The Americans are anxious.  Six months after an initial meeting, Osatech, the renowed Japanese video software company, has finally agreed to meet with an American negotiating team in its headquarters in Osaka.  Videomart, number one in America's video-game industry, hopes to get a licensee agreement with the Japanese company to sell its software.  The Americans should be anxious.  Osatech has an impeccable reputation for creating one successful game after another.  Landing a contract with it would be a real coup.  Now, after what seemed to the Americans an eternity, Osatech has agreed that it is in the companie's mutual interest to meet and work out an acceptable deal - or so it seems.

 

The meeting gets off to a good start.  After brief introductions and the ritual exchange of business cards, both parties sit down at the table, the Japanese on one side, the Americans on the other.  On the Japanese team are the general manager, two assistants, and an engineer who will also serve as the translator.  Representing the Americans are the president of Videomart, two vice presidents (sales and marketing), and an engineer.  They have no translator.  Nor do any of the Americans speak or understand Japanese.

The Americans begin their opening presentation, giving a brief status report on their company, the amount of business it does, its share of the market, and projected sales - a veritable 'dog and pony show'.  They emphasize that Videomart has emerged as the industry leader in terms of unit  and dollar volume.  Repeatedly they point out that should the Japanese pass up the opportunity of doing business with them, the former would be doing their company a grievous disservice.  After a lengthy public relations build-up, the Americans set the agenda, describe their product needs, suggest a time schedule and a delivery date.  Item costs, they claim, can be resolved later.

During the Americans' presentation, the Japanese team has been quiet, listening attentively, occasionally nodding to one another.  When the Americans finish talking, the Japanese ask many probing questions covering a wide range of issues - mostly in the category of detailed product specifications.

They wish to see the engineering blueprints for these units.  What about the new game Videomart plans to introduce at the next sales convention?  May they please see a working model to check for compatibility?  What about delivery dates?  The Americans, taken aback by the nature of the questions, decide to call a recess to think through what has just occurred.  The Japanese politely agree. 

Alone in their conference room, the American team is aghast.

'I don't think they understood one word!'

'How do they expect us to tell them that when we don't even have a firm commitment from them that they will joint us?'

'Nervy of them! They can't really keep asking questions like that without giving a few answers themselves.  They just ignored you, Bob.'

'Well, they kept nodding yes and smiling...'

'Can't they see what a lucrative deal this would be for them? And just think what the board will say if we don't come home with a deal!'

'I'm getting sick of the stupid request to see our blueprints before we've even drawn up the terms of a contract.  Remember that article in Fortune about Japanese spies in the Silicone Valley?'

'Yeah well, what do you think?'

'I don't know.  Two weeks and we've agreed to almost nothing.'

'Would never happen in Ohio.'

The Japanese, too, are ready to pull out.  To them the futility of doing business with these Americans is obvious!

'If they are sincere, why do they keep referring to their lawyers as if only lawyers can discuss and determine minor points?'

'They are not minor points, Yoshi,'

'Yes we know that, but they don't seem to."

'To me they are presumptuous and operate out of bad faith.  They cannot be trusted.'

'But their company can help us gain the distribution and market share like no one else as they will not let us forget.'

'I hope we do not have to hear that one more time.  It makes me think we should consider doing business with another company that is not so "tops".'

There was one final meeting.  It too failed.  The Americans went home.

 

QNS: How would you have handled the negotiation with the setting of climate and framing the negotiation if you had been the Chief Executive Officer of the United States Co.?