The paper 'Type of Negotiations Recommended to Pursue with Red Star Holdings' is a great example of a Management Assignment. Matt should use distributive negotiation to pursue negotiation with Red Star Holdings. To assist Matt to understand how culture potentially affects negotiation, certain elements of negotiation rooted in the Western theory should be examined. Among these elements, include direct confrontation. Additional elements comprise the forms of negotiations, whether transactional (between sellers and buyers) or resolution of disputes. Such forms of negotiations may have two likely agreement outcomes, mainly distributive negotiation or, integrative negotiation.
Matt should be advised to pursue distributive negotiation (Lewicki et al. 2007). Matt already has established a manufacturing base in Australia, and only wants to source fabrics from a Chinese supplier. On the other hand, while “ Red Star Holdings” are the exclusive importers/ producers of rare fabric that enables his clothes to repel food and ink stains, it also seeks to establish certain brands in Australia since they have no customer base in Australia. There is a possibility of the two dividing their resources. In the distributive negotiation, a possible deal would see Matt negotiate to use Red Star Holdings’ supply chain, while Red Star Holdings negotiates to use Matt’ s marketing and distribution chain to reach Australian customers. Indeed, the outcome of Matt’ s transactional negotiation is likely to be an entire, distributive agreement.
The distributive agreements would result since Matt and Red Star Holdings are in a distributive negotiating situation, where Matt and Red Star must appear to divide their resources. The negotiation is likely to lead to a competitive rivalry. The division of resources should be equal.
More importantly, the distributive bargaining has the likelihood of being beneficial to Matt, as Red Star Holdings is relative of little consequence, as well as since Matt must maximize the value of any single deal he makes. On the other hand, integrative negotiation is not suitable, as Matt does not hope to share resources since he wants to make considerable revenues from the deal. Q2. How would Matt effectively prepare for negotiations considering the international context of engaging with business partners from China Hofstede's model of cultural dimensions is appropriate for the case of international negotiation that Matt seeks to pursue.
The framework proposes five dimensions for analysis of cultural issues anticipated when Matt (a Westerner) negotiates with the Red Star Holdings’ (Asian) managers. The five key dimensions are individualism-collectivism, power distance, uncertainty avoidance, long-term orientation, and masculinity-femininity, (Soares et al. 2007). In respect to Individualism– collectivism, Matt should be advised that the negotiators, from Red Star Holdings, are from collectivist cultures hence would most likely give preference to negotiations oriented towards group belonging (Menger 1999). Regarding uncertainty avoidance, Matt should be advised that the negotiators from Red Star Holdings are likely to have low uncertainty avoidance.
China has low uncertainty avoidance and values risk-taking and is less rule-oriented. Matt will need to avoid imposing rules or structure unreasonably while negotiating (Chang 2006). In respect to Power distance, the concern is given to the manner in which individuals identify with authority. Matt should be advised that the negotiators from Red Star Holdings are likely to have high power distance. The high power distance score indicates that society experiences deep inequalities of power and wealth. Hence, while negotiating with the Chinese negotiators, Matt should prepare to acknowledge power and authority, and appreciate that most of the negotiator is likely not to be decision-makers and will need to consult with higher authority (Miles 2003).