1. 3/8/2012
GROUP
ASSIGNMENT
DECISION MODELS IN NEGOTIATION
Submitted By | LEE Yijung, LEPOUTRE Gaetan, PRASAD Naveen, REDON Annesolene
IÉSEG School of Management

2. Example 1:
‘Whether Walmart should be allowed to enter India or not?’ has recently been a topic of huge
discussion and debate in India and hence after attending the lectures on ‘Decision Models in
Negotiation’, specially Game Theory, I was inspired to write a case on how Walmart can
use Game Theory to negotiate about its entry in India with the Indian government.
Introduction
Walmart is an America based Multinational Corporation that runs chains of large discount
department stores and warehouse stores. With revenues of close to USD 422 billion (as per
2011 data), it is the world’s largest retailer. Out of this, Walmart’s International (Outside
USA) sales are expected to be around USD 130 billion. The company eyes a growth of 25%
year on year basis for its international ventures. To achieve this, they have been trying to
enter India which has a huge market and great potential for growth. However, the government
of India, fearing fierce competition for the local retailers, have restricted Walmart’s lavish
entry to India.
Walmart may choose to negotiate with the Indian government officials or choose to stay out
of India.
Analysis from the perspective of Game theory
Indian Government
W
a Harsh Medium Soft
l Harsh -1.-5 4,2 X
m
a Medium 1,4 2,2 X
r
t Soft 0,5 1,3 X
If Walmart is very soft in approach and the Indian government is very tough, Walmart
will have to accept all the terms and conditions of the government, which might include
compensating the local retailers, picking up stock from the Indian landscape only (no
imports), no expatriates from America, etc.
This would increase Walmart’s liability to great extent and it is not sure if they will be able to
break even the heavy investment they need to make to enter India. On the other hand, it will

3. help the Indian government boast of its competency and garner accolades from the people of
India.
Therefore, I give a score of (0, 5) in favour of Indian government in this situation.
If Walmart takes a medium approach to the negotiation and the Indian government acts
tough, Walmart will still have to accept majority of the terms and conditions laid down by
the Indian government.
This would reduce Walmart’s profit margin and restrict Walmart International’s growth. On
the other hand, it will help to increase the economy of India, increase employment and
enhance the government’s rapport among the citizens, which can eventually help them in
elections.
Therefore, I give a score of (1, 4) in favour of Indian government in this situation.
If both take a harsh approach to situation, it is impossible to strike a deal. If both of them
are adamant, the Indian government will not allow Walmart to come to India. In such a
situation it is a loss for both the parties. Walmart will lose an opportunity to explore the
growing Indian market and expand its international ventures. On the other hand, Indian
government will lose the opportunity of the world’s largest retailer coming to their country.
Alternatively, they may have to look for other big retailers, which is a tough task.
Therefore, I give a score of (-1, -5), which is a loss for both the parties.
In case the Indian government takes a Medium approach and Walmart takes either
Medium or Soft approach, it may be allowed to enter India via a Joint Venture with any of
the Indian retailers. Walmart will have to share profits in such scenario and also work in co-
operation with the other firm.
Therefore, I give a score of (2, 2) and (1, 3) for these situations.
Considering the tough nature and egoistic behaviour of the Indian government officials, it is
almost impossible that they will take a soft approach to such negotiations. I, therefore, put
a cross throughout this section.
What I propose
In case the Indian government takes a Medium approach, Walmart should act harsh.
Walmart should say “Look, if I do not come to India, you lose on opportunities to enhance

4. your economy growth, employment, imports/exports”. Moreover, a failure to woo Walmart to
come to India will be taken as an incompetency of the Indian government which will
adversely affect them in the next general elections. Also, Walmart should threaten to enter or
enhance their investments in the markets which pose great competition to India, like: China,
Brazil, Russia and other developing countries. This would hamper India’s growth in
comparison to its competitor countries.
I feel the stakes are high for the Indian government in this situation and if negotiated
properly, the Indian government will bow to the proposal of Walmart.
I give a score of (4, 2) in favour of Walmart.
Example 2:
Trust in negotiation
In this part of the assignment we will focus on the impact of Trust while negotiating that is to
say the relationship that a negotiator fosters with the counterpart. After a short theoretical
background of the notion of trust, we will illustrate the concept through an historical
example.
It is easy to think that in a negotiation context we are dealing with abstract
representatives instead of human beings. As R. Fischer and W. Ury said in their book Getting
to Yes, “negotiators are people first”. They follow this statement by an analysis showing the
pros and cons of this. Indeed, through the building of a respectful, friendly, based on trust
relationship, the following negotiations will be smoother and the reach of a fair agreement
will be easier. However, a negotiator has to deal with the complexity of human emotions:
ego, perceptions, misunderstandings… “Failing to deal with others sensitively as human
beings prone to human reactions can be disastrous for a negotiation.” One of the main
important things to keep in mind in negotiation situation is that: “Every negotiators has two
kinds of interests: in the substance (the agreement that satisfies his substantive interest) and in
the relationship”. In most cases the relationship fostered with the counterparts goes beyond
the outcome reach in a specific negotiation.
According to Yan Ki Bonnie Cheng, trust in a Negotiation has three different
dimensions: Trust is a precondition, an objective and a strategy.

5. In the Chinese culture, trust in a relationship is so important that they are ready to
allocate large amount of money, time and energy to preserve their Guanxi that is to say their
network. However the definition and importance of trust depend largely on the cultural
context. Then, in extreme cases it is possible to find negotiations that are not build in any
relationship and doesn’t search for trust even if it will be easier in order to communicate. It is
the case for example in the hostage-takers negotiations.
An historical example: The Reagan-Gorbachev Relationship
Reagan and Gorbachev in 1985 in the Geneva Summit
This relationship links the two most powerful men in the 80’s. The world is split in
two blocks: the USA in one hand, the USSR in the other hand. It’s the cold war, the clash
between capitalism and communism: the two main economic models of that time. At the head
of those two great powers: Ronald Reagan: president of USA and Gorbachev at the head of
the communist party in Moscow. In 1985, it has been 40 years that those two countries
confront each other through intermediary countries. The succession of president of each
power didn’t give any improvement in the relationship.
The world has to wait for the second term of the president Reagan to see a warming
up in the relationship of the blocks. Reagan recognizes the improvement of the USSR politic
with Gorbachev at the head of the Kremlin. This is the reason why he organized a summit in
Geneva in 1985 with Gorbachev. One year earlier, he asked for ”negotiation and dialogue,
rather than confrontation, and a common interest in avoiding war and reducing the level of
arms.” We see here that Reagan changes his tone; he is ready to listen to what the other parts
need to tell him. His perception has changed: he doesn’t see the Soviet Union as only a threat
anymore. But the most important that make this summit a real success is the perception that
both man has on each other. They both come to this meeting without negative preconceived
idea. They “come to like and respect each other”. Then they were able to create the basis of a
working relationship based on common respect. They were seeing each other as person with

6. constraints like themselves, as fellow politicians. During this summit, they have humanized
the counterpart and recognize that they both have convictions. People who were present on
this summit talked about a “personal chemistry” between the two men. What happen in a
human dimension on this Geneva summit is fundamental in a negotiation context. They have
separated the problem from the people and understand the benefit that could come from a
trust-based relationship. It is obvious that they will understand better in the following
meetings and then take in consideration what they will listen from the counterpart. However,
trust wasn’t built in one meeting. It takes times to create this type of relations. Trust is hard to
build, easy to destroy and almost impossible to restore. Then it is important to take the
necessary time to build a strong relationship. In the case of the Reagan-Gorbachev relation,
they have met four times in four years. We can be quite sure that this relationship has
changed the face of the world as it has changed the Reagan’s perception of the Soviet threat.
“The commitment to principle that both man had, may have contributed to Reagan's ability to
appreciate changes in the Soviet Union in the sense that he perceived and responded to a
similar quality in Gorbachev. According to Alexander Bessmertnykh, Reagan and Gorbachev
"each had their own ideals which they tried to follow all through their lives. Their ideals were
not similar, but the dedication to those ideals was similar. They both believed in something....
This is what they sensed in each other and this is why they made good partners."”
Example 3:
Decision theory: the purchase by Bonduelle of a part of the American group Allens.
Explanation of the case
Through his subsidiary of North America based in Montreal, Bonduelle acquired three
factories of transformation and a packaging center of frozen vegetables to the American
family group Allens. No amount was specified. These sites employ 400 people. The
acquisition includes besides the brands Chill Ripe and Garden Classic as well as a right of
using the brands Allens and Veg-All for duration of 18 months.
Bonduelle indicated that last year, the sales of deep-frozen vegetables of Allens
represented a volume of about 150.000 tons in the United States, according to the following
distribution: 40 % with the general public, 25 % in food service (towards professionals of the
restoration) and 35 % in the industry.

7. Bonduelle Amérique du Nord, who cultivates more than 335.000 tons of vegetables in
Quebec and in Ontario, exported until then 30 % of its production towards the United States,
mainly in frozen food in the networks of the distribution “food service”. This operation will
allow to boost the growth of its sales and will be virtuous from the point of view of foreign
exchange risks (better balance of the productions and the sales in USD) and of the
distribution of its climatic risks ".
Claiming the place of world number 1 of the prepared vegetable, Bonduelle reminds
that he runs 42 sites and uses employs 7.250 people. With this operation, Bonduelle group
becomes one of the main actors of the vegetable prepared in North America and so pursues
its growth outside the European Union.
In my example, I imagine that Bonduelle has used the rational decision-making process to
make its decision of partly buying Allens, as we know that Decision theory is a tool to make
good decisions
II Rational decision-making process
Define the problem
The first step which is carried out by top management to take a decision is defining
the problem. People tend to think that the problem identification is obvious; however, this is
rarely the case. If the problem is not well defined, people will have a different definition of it,
and all the steps to reach a good decision will be miscarried out. In our case, the problem is
that Bonduelle has strong competitors in north America, has difficulty to reach new market
shares outside Europe, has climatic and exchange rate risks.
Identify the objectives
After having clearly defined the problem, you must accurately identify objectives.
Several objectives should be identified to make the management aware of the effects of their
decisions, and mainly lead the decision in a good way, which mean a decision which respond
to accurate objectives. These objectives will be dependant to the initial problem. In our case,
the objectives of Bondelle might have been to struggle against competitors, to reach new
market and to lower risks.
Generate alternatives

8. Bonduelle management has then generated possible alternatives that could have
helped in the Rational decision-making process to reach a good decision. The aim of this step
is not to appraise these alternatives, but only to list them. The numbers of alternatives you
elect depend on for instance experience, knowledge, and skills. So we can imagine that
Bonduelle has thought of doing more marketing in order to win market share, to buy other
competitors, or even to lower price in order to sell more and so to win market share.
Evaluate the consequences
This step aims to evaluate the consequences of all the different alternatives
independently. The evaluation of the consequences of the different alternatives is the final
step before making the decision. This step is rather difficult because consequences are
difficult to predict. Bondulle might have predict that lowering the selling price could have as
consequences of decreasing the quality of products in order to be cheaper to product them, or
of decreasing the margin per item. It might also have predicted that increasing marketing
could have been costly without enough return on investment.
Compute the optimal decision
A way to struggle against competitors, to reach new market and to lower risks with
the best expected consequences might have been according to Bonduelle to buy a part of the
American group Allens.
Example 4:
Example of routine in terms of business
Siemens is a global company operating in almost 190 countries in the world with more
than 405 000 employees. It has been producing the highest quality products in energy,
industry and health sectors for 160 years. According to his vision Siemens can see himself as
a pioneer in the fields of energy efficiency, high productivity and also clever money saving
solutions in logistics and other infrastructure features of the business. With regard on
orientation on the innovation and sustainable development Siemens has introduced a system

9. called 3i. The core of the system is based on creating a friendly work environment where the
employees are supported to suggest some original ideas how to reduce costs or increase
productivity. Can using of this system be seen as a routine from the view of employee?
With regarding to the soaring IT tactics, both advantage and disadvantage occurred in the
decision making process, especially Knowledge industry.
Routi
ne
decision-making model, The decision execution cycle,( Firestone & McElroy, 2007).
Analysis of 3i system
“When an act is repeated, a person can usually remember both his initial solution and
his reasons for taking that particular action, at the same time, distinguish the initial
solution whether is effective or not. (Peter Kesting and Remigiusz Smolinski, 2007)” The
first idea of this system was introduced almost 100 years ago. In 1913 in Siemens, Germany
were only 21 suggestions turned to the action. In 1963 it was 10 000 and other 50 years later
100 000 suggestions per year celebrated the success. Submissions were used to use papers for
describing theirs ideas and they needed to be patient to get decision of considering the
importance and viability of the idea. With rising number of written suggestions the system of
consideration became no more sustainable. “Tight boundaries enable focused action, such
as in high performance organisations (Weick and Roberts, 1993)” The selection of the
best ideas was extending, the process disturbed involved people in their principal work, even
though some employees had a good innovation they were not willing to share it with the
company because they could feel like be robbed of their intellectual property. “Mental
boundaries are limits in themselves, but also lay the basis for new knowledge and
organisational change. (Kogut and Zander, 1996)” Siemens was searching for the most
appropriate option how to deal with managing of the ideas. The routine of storage of papers

10. was destroyed and the software company offered the system with many useful features how
to map the process of consideration of the idea online. “With a budget, the routine cannot
only appear as a physical boundary, but also a mental boundary in addition to being a
norm for appropriate behaviour, for example: a social boundary.(Hernes, 2003)”
The adaptive phenomena
Employees are now provided by software platform where they can place their impulses for
improving their work conditions. When a new idea comes up to their mind for first time they
have to follow guidelines how to put all required details about new idea to software program,
how the idea works, which sector would benefit from the accepting of the idea, how much
money it would approximately save, name of the inventor, the department where he/she
works. “Routines contain co-ordination, cognitive and motivational dimensions (Nelson
and Winter, 1982).”
All information gathered in central system and there is a committee of knowledgeable
people who decide whether the idea will be put into practise or not. Everything is running
online. It enables speeding up the process of consideration. Reviewers create their reviews of
the ideas and determine the value of these ideas. If the idea is accepted the submitter is
rewarded by money, if not than he receives a little present for keeping his motivation to think
about alternatives how to optimize processes. The successful template which was used can be
saved and an employee can use it for another time, he will save time instead of filling all the
boxes about their personality etc. Employees also feel more comfortable with the software so
they go ahead faster. Their efficiency is higher and higher, they do not need to spend as much
time by planning how to use the software as before and their self-confidence of not making a
mistake is increasing. The topic (substance) is always new for them but a partner (the
company) remains the same. That allows a development of their creative potential and using
analytical skills to calculate a risk or estimate the uncertainty which would be taken by
implementation of their ideas.
The routine mechanism
On one hand 3i enables to gather the information about new ideas in few seconds, on the
other hand employees can tend to underestimate potential risks or overestimate the chance of
the idea to succeed with a number of repetitions. “Although the term is sometimes used in
a merely classificatory sense (U.S. Bureau of Labor Statistics, 2003)” The system can be
then full of immature impulses. Some of good ones may be then overseen if you have to
evaluate a lot of suggestions in short time and there are significant similarities among them.
After receiving the results there is a space for negotiation for some particular ideas about

11. implementing only a part of the whole concept or changing some attributes to meet better
company goals.
The own experience with this system was however strange. In subsidiary situated in Brno,
every department was forced to come up with at least three 3i proposals every month.
Conflicts are hidden in routines, because they have to be. “The embedded conflicts was
taken as a threat as a behavior routine (Nelson and Winter, 1982).” This condition
induced a nervous atmosphere at the end of every month among members of the department
and the leader of the department who was responsible for fulfilment. The employees felt
bored and annoyed by this every month routine.