you are Tokyo Saki in this case study , Taking Hofstede’s cultural dimensions into account outline the key cultural aspe
Posted: Tue Jul 05, 2022 11:43 am
you are Tokyo Saki in this case study , Taking Hofstede’scultural dimensions into account outline the key cultural aspectsyou think you need to consider in this negotiation. Whatadjustments can you make to deal with these cultural aspects?
(case study) Confidential Instructions for Tokyo Saki Role
Bacchus is a successful winery, with 63 fully owned vineyardsscattered throughout the US (although the majority are located inCalifornia). Bacchus was founded some 20 years ago, and appears tobe a successful and growing company, as they have maintained astrong market share, specializing predominantly in high-end wines,although they also produce some moderately priced wines. Bacchusconsistently wins prizes for their wines, both nationally andinternationally, with their wines holding up well to French winesin Western Europe, at least outside of France itself.
Tokyo Saki produces sake and rice wines, various Asian beers, aswell as a line of alcoholic ginseng products (previously acquiredfrom a Korean company). Tokyo Saki has strong market share withinAsia, and has been making inroads as a novelty product, especiallywith its ginseng lines, in Europe and North America. At least partof the success of the ginseng lines has been due to the commonbelief that the ginseng root prevents the negative effects ofalcohol on the system (such as liver damage due toover-consumption) and has long been recognized for its medicinaland curative powers in Asia, and more recently in Europe and NorthAmerica.
Serbian Steins & Stems specializes in fine decanters, wineglasses, and accessories. More importantly, however, they recentlypatented a new process that makes fine, delicate crystal andporcelain virtually indestructible, while maintaining its beautyand fragile appearance. This development has obvious customerappeal, but also significantly reduces the expenses associated withshipping breakage and the like. If costs can be reduced on theprocess, it may even be feasible to use the technique for bottling,making it attractive as a virtually unbreakable bottle for wine andbeer, as well as other products. Tokyo Saki recently acquired asmall stake in Serbian Steins & Stems, hoping to complement itsofferings with the accessories that would appeal to the NorthAmerican and European markets, thus bringing it into the mergertalks in a three-way play.
Last year, Bacchus management made overtures to Tokyo Saki in aneffort to acquire their full line. Tokyo Saki declined, butencouraged a discussion of a possible merger between the companies,including the possibility of Serbian Steins & Stems forcontemplation. Such a three way merger might provide Bacchus withcomplementary products and a presence in high-potential markets,while providing Tokyo Saki and Serbian Steins & Stems withproduct visibility and distribution systems that include thelucrative U.S. market. With the increasing popularity of fine winesand accessories, as well as “New Age” herbal medicines, such athree-way merger provides a particularly attractive opportunity.However, there are risks. For example, whether or not Bacchus hastopped out in its market expansion isn’t clear. And the instabilityof the political situation in Eastern Europe is cause for concernas well, in any deal involving Serbian Steins & Stems. Giventhe risks and possible benefits, Bacchus has expressed cautiousinterest in the possibility of a three-way merger, and thesediscussions led to a satisfactory agreement on price, however,there are several issues that are yet to be resolved. Theseunresolved issues have led to the present meeting between yourexecutive groups. In preparation for the meeting, the threecompanies have already exchanged appropriate information andfigures. Unfortunately, a merger between any two of the companiesloses significant synergy and is considerably less attractive;hence it is important to negotiate an agreement that issatisfactory to all parties, if there is to be an agreement at all.At this time, the remaining issues to be resolved include:
Stock ownership of the combined company that would result froma merger. The division of stock influences the amount of the annualprofits that would accrue to each of the three respectivecompanies. This issue is, of course, of very high importance toyou. You believe that the division of stock ownership should bedriven by the fact that you are bringing a totally new product lineto the table, and that you have a much greater profit margin thananyone else does at the table. However, you are also aware of thefact that Bacchus has a considerably higher value, and that SerbianSteins & Stems brings something unique to the table. Youbelieve that these differences entitle you to a minimum of 25%ownership of the combined company.
