International Business Negotiations IMBA 6230 Group Write Up

Strategy Planning We played the role of the AAA Hotels Executive Committee (the green team) during the international lodging merger exercise. Our group convened prior to negotiations and discussed several strategic options as well as cultural considerations that may impact our ability to achieve the intended outcome. We spent time looking at the globaledge.msu.edu web site that we learned about in IMBA 6010. After studying information about Brazil and the U.S., we were able to build a framework upon which we could apply our cultural values as well as what to expect from our U.S. counterparts. Important to our group was respect and tradition that was part of our cultural values as Brazilians. It was crucial for us to feel that the acquiring hotel chain, Lambert, understand the nuances of our culture and the traditions. We discussed the impact this would have on our strategy and negotiations if the other team was unable to accommodate our ways. We had consensus that if the Lambert team was not able to show their understanding of family, impact of being aggressive, or not being able to acknowledge the cultural values of our organization; it would lead to an impasse in negotiations. It was essential for us to feel they understood this as our employees value the family style operation and have been working loyally to grow our business. The second consideration was how we would approach these negotiations with a distributive or integrative approach. The first impression would impact our decision tree in this regard. We all preferred an integrative approach given that we were seeking an equal merger, but based off our views of the value of our company, we were prepared to take a distributive stance if necessary. We felt that our company had more growth potential in an emerging market with a track record of increasing profits and revenue with the ability to command higher rates on our rooms despite a lower luxury rating. We recognized this may be a point of contention as Lambert's assets were threefold greater than ours and they had a higher luxury rating for their hotels in the U.S.; but we felt we had leverage of a strong brand name with high margins within South America, and a growing emerging market. Our third consideration was as to how we would initiate our negotiations. We decided that the Lambert group made overtures, and thus should be the ones to bring forth the first offer. We felt if we put an offer forward we would lose our position of strength and felt that since they traveled to meet with us it would be natural for them to make the first overture. In our opinion this tactic would put us in the position of strength as they would likely be impatient and have a pre-defined flight back to the U.S. We thought time would be on our side and delays would be an ally in our strategic plan. We wanted to appear to have the upper hand at all times and show we were in control and in charge of these discussions, despite the fact they were the pursuing company. We defined each of our positions as VP's of Finance, Marketing, International Relations and Operations. These titles came naturally to us based off the inputs of each person during our preparation time. It was imperative to have precise titles as equals so we conveyed we were on the same standing and were not going to digress or undermine each other during group negotiations. Lastly, we knew our BATNA was 300 points, although a simple strategy would have been to achieve a value above this, it would be inconsistent with our culture, company values and interests of our management team. Unlocking the best value would allow us to retain our standing with our employees and managers, and such respect was of the upmost importance to each of us. Thus, we set a goal of equal merger and were unwilling to go below a 52-48 split and 4 seats on the board. We understood this would