7 dec china

!!

BA#244:#Supply#Chain#Management#

Pre%nego)a)on!

prepara)on!

Actual!

Nego)a)on!/!

Interac)on!

Post%nego)a)on!

follow!up!

IMPORTANT!*

STAGES#OF#NEGOTIATION#

RELATIONSHIP#SPECTRUM#

Compe))ve! Collabora)ve!

ORIENTATIONS!TO!NEGOTIATION!

Distribu2ve*Bargaining* Integra2ve*Nego2a2on*

Compe))ve! Collabora)ve!

Best!outcome?!

RANGE!OF!NEGOTIATION!

OUTCOMES!

WIN;LOSE! LOSE;LOSE! WIN;WIN!

WIN;PERCEIVED*WIN*

Most!advantageous!

to!you!

+!rela)onship!

objec)ves!

Buyer!

Supplier!

Range!of!Nego)a)on!

Zone!of!Poten)al!Agreement!

LAA!MFP!/MDO!

LAA! MFP!/MDO!

Price,!PHP!

Price,!PHP!

RANGE#OF#NEGOTIATION#

BEST#ALTERNATIVE#TO#A#NEGOTIATED#AGREEMENT#(BATNA)#

•  When!you!walk!away,!you!need!a!back%up!plan!

(BATNA)!

•  Provides!leverage!

!

!

!

!

!  Increase!expert!and!informa)onal!power!

!  Gather!Market!Intelligence!

!  Increasing!legi)mate!power!

!  own!legi)mate!authority!or!a!higher!authority!

!  Manipula)ng!structural!factors!in!buyer%supplier!

!  Aggrega)ng!volume!

!  BATNA!

HOW#TO#IMPROVE#YOUR#LEVERAGE?#

WHAT%HAPPENS%DURING%A%NEGOTIATION?%

Opening!!

Tes)ng!and!

Proposing!

Agreement!and!

Closure!

Rapport! –! developing! a! sense* of*rela2onship* or! connec2on! with!another!person!

!

Power!Distance!

NON1VERBAL%COMMUNICATION%–%INFLUENCE%OF%CULTURE%

Uncertainty!Avoidance!


Individualism%Collec)vism!


Gift#Giving#in#China#

!  Steidlmeier, P. 1999. Gift Giving, Bribery, and Corruption: Ethical Management of Business Relationships in China. Journal of Business Ethics. 20: 121-132.!

China#101#

Industry#Classifications#

Encouraged*Industries!!  Middle!and!West!region!

!  High%end!product!manufacturing!

!  Energy%saving,!Environment%

friendly!

China#101#

The case of China’s successful contemporary enterprises

•  Founded!in!1984!with!an!ini)al!capital!outlay!of!only!2!

million!yuan!funded!by!Chinese!Academy!of!Sciences!

•  On! April! 1,! 2004,! the! company! changed! its! name!

Legend!to!Lenovo


•  A Chinese investment holding company whose subsidiaries provide mass media, entertainment, Internet and mobile phone value-added services, and operate online advertising services in China.

•  Founded by Huateng MA and Zhidong ZHANG in November 1998 as Tencent Inc.


•  Founded in 1987

•  Headquartered in Shenzhen

•  Ranked No. 2 in the world among ICT providers

China’s#Economic#Transition#

Gift#Giving#

!  Prevalent!in!Filipino!Supply!Chain!Rela)onships!

Gift#Giving#in#China#

Cultural#Databases#

!  Ar)facts!

!  Things!that!can!be!seen!or!heard!

!  Who%what%where%when!

!  e.g.!what!gi_s!and!to!whom,!gree)ng!

!  Social!Knowledge!

!  Social!process!and!values!used!as!reasons!

!  How!and!Why!

!  Mediates!between!the!two!

!  Cultural!Logic!

!  Worldview!which!grounds!social!behavior!

!  e.g.!harmony,!jus)ce!

Business#Culture#in#China:#Guanxi#

!  Guanxi*!  Network! of! rela)onships!

among!various!par)es!that!

cooperate! together! and!

support!one!another!