Control, as represented by the number of voting seats on the12-person executive board to be controlled by each company. It isextremely important to you that you have multiple membersrepresented – enough to wield some level of power – on theexecutive board. This issue is a point of pride, as you explicitlydo not want to be “taken over” by Bacchus — you desire a mergerthat is respectful of your identity and accomplishments. You worrythat minimal representation could easily be intimidated andsilenced on the board and would become “tokens” with little or noactual influence. You bring a unique product line – especially withthe ginseng products, one that is highly saleable in multiplemarkets. This will invigorate Bacchus’ currently rather stalelines. In addition, given your small ownership in Serbian Steins& Stems, you are clearly bringing a great deal to the table andyour contributions should not be minimized.
Management. There are three management issues. First, is themanagement of the company in each country? In order to capitalizeon the strategic synergies, management issues are key, and it willbe critical to staff each location appropriately. It has not yetbeen established whether each location would continue to run asthey have been running, or whether the Americans will try to selectand send general managers, or whether there will be some form ofexchange program or cross-training of managers. However, it isextremely important that you have at least one Japanese manager ineach location, otherwise you will be unable to appropriatelymonitor other components of your business and react quickly andappropriately to decisions that are not in Tokyo Saki’s bestinterests. Your preference, of course, is to staff with Japanesemangers, but you realize that is not realistic. Yet, you alsounderstand the importance of working within a socio-culturalnetwork, and know that the locals have contact that your managersmight lack. Hence, in lieu of Japanese representation, you willaccept local management. The second issue is more troubling. Thatis what to do about Nikko Raspovliac, the son of the founder ofSerbian Steins & Stems. It is your understanding that he is anunrepentant womaniser, and there are even rumors that he may beinvolved with the drug trade. Unfortunately, you learned of allthis after you originally purchased a stake in their business.Raspolivac’s negative reputation will result in significant loss offace for your company in any public liaison (and you have debatedending the existing one if you can find a way out!). It is simplynot acceptable to have someone at the helm whose reputation is sosullied. Finally, the third issue is management incentives, or howto motivate the management teams towards the common goals of themerged companies. You have always paid your managers an attractivesalary, yet Bacchus has suggested that they be
paid contingent on performance. Although you are willing toprovide a small contingent incentive, you know there are clearlydifferences in the different foci of the companies and that someare simply easier to make a profit at, and any manager accepting a“difficult” assignment would be penalized. In addition, you knowthat such differences will create status and power differencesamong the managers of the different divisions, which is simplyunacceptable You strongly prefer no contingent incentives, as youwant to continue the culture you have developed at Tokyo Saki, aculture that has served you very well indeed. If a competitiveculture were instantiated, your past experience in Asia suggeststhat they refuse to help one another, or lobby for specificinterests, which clearly could be to your detriment. In additionyou know well that such a plan will substantially reduce the moraleamong the management team and create conflict and tension.
Form of the agreement is also quite important. In yourprevious negotiations with Bacchus, it seemed as if they werecompletely unwilling to build any flexibility into the agreement.Yet, in merging the three companies, you are charting newterritory, and having some flexibility – to accommodate theunexpected as it arises – is not only essential, but makes goodbusiness sense. Thus, it is important to you that any agreementstruck be flexible, with adequate safeguards for accommodating theunexpected. In addition, you find Bacchus’ insistence on penaltiesfor minor accommodations in the contract to be repugnant andinsulting, and will clearly damage the relationship among allparties. Your preference is for a contract that avoids threateningtrust by specifying penalties that may never be needed.
