Michael went to the balcony of the hotel room. A warm gust of wind blew in his face - Michael shrank and smoothed his tousled red hair. Ahead splashed two seas, the Mediterranean and the Aegean, islands that converged in this part - the June sun seemed to try them together. For such a stunning view, Michael chose Mediterranean, the best hotel on the entire coast of Rhodes. The trip to the Greek island was somewhat like an escape - an escape from endless disputes with Ben about the future of their common business.

"Only three days. They flashed by, and I didn't have time to notice, - Michael thought sadly, - in the evening I will be in my hometown, and tomorrow again with my head in all these problems. There is nowhere to go from them".

Closing his eyes, Michael took a deep breath. The scent of the sea was mixed with the delicate aroma of flowering rhododendron.

"I would like to stay here for at least a week, to disconnect from everything," Michael was upset. - But no, it will not work. After all, everything seemed to go well. And where did this German come from?!"

 

ACQUAINTANCE

And the German came, in fact, from Germany. Michael and Ben met him at the largest packaging exhibition in Europe in Düsseldorf ("Michael&Ben Service" was a prominent player in the consumer packaging market, and the partners did not miss a single significant event in their field). The German himself approached them: he introduced himself (Hans Benhart), said that he had been involved in packaging all his life and had long been interested in investing in their country (for this reason he even learned "such a complex language"). New acquaintances exchanged meaningless phrases and agreed to have dinner together.

The dinner turned out unexpectedly heartfelt. Hans, gesturing briskly, was inspired to think that their countries had - and always had - special economic and cultural relations, which, paradoxically, had a similar mentality. They raised a toast to the country ("Your country has a great future," the German whispered shrewdly, shining a tear).

The next day, Hans invited new friends to his office, whose work resembled the purr of the engine of a German car, spent on the floors, drank coffee, sat down to talk.

— Your packaging market, - Hans said, occasionally cutting the air with his palms for more persuasiveness, - has limits to growth. You may think it has no limits, but it has. Your country is a commodity country, and the competitive situation in This segment has its own characteristics. Therefore, you need to go beyond it."

— Exactly! - Ben readily picked it up and even got up from his chair in excitement. - I absolutely agree. It would be interesting for us to enter the European market with our products. True, Michael?

— Well, in general, yes, - Michael guessed. - Two or three foreign contracts can balance the company's risks. We somehow didn't think about it before. We walked on paved paths.

— I'll help you enter the Western markets, - Hans replied cheerfully, without ceasing to gesture. - I have experience in international operations. But I want to become a partner for you, not a contractor. We'll talk about that soon.

In the evening he drove Ben and Michael to the airport.

— I am convinced, - said Hans, saying goodbye, - that our meeting was not accidental. I will be happy to come to you and we will continue our interesting conversations. See you soon!

 

SEARCH FOR THE WAY

Michael and Ben stood together at the origins of the company - that's why they named it after themselves. The partners had 50% of the shares and, according to the agreement, equal voting rights - all key issues they always decided together. And although the company, in fact, did not have a board of directors, Ben's business card said: chairman of the board of directors, Michael's business card - more modest: a member of the board of directors.

Over time, "Michael&Ben Service" has become a successful company known in its field. Everything went well until a few years ago the company was hit by a classic growth disease. The lack of simple and clear decision-making mechanisms, a common information field, and criteria for evaluating efficiency complicated the influx of new high-quality specialists and inexorably led to the crisis.

If in the year before last "Michael&Ben Service" showed 25% growth (net of inflation), and in the past - 18%, then in the first five months of this year, financiers uncertainly forecast a "maximum of 10%". Even the most dedicated employees began to look around: in general, the labor market and wages grew faster, and conditions were better.

The development of the industry also outpaced the development of the company. Buyers have imposed increasingly stringent requirements for quality, delivery time and cost of goods. Simple agreements, the usual rollback was not enough. Procurement was tightly controlled and increasingly conducted on the basis of tenders. There were players who developed dynamically, offering the highest quality goods at low prices. The packaging business, which until recently said goodbye a lot (there would be connections and desires), dictated new rules of the game and quality standards.

And the company's executives began to think about how to live on. Michael was a supporter of soft reforms. He believed that the company had all the data to stay in the market.

— It is necessary to refuse omnivorousness and throwing. Determine the direction and rate of growth. Give authority and resources to managers. Tie the reward to the results, - he persuaded his partner. - We need to become older, more formalized. But develop without sharp jumps. Evolutionary.

— Believe me, this is the right way, - he said again and again. - I know what I'm saying, because I know the internal environment of the company better than you - you yourself admitted it.

And indeed, Michael actively communicated with employees. He was always there, and the door to his office was always open. Everyone went to him: some with complaints, some with innovation proposals, some with personal requests, some for advice. Michael readily delved into the details. He was able to give a correct assessment. Understand. Go to a meeting. At the same time, hardly anyone would call him a soft man: if required, he could well refuse, firmly say "no".

