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SCENARIO: Three years ago Flagship Airways signed a ten-year, $1 billion contract with Eureka Aircraft Engines. Since then, things have changed for both Flagship and Eureka. Flagship's revenues have steadily decreased and they are now reluctant to put forth $1 billion to expand. Meanwhile, Eureka's development of its "revolutionary" engine has not proved as efficient as Eureka had hoped. Today, at Flagship's request, the two companies are meeting to discusshow to restructure the agreement. This is not an unprecedented procedure. The two companies have met in the past to restructure deals when circumstances have changed significently for either party. In their negotiation, there is a great deal of data to be managed by both parties. There is also a longstanding relationship between the two lead negotiators for each side. Each must decide how to secire the best deal for his/her respective company, while maintaining their relationship. Each must also build trust within his/her team to make sure that the terms agreed upon are acceptable to all. MAJOR LESSONS: To insure relationships that promote quality within the organization, both long-term and short-term interests must be balanced very thoughtfully. This exercise demonstrates the dependency of successful internal negotiations on successful external negotiations. Thorough preparation is absolutely critical in this negotiation. Dont' jeopardize long-term relationships by pushing too hard for short-term gains. Effective cross-cultural negotiation depends upon making sure what you are saying is what is being heard and that you are hearing what is said. Clear communication is critical. SIMILAR SITUATIONS: Common Measures BMP Policy Multisumma
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