solution

Read the below cast study and answer the following questions (approximately 300 words total). This mini case study illustrates how cultural differences may impact on cross-cultural negotiation.

1. According to the preparing for cross-cultural negotiation steps, how could GE and Mitsubishi better prepare their initial get-acquainted meeting? (5 marks)
2. If you were Depew, how could you help to get the conflicts better managed? (5 marks)

Case Study:

Perils of being a junior manager While General Electric (GE) had long dominated the market for basic electrical supplies, recent competition from Asia and Europe had begun to seriously erode its market share and the company was determined to re-establish itself in this lucrative global market. In its Asian markets, GE had a long-standing partnership with Japan’s Fuji Electric Corporation, but this alliance failed to produce the results GE sought. Perhaps it was time to find a new partner. Jeff Depew, an aspiring young manager at GE, was assigned the task of laying the groundwork to make this happen. Fluent in Japanese, he was sent to Japan with instructions to cultivate a new relationship with Mitsubishi Electric, one of Japan’s premier electrical equipment manufacturers and a possible partner for GE’s new strategy. It was made clear to him by his boss that success in this assignment would position him well for continued career progression upon his return to the United States.

As Depew tells the story, upon his arrival in Tokyo he began a carefully orchestrated effort to nurture relationships with his counterparts at Mitsubishi and over time won their respect and trust. What he envisioned was a quantum leap of the sort that would catch the attention of GE’s then-CEO Jack Welch. Welch valued managers who could take control and make deals happen. He wasted little time on the niceties of negotiation and preferred to work with people who thought as big as he did. To Depew, a possible alliance between GE and Mitsubishi was just such a venture. The partnership would catapult them into a position of dominance in the global market with combined annual sales of $3.5 billion. As Depew saw it, the partnership made strategic and economic sense for both partners. The combined company would be the world leader in six of its eight product lines and would allow GE to establish a working relationship with a leading Japanese conglomerate.

After lengthy and promising discussions with Mitsubishi, Depew was finally ready to invite GE’s CEO to come to Japan to meet Moriya Shiki, Welch’s counterpart at Mitsubishi. The visit (called an aisatsu, or formal ceremonial greeting) would be a brief get-acquainted meeting to demonstrate GE’s commitment to the project and begin to establish a working relationship between the two CEOs. A date was set for the official meeting.

When Welch arrived, Depew briefed him on the progress that had been made, as well as the tasks that remained to be done. While many details of the agreement remained to be negotiated, everything looked good to Depew and he estimated that a deal could be reached after approximately five months of further cultivation and negotiation. Welch was obviously pleased and excited about the prospects. A meeting was scheduled for the next morning with Mitsubishi.

The official meeting between the two companies was a standard protocol session – a mating dance that preceded most major alliances. Not only did Welch understand this, he had participated in several such rituals in the past. In these initial meetings, specific discussions about business were studiously avoided. Instead, only general issues were discussed, such as the state of the US electronics industry and Japanese competition. It was only later in private meetings that the details of any partnership would be discussed. The meeting between Welch and Shiki would proceed along a similar path. The two CEOs would exchange pleasantries, declare their mutual respect for one another, and withdraw. It was too early to discuss details; subordinates would handle this later.

When Jack Welch and his colleagues arrived at the Mitsubishi building for the scheduled meeting, he was both well prepared and enthusiastic. He was ushered into the conference room and formally introduced to Mr. Shiki and his subordinates. To Depew, both executives were impressive. Shiki was the epitome of the Japanese executive: dignified, elegant, smooth, and very much in control. As they exchanged business cards, both executives began with a profuse exchange of thanks along with the expected expressions of mutual admiration.

But then without notice, Welch quickly ended the pleasantries and launched into a discussion of why a deal was attractive to GE: the product lines were impressive, the cultures could work well together, and everything seemed to be a good fit. The venture would be a powerful force in the marketplace, one that would allow both Mitsubishi and GE to smash the competition. Mr. Shiki nodded his head quietly while Welch went on to point out that in the past, GE had tried to do deals with other big Japanese companies, but had always had troubles. Maybe this time would be different, he observed. He noted that both firms had large bureaucracies, but that this should not get in the way. Then he surprised everyone by suggesting that the two companies should agree to a deal then and there.

Depew was surprised, but couldn’t betray his emotions in the meeting. He sat quietly but nervously. GE had crossed the protocol line. Perhaps they could have gotten away with this in the United States, but not in Japan where protocol was religiously observed. It was highly inappropriate to press for an immediate commitment when negotiating with the Japanese – especially when Mitsubishi had already agreed to GE’s proposed five-month timetable for closure of the deal. Shiki looked over at Depew as if to say, “What’s going on here?” but Depew didn’t have the slightest idea. After a long period of silence, Shiki reiterated his desire to go ahead with the plan – a subtle yet significant indication of how badly his company wanted to finalise the agreement. However, he was not about to conclude a final agreement on the spot.

It was well understood by both parties, although not discussed, that Mitsubishi Electric was trying to extricate itself from a long-standing agreement with GE rival Westinghouse. Mitsubishi was aware that Westinghouse was quietly preparing to abandon its business in Japan, and Shiki needed a new US partner on whom he could depend for the foreseeable future. GE suited his goals perfectly. However, Japanese etiquette required Mitsubishi to inform Westinghouse of its intentions to change partners before signing a formal agreement with GE. But when Shiki mentioned this obligation to Welch, Welch questioned why this was necessary. Shiki tried without success to explain the nature of the relationship, but Welch concluded that his counterpart was trying to play him off GE against Westinghouse. He reiterated that he didn’t want to move forward unless Mitsubishi was unequivocally committed to the partnership. Shiki assured him that this was the case and that the agreement would be completed in due time.

With that, the meeting broke up amicably and Welch and his colleagues returned to their hotel. Later that evening, Welch observed that he had pressed Shiki because he concluded that if the agreement was not completed quickly, it would not be accomplished at all. He was convinced that Shiki’s reluctance to quickly agree to the proposal meant that he was not serious about it. The next morning, while Welch made a courtesy call on the Ministry of Trade and Industry, Depew returned to Mitsubishi. This meeting went better than the previous one, and a consensus was soon reached concerning how negotiations should proceed and how the agreement should be structured. The deal was back on track. Welch returned to New York and Depew was assigned the task of moving things forward.

Several weeks later, however, Depew received a call from his boss in New York telling him that Welch was leaning against signing the agreement. He felt he had been sandbagged and embarrassed by one of the most prominent leaders of the Japanese business community. The only way to save the deal now, Depew was told, was for Shiki to write a personal letter of apology to Welch in which he stated unequivocally that he would agree to the proposal. Depew dutifully approached Mitsubishi with his orders. After some negotiation, it appeared that Mitsubishi was on the verge of complying with Welch’s demand when Depew received another call from his boss notifying him to break off all negotiations with Mitsubishi. Instead, he was to return to GE’s former partner, Fuji Electric, and attempt to rebuild relationships so a new joint venture could be developed.

Two months later, Jeff Depew was recalled to New York headquarters. His boss explained that GE had decided to take a different approach to the Asia/Pacific region, focusing more on sales than business development. As a result of the change, GE was eliminating his position.

Shortly after the failure, Fuji Electric dissolved its partnership with GE. In accordance with the dissolution agreement, Fuji then began selling products in North, Central, and South America under its own brand name. At the same time, the MitsubishiWestinghouse partnership not only survived, it expanded and is thriving today. Jeff Depew now works in the high-tech world of Silicon Valley and is doing well