!  Organiza)on! minimizes! the!

r i s k s ,! f r u s t r a )on s ,! a n d!

disappointments! when! doing!

business!in!China!

!  That! is! why! the! correct!

"Guanxi"! is! so! vital! to! any!

successful! business! strategy! in!

China!

Business#Culture#in#China:#Guanxi#

!  Develop! rela)onships! with!

suppliers,! retailers,! banks,! and!

local*government*officials!!  They! can! indirectly! link! you! to!

new! a cqua i n t an ce s! and!

informa)on! resources,! thus!

helping! you! to! develop! other!

right!"Guanxi"!you!need!

!  The! company! has! to! maintain!

the! rela)onship! if! it! wants! to!

do! more! business! with! the!

Chinese!

Guanxi#Rank#

!  Family!

!  Friends!

!  Other!Chinese!

!  Outside!World!

Chinese#Relationships#

!  Mian!zi!

!  Respect!one!owes!in!terms!of!face!

!  e.g.!not!publicly!disagreeing!

Individualism#vs.#Group#Identity#

!  Standing!out!and!Individual!crea)vity!

!  VS.!Defining!place!within!the!group!

Reciprocity#

!  To!approach!another!and!bring!nothing!is!unusual.!To!accept!a!gi_!and!not!reciprocate!is!perceived!as!

morally!wrong!

Reciprocity#

!  Commission!

!  Pay!for!services!

!  Gratuity!!  Express!gra)tude!

!  Bribery!!  Gain!favor!

Doing#Business#Right#in#China#

!  Not!universal!across!regions!!  Local!officials!have!tremendous!discre)onary!power!

What#is#your#company#gift#policy?#

Internal#Supply#Chain#

Procurement! Produc)on! Storage! Distribu)on! Sales!and!

Marke)ng!

Inventory#System#

!  Specifies!!  How!much!stocks!should!be!maintained!

!  Replenishment!Schedule!

!  Replenishment!Order!Size!

Inventory#Cost#

!  Includes:!!  Carrying!

!  Order!Processing!

!  Stock%out!

!  Set%up!

Inventory#

!  Is!a!stock!of!item!or!asset!in!the!organiza)on!

Why#keep#inventory?#

!  Balances!Supply!and!Demand!

!  Cushions!impact!of!demand!fluctua)on!

!  Stocks!are!ready!for!sudden!requirements!

!  Buffer!between!cri)cal!supply!interfaces!

!  Supplier%Warehouse!

!  Warehouse%Produc)on!

!  Produc)on%Marke)ng!

!  Allows!economies!of!scale!

!  Procurement!

!  Transport!

!  Manufacturing!

Carrying#Cost#

!  Variable!costs!due!to!keeping!inventory!!  Storage!

!  Deprecia)on!

!  Rental!

!  Insurance!

!  Handling!

!  Opportunity!

!  Interest!

!  Obsolescence!

!  Expira)on!

Order#Processing#Cost#

!  Fixed!Costs!related!to!processing!orders!for!inventory!replenishment!

!  Labor!

!  Inspec)on!and!Receiving!deliveries!

!  Quality!Check!

!  Returns!and!Reprocessing!replacements!

!  Transport!

!  Handling!

!  Documenta)on!

StockXout#Costs#

!  Semi%variable!costs!incurred!when!stocks!are!

depleted!and!orders!are!not!served!

!  Sales!and!profit!loss!

!  Back!order!processing!

!  Lost!Customer!goodwill!

!  Penal)es!for!late!delivery!

SetXup#Costs#

!  Fixed!costs!incurred!for!changing!over!the!produc)on!set%up!to!replenish!inventory!

!  Labor!

!  Documenta)on!

!  Lost!Produc)on!Time!

Inventory#Systems#

!  Q%model!

!  Fixed!order!quan)ty!model!or!EOQ!model!

!  P%model!

!  Fixed!period!model,!periodic!review!system,!fixed!

order!interval!system!

!!

End#