Michael was well aware that the company had reached a critical point, but he believed that the root of evil - not so much in the market situation, but in the organization itself. Managers are tired of uncertainty, lack of motivation. Therefore, Michael advocated the preparation of a formalized document that would determine the direction of further development of the company. "We need to develop general rules of the game," said Michael, "to create conditions for meaningful development, optimization of business processes."

Ben objected, inflamed.

— Don't you understand, - he shouted to Michael, - that your strategy will drag us into the routine?! We will lose the fighting spirit, market sense, pressure, we will work in a closed cycle. What kind of development can we talk about then?

Ben was called "Energizer" by the company. Despite its large size, it moved at an impressive speed and seemed to be in all places at once. He spent all his working - and free - time in endless travels and negotiations. And always came back with new ideas, agreements and contracts. In general, Ben was the engine and driving force of the firm. He believed that to change something, you need to act quickly, decisively and vigorously. And so he tried to convince his partner that the company needed a new impetus for development. A new push. New motion vector.

— In our economy, - he prophesied with inspiration, - there are still so many unfilled niches! You need to keep your nose to the wind, not think about mission and vision.

And yet, despite the active resistance of his partner, Michael managed to insist on his own. Ben - albeit without much enthusiasm - agreed to fund the development of a strategy for a three-year period. "Michael&Ben Service" turned to a well-known consulting company and with its help created a coveted document - it defined the goals of work in each market segment, key performance indicators for senior and middle managers, which affected their remuneration, as well as the principles according to which the company's activity will be built.

The company's employees, especially top managers, adopted the strategy with a standing ovation: its appearance marked the beginning of a new life and professional cycle for them. Michael triumphed: it seemed that a new life was about to begin.

 

ATTRACTIVE OFFER?

Hans arrived in the city a few weeks after the first meeting with Michael and Ben in Dusseldorf. Now it was their turn to show the wonders of hospitality.

The whole first day there was almost no talk about things. Straight from the airport went on a tour of the city. They had lunch at a restaurant with a beautiful view. They thought about the greatness of the city. They reasoned that, thanks in large part to the Germans and the Dutch, the city had become what we know it today.

They drank beer at dinner. After the first glass, Hans offered to finally get down to business. Pushing aside with one hand a deep plate of shrimp, and the other writing in the air intricate figures, the German began to develop his theory. In a few years, he argued, the country's packaging market would rise. Therefore, on the one hand, it is necessary to look for exits to other markets (and here it, undoubtedly, will help - after all they agreed on it in Germany), and on the other - not to be closed in one branch.

— We need to think about development, - Hans continued, ordering a second mug of beer, - to look for exits to other markets, to offer new solutions, but do not forget that the dynamics of industry development is different. It is necessary to consider the possibility of diversification in an industry with a higher growth rate. For example, commercial real estate. Or in the industry that cater to this segment. You are obsessed with your business.

Hans's long arms flew in the air, the beer evaporated at a terrifying rate, Michael and Ben listened in fascination.

— You have a country with unlimited opportunities, - the German summed up and immediately offered his friends to sell him part of the business. - I have money and experience in Western markets. You have knowledge of the local market, name and reputation in your country. Together we can do a lot.

Proposals for the sale of shares were received by the partners more than once, but there was an unspoken agreement between Michael and Ben: no third parties. Together they began, together they assembled a team, together they passed fire, water and copper pipes. However, Hans's proposal was one that, as they say, cannot be rejected. And the partners took a time-out, especially since a specific offer from Hans has not yet been received.

 

TRIUMVIRATE

Hans was more than determined. The next day, he inspected the Michael & Ben Service office, visited the plant, and spoke with the commercial director and sales director. And in the evening, meeting with Michael and Ben in a restaurant, continued the offensive on all fronts. The amount he offered for a third of the shares seemed very attractive to the partners. However, Hans did not want to limit himself to a simple purchase of a part of the business - he insisted on changing the company's development strategy.

Now the production and warehouses of "Michael & Ben Service" were located on leased space (including a small distribution warehouse in the suburbs). In the near future, the partners planned to create their own production and logistics complex - they already had a building permit and a business plan that justified the feasibility of investment, as well as land allocation. They were going to build at the expense of working capital, without attracting long-term borrowings.

Knowing this, Hans proposed to build three warehouses: in the city, in the South and in the West of the country. According to his plan, 20% of the area can be used for their own needs, 80% - to provide comprehensive logistics services to other companies.

— But this is a completely different business, - the partners unanimously objected. - New competencies are needed to deal with them. Today we have all the logistics outsourced.

Hans did not see this as a problem.

I was involved in transportation - from Eastern Europe to Panama, - he said - In each transit country I had the assets and proxies.

 All this is fine, - Michael objected, - but in our country everything is a little different.

 In any case, the German said, it would be a large-scale investment in warehousing infrastructure. If nothing comes out of logistics, we will sell warehouses at the price of commercial real estate.

 All right, let's discuss everything in detail, - Ben suggested. - Can you imagine how much it can cost? After all, we, in principle, did not seriously do anything but cardboard. It is necessary to make at least approximate calculations.

Oh, there's no problem, - said Hans. - The total amount of construction is easy to deduce. Multiply the number of square meters by the cost of one meter. In your country and in Germany it is now almost the same. Maybe you have a little more than the road. You need to find a good western development company that has a branch network in your country. They help with calculations and find a site for construction. 

Well, we have too many familiar "developers", - Michael joined the conversation. - How much are you willing to give?

 I have a third of the required amount. A third of the investment will go from working capital. We will occupy or find a third: each of its means. The condition of my investment is your company's entry into the authorized capital. This company have history, reputation, name

We would not like to lose the main business with such large-scale ideas, - the skeptical Michael shook his head.

We will not lose, - Hans assured him. - Moreover, in a year or two we will enter the Western Europe market. And the company, if we agree, will be called "Michael&Ben&Benhart Service". This sounds good to the German consumer, doesn't it?

Michael looked at his partner and shook his head again. Ben didn't notice it: he looked at Hans as if fascinated in all eyes and smiled dreamily.

 

YES OR NO?

After seeing Hans off, the partners returned to normal life. Ben went to the capital for negotiations. Michael held a series of meetings with key executives. The company mastered the new rules and tried to follow the adopted strategy. Almost no one guessed the content of the talks with the German guest.

Michael, to whom Hans's proposal seemed not something delusional, but at least uninteresting, would have preferred to forget about it altogether. He not only did not want to open a company for a third party, but also feared that Hans would destroy the fragile relationship that had developed in the organization, and this would inevitably lead to the loss of business.  But Hans did not let him relax, called regularly, reminded himself, asked to think carefully. And then Ben began to press: the prospect of a triumvirate seemed to him extremely promising. He had no doubt that it was necessary to enter into a destiny with the German and build a long-term relationship with him. He saw it as a chance to miss which would be at least pointless.

And for the first time, the partners, who always at least managed to reach an agreement, took a principled stand and in no way wanted to give up. When it turned out that it was no longer possible to pull, the German was already waiting for an answer, Michael and Ben decided to discuss everything again over dinner at a restaurant. There was a conversation between them of the following content.

Ben: Why did you stand up as a child?! "Strict adherence to the strategy." "The key to sustainability." But strategies are written to score on them. Such a chance!

Michael: Our strategy, by the way, has begun to bring tangible results. The company has faith in its own strength! And this Hans draws us into an adventure. By the way, he has already intervened in the affairs of our small candle factory. The accountant said: approached, asked questions. Taught how to work.

Ben: So what? Hans is a foreign coach for us - we will learn a lot from him, don't you understand?!

Michael: Listen, people believed us. Remember what the mood was a few months ago. I'm not a dogmatist, but let's work a little, as agreed.

Ben: And what prevents you from working, as agreed?! What we did, we will do. And you will implement your strategy. The people are still focused on you, and they prefer to stay away from me. So I will spend more time on new projects.

Michael: Remember where it all started: "I'll help you enter Western markets." And how it ended: "We will build warehouses in your country." And do you want to trust such a person?

Ben: So what? One does not interfere with the other!

Michael: Do you know how events will develop? There will not be enough funds for construction. We will withdraw money from working capital, put everyone on a starvation ration. People will leave. The main business will rise.

Ben: And what do you offer?

Michael: I do not offer anything. Understand, Ben, that what is good for him is bad for us.

Ben: What is good for you and me now is another question. I have a feeling that we don't understand each other anymore. And this is very sad: it seemed to me that you and I were good partners.

Michael: Don't get feverish, Ben. If you want, create a company with a German and build warehouses, airfields, buy recyclables, stocks - everything you want. And don't touch our business with you.

Ben: He obviously needs guarantees. And what guarantees can we give, apart from shares? We have no assets. Everything is for rent and ghostly arrangements with a dozen large clients. We sell air, and get the opportunity to become much richer. Don't you understand?!

Michael: I do not want to work with a German. I do not want to engage in investment activities. I don't want to, that's all. I want to save the team. I want to take small steps to the indicators that we have planned.

Ben: Not "we" planned, but you planned. As you remember, I practically did not take part in these brainstorming sessions and field meetings. And how many times have I sent your consultants in plain text. As long as you stick to what happened yesterday, the train will leave the station. And we will tread between small and medium-sized businesses. Listen to me!

 

The next day Michael decided to take a short break and flew to Rhodes for three days. Now the impromptu vacation was coming to an end, and only problems were ahead. It was necessary to agree urgently with Ben, but what if none of them has a decisive vote? And it is necessary to agree - so that God forbid not to ruin the company in which they both invested so much money and mental strength. And also to stay friends.

 

1. What should partners do if they both have equal voting rights?

2. What nature (tone) of the negotiations you'll propose to choose (to achieve the desired result)

for Michael

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for Ben

_________________________________________________________________   

for Hans

_________________________________________________________________

3. Describe the optimal communication process for partners.

4. What information from each participant is required for negotiations?

5. Describe the features of each stage of negotiations in this situation.

Answer rating: 100% (QA)

When partners have equal voting rights they should aim for consensus in decisionmaking If consensus isnt achievable they might consider involving a neutral third party such as a mediator or business c... View the full answer