A final issue is status. It is quite important that younegotiate with those who are of equal (or greater) status toyourself; otherwise, it is clear that the other parties are nottaking you seriously, if not insulting you. Negotiator status is animportant indicator of the respect with which you and the companyare viewed. If they send negotiators of superior status, then thatindicates that the future relationship will be one of respect andin which parties will attempt to accommodate our company and itsissues. If, however, the negotiators sent by Bacchus and SerbianSteins & Stems are of lesser status, it suggests that thelong-term relationship will be one in which you and the companywill be discounted and marginalized. You should use job experiencerank as a proxy for status, such that a negotiator with no jobexperience has a status of zero; if they only had “odd job”experience, their status would be 1; seasonal experience would be2, part time experience 3, full time experience 4, and management5. To compute your status score, you should use the followingformula:
(case study) Confidential Instructions for Tokyo Saki Role
Bacchus is a successful winery, with 63 fully owned vineyardsscattered throughout the US (although the majority are located inCalifornia). Bacchus was founded some 20 years ago, and appears tobe a successful and growing company, as they have maintained astrong market share, specializing predominantly in high-end wines,although they also produce some moderately priced wines. Bacchusconsistently wins prizes for their wines, both nationally andinternationally, with their wines holding up well to French winesin Western Europe, at least outside of France itself.
Tokyo Saki produces sake and rice wines, various Asian beers, aswell as a line of alcoholic ginseng products (previously acquiredfrom a Korean company). Tokyo Saki has strong market share withinAsia, and has been making inroads as a novelty product, especiallywith its ginseng lines, in Europe and North America. At least partof the success of the ginseng lines has been due to the commonbelief that the ginseng root prevents the negative effects ofalcohol on the system (such as liver damage due toover-consumption) and has long been recognized for its medicinaland curative powers in Asia, and more recently in Europe and NorthAmerica.
Serbian Steins & Stems specializes in fine decanters, wineglasses, and accessories. More importantly, however, they recentlypatented a new process that makes fine, delicate crystal andporcelain virtually indestructible, while maintaining its beautyand fragile appearance. This development has obvious customerappeal, but also significantly reduces the expenses associated withshipping breakage and the like. If costs can be reduced on theprocess, it may even be feasible to use the technique for bottling,making it attractive as a virtually unbreakable bottle for wine andbeer, as well as other products. Tokyo Saki recently acquired asmall stake in Serbian Steins & Stems, hoping to complement itsofferings with the accessories that would appeal to the NorthAmerican and European markets, thus bringing it into the mergertalks in a three-way play.
Last year, Bacchus management made overtures to Tokyo Saki in aneffort to acquire their full line. Tokyo Saki declined, butencouraged a discussion of a possible merger between the companies,including the possibility of Serbian Steins & Stems forcontemplation. Such a three way merger might provide Bacchus withcomplementary products and a presence in high-potential markets,while providing Tokyo Saki and Serbian Steins & Stems withproduct visibility and distribution systems that include thelucrative U.S. market. With the increasing popularity of fine winesand accessories, as well as “New Age” herbal medicines, such athree-way merger provides a particularly attractive opportunity.However, there are risks. For example, whether or not Bacchus hastopped out in its market expansion isn’t clear. And the instabilityof the political situation in Eastern Europe is cause for concernas well, in any deal involving Serbian Steins & Stems. Giventhe risks and possible benefits, Bacchus has expressed cautiousinterest in the possibility of a three-way merger, and thesediscussions led to a satisfactory agreement on price, however,there are several issues that are yet to be resolved. Theseunresolved issues have led to the present meeting between yourexecutive groups. In preparation for the meeting, the threecompanies have already exchanged appropriate information andfigures. Unfortunately, a merger between any two of the companiesloses significant synergy and is considerably less attractive;hence it is important to negotiate an agreement that issatisfactory to all parties, if there is to be an agreement at all.At this time, the remaining issues to be resolved include:
Stock ownership of the combined company that would result froma merger. The division of stock influences the amount of the annualprofits that would accrue to each of the three respectivecompanies. This issue is, of course, of very high importance toyou. You believe that the division of stock ownership should bedriven by the fact that you are bringing a totally new product lineto the table, and that you have a much greater profit margin thananyone else does at the table. However, you are also aware of thefact that Bacchus has a considerably higher value, and that SerbianSteins & Stems brings something unique to the table. Youbelieve that these differences entitle you to a minimum of 25%ownership of the combined company.
