Base on the case study in the pictures, help with an analysis and write a negotiation plan as/for the managementbased on the following

1) Introduction

2) Case Synopsis

3) Negotiation Issues

4) Planning for the Negotiation

5) Preparation, Factors and Strategies using models

High grades will require a thoughtful integration of key concepts and research evidence with case data/facts

Exercise 10 Universal Computer Company Introduction In this exercise you will play the role of a plant manager who has to negotiate some arrangements with another plant manager. You will be in a potentially competitive situ- ation where cooperation is clearly desirable. Your task is to find some way to cooperate, when to do so might seem to put you at a disadvantage. Read the background information section and the role information that the instruc- for has provided. Do not discuss your role with other class members. Plan how you will handle the forthcoming meeting with the other plant manager. Record your initial pro- posal on the Initial Settlement Proposal form. Do not show this to the other party you are negotiating with until after the negotiations are completed. Background Information The Universal Computer Company is one of the nation's major producers of computers. Plants in the company tend to specialize in producing a single line of products or, at the most a limited range of products. The company has considerable vertical integration. Parts made at one plant are assembled into components al another, which in turn are assembled into final products at still another plant Each plant operates on a profit center basis. The Crawley plant produces computer chips, modules, cable harnesses, and termi- nal boards, which are shipped to other company plants. In addition to numerous computer chips, the Crawley plant makes more than 40 different modules for the Phillips plant. The two plants are about five miles apart. The Quality Problem Production at the Phillips plant has been plagued by poor quality. Upon examination it has been found that a considerable portion of this problem can be traced to the quality of the modules received from the Crawley plant. The Crawley plant maintains a final inspection operation. There has been con- siderable dispute between the two plants as to whether the Crawley plant is to main- tain a 95 percent overall acceptance level for all modules shipped to the Phillips plant, or to maintain that standard for each of the 42 modules shipped. The Phillips plant manager has insisted that the standard has to be maintained for each of the 42 individual modules produced. The Crawley plant manager maintains that the re- quirements mean that the 95 percent level has to be maintained overall for the sum of modules produced. Experience at the Phillips plant shows that while some module types were consistently well above the 95 percent acceptance level, 12 types of mod- ules had erratic quality and would often fall far below the 95 percent level. As a re- sult, while individual types of modules might fall below standard, the quality levelInitial Settlement Proposal Plant How do you propose that the following axperes and repairs should be handled? Exports of repairing all faulty modules Expense of repairing faulty modules other than the 12 types that fall below the $6 percent lovely Exporate of repairing the faulty modules of the 12 types that fall below the 95 percent level: How to handle the repair of the faulty modules of the 12 types that fall below the 95 percent Tovol: How to handle the topair of the modules other than the 12 types that fall below the 95 percent lavol: for all modules was at or above the 95 percent level. This raised serious problems a the Phillips plant. since the quality of its products is controlled by the quality of the poorest module. The Interplant Dispute The management of the Phillips plant felt that the quality problem of the modules received from the Crawley plant was causing them great difficulty. It caused prob- len's with the customers. who complained about the improper operation of the prod- usis that contained the Crawley modules. As a result, the Phillips plant operation had earlier added secondary final inspection of its completed products. More recently it had added an incoming inspection of 12 poor-quality modules received from the Crawley plant. There were times when the number of modules rejected was large enough to slow or even temporarily stop production. At those times. to maintain pro- duction schedules. the Phillips plant had to work overtime. In addition, the Phillips plant had the expense of correcting all the faulty units received from the Crawley plant. Ideally, the management of the Phillips plant would like to receive all modules free of defects. While this was recognized as impossible, they felt that the Crawley plant should at least accept the expense of repairs, extra inspections, and overtime required by the poor quality of the parts. Since installing incoming inspection procedures on the 12 modules, the Phillips plant had been rejecting about $13.0100 of modules a week. For the most part, these had been put into storage pending settlement of the dispute as to which plant should handleFinal Settlement Agreement How, exactly, did you agree that the following expenses and repairs would be handed? Expense of reporting all faulty modules Expense of repairing lauity modules other than the 12 types that fall below the 95 percent Expense of repairing the faulty modules of the 12 types that fall bolow the 85 percent level: How to handle the repair of the faulty modules of the 12 types that fall below the 95 percent lovet How to hide the ropair of the modules offer than the 12 types that fall below the 95 porcont level: Heprosentalive, Phillips Plant Representative, Crawley Plan repairing them. Occasionally. when the supply of good modules had been depleted. repairs were made on some of the rejected units to keep production going. The Phillips plant had continued to make repairs on the remaining 30 types or modules as the need for repairs was discovered in assembly or final inspection. From its perspective, the Crawley plant management felt that it was living up to its obligation by maintaining a 95 percent or better quality level on all its modules shipped to the Phillips plant. Further. they pointed out that using sampling methods on inspec- tion meant that some below-standard units were bound to get through and that the expense of dealing with these was a normal business expense that the Phillips plant would have to accept as would any other plant. They pointed out that when buying parts from outside suppliers it was common practice in the company to absorb the expenses from handling the normal level of faulty parts. The Phillips plant management argued that the Crawley plant management was ignoring its responsibility to the company by forcing the cost of repairs onto their plant. where only repairs could be made-rather than having the costs borne by the Crawley plant. where corrections of faulty processes could be made.Universal Computer ROLE INFORMATION FOR THE PHILLIPS PLANT MANAGER Phillips and Crawley are two separate plants and profit centers owned by Universal Computer. The quality problem on the modules coming from the Crawley plant has been the most frustrating problem you have had for some time. Not only has the expense of rework and repairs, overtime and additional inspections increased the cost of operation of your plant, but complaints from customers and occasionally failing to meet production schedules have gotten you a lot of unfavorable attention from higher management. What is particularly frustrating is the fact that the difficulty comes from a single area, and also that there is so little you can do directly about the matter. You would like the additional expenses resulting from these problems to be transferred to the Crawley plant. The plant manager at the Crawley plant has been very stubbom about this matter and has refused to accept any of the costs. While Crawley has been working on the problem and quality has improved somewhat, you have doubts that it will ever be of a desired level for all modules that you receive from their plant. They have made the argument that expenses incurred because of faulty modules should be borne as a regular business expense the way they are for all products purchased outside. While it is true that Phillips has repaired some poor quality items received from other vendors, this is usually done to avoid interrupting production by sending them back to the supplier. You do not know why the company does not charge the supplier for these costs, but assume that it is because it is difficult to write into a purchasing agreement. In any event, when the materials received from an outside supplier do occasionally get bad enough, a shipment will be rejected and sent back. You do not think it is to the company's benefit to accept these costs on items made in its own plants. If the supplying plant had to absorb the costs, pressure would be created within that plant to reduce, if not eliminate, these expenses. Because the company does not have this practice, however, you are not sure you can get the other plant to accept the repair expenses for all poor quality modules. You are determined, however, that they will have to absorb the expenses on the cost of repairing faulty items of the twelve types of modules where quality has been found to be below the 95% level. You feel strongly that the plant manager of the Crawley plant is making an inaccurate and unfair interpretation of the way the 95% level of quality is to be applied. You are also troubled by the delays in production (often requiring overtime) when large numbers of rejects occur on the twelve types of modules often found with poor quality. You are not too optimistic about getting the Crawley plant manager to accept overtime costs for production, but you are going to insist that either they accept the faulty parts back to replace or repair them quickly, or that they pay you to put repair staff to work on them, even if overtime is necessary. Unfortunately, while this dispute has gone on, modules have been rejected in incoming inspection at a rate of about $15,000 a week. You have refused to work on these, arguing that they should be handled by the Crawley plant. They have refused to accept any responsibility for them. Before long this will come to the attention of the Vice President of Manufacturing and you feel quite sure that both you and the Crawley plant manager will be called on the carpet for not having solved this problem. You have set up a meeting with the Crawley plant manager at his plant for one last effort to try to settle this matter