fuentes.
3. PRE-NEGOTIATION: Each side will prepare for the negotiations by discussing their negotiation strategy and filling out the Negotiations Worksheet and the Position Presentation Worksheet (Appendices 1 and 2, “Negotiating in English”, Эмерель Н.И.,
Григорьева Е.Ю.).
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4. MEETING AT THE AIRPORT: Raphael Fuentes will meet the Sun and Fun Tours team at the airport and welcome them. They all know each other from a long business relationship, and so the tone of their conversation will be informal and first names will be used. Naturally, Fuentes will ask about the flight, how business is going, and about the demand for package tours on the British market. He will outline the schedule meetings, dinner, and entertainment for the stay and ask if that is acceptable.
5. THE NEGOTIATIONS: The negotiations should be carried out in a positive tone due to the long business relationship the two teams have enjoyed, the fact that they have a common interest in satisfying the customers, and that they have more to lose than to win by being confrontational.
Teams from Sun and Fun Tours will negotiate with teams from Hotel de la Playa and attempt to reach a satisfactory agreement for both sides. Both teams will have a secretary who records the terms of the agreement as the negotiation proceeds, compares notes upon the completion of the negotiations, and writes up the final agreement.
1.The demand for a 30 percent reduction to be passed on to the guests
2.Other possible forms of compensation to the guests
3.A guarantee that construction will be limited to the hours between 9 AM to 5 PM
4.The renewing of the contract and its length
6. FINAL AGREEMENT: When a final agreement is reached, it will be summarized to make sure that there are no misunderstandings.
7. PRESENTING AN ANALYSIS OF THE NEGOTIATIONS: Both teams will present the
results of their negotiations to the class, as well as their strategy and goals.
LANGUAGE MASTERY EXERCISES
1.The Hotel de Playa team should write the preliminary letter to Margaret Smith explaining the situation at the hotel and, after their telephone conversation, she should respond in a letter confirming what was discussed.
2.Write the final agreement. This will be a joint effort completed by the secretaries of both teams.
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ACME WATER PUMPS AND THE NIGERIAN GOVERNMENT
A SALES CONTRACT
One of the major problems in Africa is water supply. One solution is pumping ground water, which saves time and effort for villagers who would otherwise have to walk for miles to sources, some of which are polluted. Another problem is maintenance of technical equipment. African buyers often purchase foreign goods, and they prefer goods that require minimum maintenance. In this case, the Nigerian government is considering buying equipment from an English producer.
The English have had a long tradition of economic and political involvement in Africa. In spite of the colonial nature of past relationships, the English still enjoy a good working relationship with many African governments. Many of the legal, educational, governmental, and value systems which exist today were established by the English and thus there is a common understanding of each other's culture and of how things should be done. However, one major difference is in the rigid government control in Nigeria and the possibility for corruption opened by the centralization of power and lack of democratic controls. This could create conflicts between the English system, which does not condone bribery, and the Nigerian system, which accepts it. Another area of possible conflict is the sense of superior-inferior relationship that may be a by-product of England's relative economic success and Nigeria's economic faltering. Pride will definitely be an issue, and any sense of a superior tone on the part of the English will be counterproductive.
Two groups will be selected by the teacher to present an analysis of the two cultures of negotiations in this case—England and Nigeria—along the lines discussed in Chapter
Cultural Awareness in International Negotiations on cross-cultural negotiations, such as (1) differing concepts of time, (2) the purpose of negotiations—deal versus relationship establishment, (3) approaches to decision making, and (4) the value and importance of protocol, ceremony, and so forth. Another important issue is tone. What tone should the English delegation establish and what barriers should be overcome?