Control, as represented by the number of voting seats on the12-person executive board to be controlled by each company. It isextremely important to you that you have multiple membersrepresented – enough to wield some level of power – on theexecutive board. This issue is a point of pride, as you explicitlydo not want to be “taken over” by Bacchus — you desire a mergerthat is respectful of your identity and accomplishments. You worrythat minimal representation could easily be intimidated andsilenced on the board and would become “tokens” with little or noactual influence. You bring a unique product line – especially withthe ginseng products, one that is highly saleable in multiplemarkets. This will invigorate Bacchus’ currently rather stalelines. In addition, given your small ownership in Serbian Steins& Stems, you are clearly bringing a great deal to the table andyour contributions should not be minimized.
Management. There are three management issues. First, is themanagement of the company in each country? In order to capitalizeon the strategic synergies, management issues are key, and it willbe critical to staff each location appropriately. It has not yetbeen established whether each location would continue to run asthey have been running, or whether the Americans will try to selectand send general managers, or whether there will be some form ofexchange program or cross-training of managers. However, it isextremely important that you have at least one Japanese manager ineach location, otherwise you will be unable to appropriatelymonitor other components of your business and react quickly andappropriately to decisions that are not in Tokyo Saki’s bestinterests. Your preference, of course, is to staff with Japanesemangers, but you realize that is not realistic. Yet, you alsounderstand the importance of working within a socio-culturalnetwork, and know that the locals have contact that your managersmight lack. Hence, in lieu of Japanese representation, you willaccept local management. The second issue is more troubling. Thatis what to do about Nikko Raspovliac, the son of the founder ofSerbian Steins & Stems. It is your understanding that he is anunrepentant womaniser, and there are even rumors that he may beinvolved with the drug trade. Unfortunately, you learned of allthis after you originally purchased a stake in their business.Raspolivac’s negative reputation will result in significant loss offace for your company in any public liaison (and you have debatedending the existing one if you can find a way out!). It is simplynot acceptable to have someone at the helm whose reputation is sosullied. Finally, the third issue is management incentives, or howto motivate the management teams towards the common goals of themerged companies. You have always paid your managers an attractivesalary, yet Bacchus has suggested that they be
paid contingent on performance. Although you are willing toprovide a small contingent incentive, you know there are clearlydifferences in the different foci of the companies and that someare simply easier to make a profit at, and any manager accepting a“difficult” assignment would be penalized. In addition, you knowthat such differences will create status and power differencesamong the managers of the different divisions, which is simplyunacceptable You strongly prefer no contingent incentives, as youwant to continue the culture you have developed at Tokyo Saki, aculture that has served you very well indeed. If a competitiveculture were instantiated, your past experience in Asia suggeststhat they refuse to help one another, or lobby for specificinterests, which clearly could be to your detriment. In additionyou know well that such a plan will substantially reduce the moraleamong the management team and create conflict and tension.
Form of the agreement is also quite important. In yourprevious negotiations with Bacchus, it seemed as if they werecompletely unwilling to build any flexibility into the agreement.Yet, in merging the three companies, you are charting newterritory, and having some flexibility – to accommodate theunexpected as it arises – is not only essential, but makes goodbusiness sense. Thus, it is important to you that any agreementstruck be flexible, with adequate safeguards for accommodating theunexpected. In addition, you find Bacchus’ insistence on penaltiesfor minor accommodations in the contract to be repugnant andinsulting, and will clearly damage the relationship among allparties. Your preference is for a contract that avoids threateningtrust by specifying penalties that may never be needed.
A final issue is status. It is quite important that younegotiate with those who are of equal (or greater) status toyourself; otherwise, it is clear that the other parties are nottaking you seriously, if not insulting you. Negotiator status is animportant indicator of the respect with which you and the companyare viewed. If they send negotiators of superior status, then thatindicates that the future relationship will be one of respect andin which parties will attempt to accommodate our company and itsissues. If, however, the negotiators sent by Bacchus and SerbianSteins & Stems are of lesser status, it suggests that thelong-term relationship will be one in which you and the companywill be discounted and marginalized. You should use job experiencerank as a proxy for status, such that a negotiator with no jobexperience has a status of zero; if they only had “odd job”experience, their status would be 1; seasonal experience would be2, part time experience 3, full time experience 4, and management5. To compute your status score, you should use the followingformula: