Dealing with Power Imbalance and Authoritative Consent in Multiparty Negotiations: A Case Study

Aditi Tripathi*

Abstract

Negotiations are an effective means of dispute resolution but they lack a proper procedural framework. The author has focussed on various challenges and forms of complexities faced in a multi-party negotiation at different stages along with various techniques that can be used as stimulating factors to overcome the hindrances encountered in multiparty negotiations. The author has discussed negotiations between Tata, Jaguar, and Land Rover for international mergers and acquisitions in the auto industry to show how the power imbalance can be resolved through a five-step process in multi-party negotiations.

Introduction

In the contemporary dispute redressal mechanism, negotiations have gained a lot of popularity because of the simplified structure and desirable results. In cross border trading and commercial world, negotiations involve multiple parties with different interest, goals and relationships.[1] It is characterised by vast connectivity, multiple constitutions, and ongoing consent.[2] These factors often lead to the problem of power imbalance and authoritative consent.

Contemplate a disagreement between a group of friends over the type of cuisine they want to eat. One wants vegan, others wants seafood and the others are indecisive. The possible solution to every place to eat is rejected with a ‘NO’. Since effective negotiations fail, the two friends who exercised authority in the group tried to form a coalition and imposed a majority decision on others. The same problem of power imbalance and authoritative consent exists in negotiations. In order to deal with it, it is equally imperative to compartmentalise the challenges to come up with effective solutions to deal with them.

Challenges marked in Multi-Party Negotiations

Multi-party negotiations generate complexity and ambiguity because of a number of potentially interacting variables and constraints.[3] Social Imbalance/Complexity, Informational Complexity, Logistical Complexity, and Procedural Complexity are the three major types of complexities thar exists in any multiparty negotiation.[4]   

Social complexity concerns with the social environment and the group dynamics and other factor inter alia that affect the way the negotiators work. Informational and Procedural Complexity arises from differences in the objectives, goals, and interests of the several parties having different expectations. The objective of every party is to maneuver the process in order to satisfy most of their demands and it often delays the negotiation process leading to failure to reach an acceptable solution. However, there are models and procedures through which the complexities and challenges can be dealt.

Dealing with the Challenges

Negotiation is marked with three stages, i.e., Pre-negotiation stage, Formal Negotiation Stage and lastly the Agreement stage. In this life of negotiation, steps are required to be taken at all the three stages as to avoid power imbalance and the regime of authoritative consent. These can informally help parties to overcome complexities inherent in the process of negotiation.

Pre-Negotiation StageFormal Negotiation StageAgreement Stage
Defining objectives and developing an agenda Defining the relationships between the parties Understanding the financial cost and consequences in case of a no-agreement situation.Adherence to the procedure and the conduct of the process Channelize the information and perspectives coming to the table Strife for an effective solutionReview the BATNA Effective Implementation Effective follow-up

The above-mentioned solution is informal but depends on the parties in the process and is governed internally. However, certain measures can be taken externally as stimulating factors in order to remove the issue of power imbalance and authoritative consent

Procedural management of the process (Payoff Matrix)

Payoff Matrix is a procedure that can be developed by parties for reducing the ambiguity in a negotiation.[5] Elizabeth Mannix of Cornell University states that, a payoff matrix must provide a road map to identify the issues to be discussed and state parties’ priorities as well. It should also facilitate the formation of functional groups that serves as a bridge between the parties. Moreover, in the course of negotiations, when the interests of the parties keep on fluctuating, then the payoff matrix keeps a track of this change in parties’ preferences.[6]

Calculate the dynamic BATNA- what situation for what type of negotiations

BATNA is the Best Alternative to the Negotiated Agreement. It is imperative to consider that negotiations can be either integrative or distributive and the BATNA must be formulated to satisfy the need of every format.[7] BATNAs must be independent and flexible so as to fix in with the “the constantly shifting or kaleidoscopic nature of each party’s best alternative to negotiated agreement”.[8]

MATNA

Multiple Alternative to the Negotiated Agreement- In multi-party negotiation, since there are a constant power dynamics, imbalance and authoritative regime and therefore there is a need to identify, develop and carefully assess the multiple alternatives to the negotiated agreement so that the objectives and the interests can overlap in whatsoever circumstance.

What to do in case of a no-agreement situation

There can be instances wherein the parties are unable to reach a solution because of power imbalance. In such a situation of no settlement or agreement, it is advisable and effective if the parties draw up an elaborate decision-making technique so that no conflict further arises. Another way to deal for such situations of disagreement is to appoint a facilitator to act as an ultimate decision-maker.[9]

‘Coalition Game’

Coalition is a way for individually weaker parties to gain power. The question is do such coalition games really help or hamper the path of reaching integrative solutions.[10] In the power abuse and the different voices in multi-party negotiations, it is difficult for some parties to be heard. It is here coalition comes as a powerful tool to build strength. But sometimes, it can be used by powerful key players in again to obtain authoritative consent and lead to bias. The objective of a dispute resolution mechanism like negotiation is to focus on interest and not position and such coalition games work on majority and not conforming to the interests of parties in consensus and therefore norms against coalition games is certainly the need of the hour.[11]

The Model

Yavinder S. Rana defined a detailed and comprehensive framework spiralled around 5 linked stages to conduct any negotiation process[12]

  • Identifying and mapping the different stakeholders in in the negotiation process
  • Formulation of the goals and interests of various stakeholders  
  • Identification and formation of the possible coalitions
  • Managing the procedure while dealing with the complexities
  • Deciphering the nature and scope of each party’s BATNA

He explained thar after following the steps, the negotiation is expected to satisfy the interests of all the stakeholders involved.[13] The structure comes out to be an effective way of dealing the problem at hand as in the process the essence of negotiation as a method of dispute resolution is maintained and the considerations of all parties are placed on the same footing.

Case Study

Study of negotiations between Tata, Jaguar, and Land Rover for international mergers and acquisitions in the auto industry.

The case study is focussed on Ford Motors which was running into losses in the year 2006. It had become essential for them to sell Jaguar Land Rover.[14] JLR had three manufacturing sites and two advanced design centres consisting of a huge workforce in the UK. JLR customers were supposedly perceived to be brand loyal and highly nationalistic.[15] In the subsequent year, Ford announced Tata Motors as its preferred bidder. However, this wasn’t this easy, the Union was concerned with the employment of the workforce. The public was concerned with the ‘Britishness’ of the brand. Ford was aiming to recover losses and Tata looked all of this as a lucrative business opportunity. Negotiations initiated between the three key players. Tata being in a position of power played up in the negotiations to get its maximum objectives fulfilled.

If we apply the five-stage framework to the negotiations between these automobile firms, the structure and constraints in the negotiation process can be dealt with very smoothly.

Stage 1Identification of the players and classification– In the instant case, the players can be identified and classified as follows-

Level one playersLevel two playersLevel three players
Ford Tata UnionUK Government Competitors for JLRJLR dealers and clients Public opinion  

Stage 2Identification of the interests and goals of parties– The interests of the parties are-

TataFordUnion
Acquire a premium bandExpand its business operationsAcquire resources and JLRWanted to keep its goodwill and reputationSell JLRPreserving the jobs of the workers

Stage 3Identification and formation of coalitions– Tata adopted the correct approach by firstly dealing with Union by meeting all its demands relating to the workers and then government and the public opinion and finally then approached Ford for direct talks.[16]

Stage 4Managing the procedure while dealing with complexities- The complexities were not so much in the instant case as Tata proactively diffused skepticism by the presentation of their case.

Stage 5Understanding the nature and scope of each party’s BATNA- Until this stage and in the process of negotiations, Tata had already identified and defined the structure of negotiation and has efficiently worked upon the range of potential outcome (BATNA) and therefore, Ford had the best option of selling the brand to Tata.

After the conclusion of the last stage, it can be reasonably concluded that following the five-step process that Ford had the best option of selling the brand to Tata after negotiations and satisfying the interest of all the stakeholders involved in this process.

Conclusion

With growing commercial world and the need to maintain business relations with all stakeholders of the corporate community, dispute resolution through multi-party negotiations offers a positive and amicable way. It has no doubt become an inseparable part of cross border and commercial disputes but is faced with the problem of power imbalance. In order to make it an effective means of dispute resolution, there must be formulation of efficient procedures and institutionalization of the process for bringing trained negotiators in the dispute resolution arena.  


* Aditi is a student at Maharashtra National Law University, Nagpur. She can be reached at her LinkedIn.

[1] Sanda Kaufman, Debroah Shmueli & Connie P. Ozawa, Negotiations in Public Sector: Applying Negotiation Theory to Multi-Party Conflicts, 1 int’l neg. jlr, 59-73 (2018).

[2] Stefanos Mouzas, A Network on Negotiation: What is new and Why it Matters (Nov 2, 2019, 03:00pm), https://www.researchgate.net/publication/291184735_A_Network_Perspective_on_Negotiation_What_Is_New_and_Why_It_Matters.

[3] Andrew Trask, Andrew DeGuire, Betting the Company: Negotiation Strategies for Law and Business (1st ed. 2013).

[4] Mnookin, R.H., “Why negotiations fail: An exploration of barriers to the resolution of conflict,” 8(2) Ohio St. JLR of DR, 235–249 (1993).

[5] Sidharth Thakur, Multi-Party negotiations- Meeting the Challenges & Finding Resolution, Project Management & Ideologies (Nov 4, 2019, 2:34am),  

https://www.brighthubpm.com/methods-strategies/116125-the-unique-challenges-of-multi-party-negotiations/.

[6] Larry Crump and A. Ian Glendon, Towards a Paradigm of Multiparty Negotiation, 8(2) int’l neg. jlr, 197-234, (2003).

[7] Carrie Menkel-Meadow, Chronicling the Complexification of Negotiation Theory and Practice (Nov 1, 2019, 06:11pm), https://www.researchgate.net/publication/47505385_Chronicling_the_Complexification_of_Negotiation_Theory_and_Practice.

[8] 1 Lawrence E Susskind, Larry crump; Multi Party Negotiation (2008).

[9] Christian Bühring-Uhle, Arbitration and Mediation in International Business §6 (2nd ed. 2006).

[10] Katie Shonk, Managing a Multi-Party Negotiation, Expert Advice on Handling Multi-Party Negotiation and the Complications created by Multiple Parties (Nov 2, 2019, 02:50pm), https://www.pon.harvard.edu/daily/dealmaking-daily/managing-a-multiparty-negotiation/.

[11] Christopher Dupont, Negotiation as Coalition Building, 1 int’l neg. jlr, 47-64 (1996).

[12] 1 Lawrence E Susskin & Larry Crump, Multi Party Negotiation (2008).           

[13] Yavinder S. Rana, A Multiparty Perspective in Cross-Broder Negotiations: Insights from the Automotive Industry (Nov 2, 2019, 02:43pm), https://www.researchgate.net/publication/279918369_A_Multiparty_Perspective_In_Cross-Border_Negotiations_Insights_from_the_Automotive_Industry.

[14] S Arnott, Booming sales at Jaguar Land Rover boost Tata Motors Profits (Nov 1, 2019, 03:05pm), http://www.independent.co.uk/news/business/news/booming-sales-at-jaguar-land-rover-boost-tata-motors-profits-2049056.html.

[15] V Sood & S. Seth, How Tata Motors turned JLR around, (Oct 21, 2019, 02:12pm),  http://www.livemint.com/Companies/UhROXPttBWa40lVOgtS6wL/How-Tata-Motors-turned-JLR-around.html.

[16] M.W. Morris & Y.S. Rana, Program on Social Intelligence: Negotiating International Acquisitions:  The Tata JLR Case (Nov 2, 2019, 12:32pm), http://www8.gsb.columbia.edu/psi/workshops/culture.


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