CASE STUDY Negotiation case study: Child labor in Indonesia for an American Colossal of shoes

The ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, and environmental pollution are not always clear-cut. However, what is becoming clear-cut is that managers and their companies are feeling more of the marketplace pressures from customers and other stakeholders to be transparent in their ethical decision-making. At the same time, there is no universal worldwide agreement about what constitutes accepted ethical principles and ethical dilemmas in negotiations.

In 2016, a visiting American executive found that a foreign subsidiary in Indonesia has hired a 12-year-old girl to work on a factory floor. Appalled to find that the subsidiary is using child labor in direct violation of the company's ethical code, the American instructed the local manager to replace the child with an adult. The local manager dutifully complied. The girl, an orphan, who was the only breadwinner for herself and her six-year-old brother, was unable to find another job, so in desperation, she turned to prostitution. Two years later, she died of AIDS. Back in 2022, as a member of the management board of the Hula Hoop multinational with headquarters in San Francisco and subsidiaries on all continents and one of the most well-known shoe retail firms, you are called to form a negotiation team to decide on the prohibition against child labor in the companys ethical code. The recent corona crisis has raised corporate responsibility and sustainability dilemmas, and one of your competitors, Elora multinational with headquarters in Vermont and a member of the world fair trade organization (WFTO), has brought up the issue of the executives obligation in the agenda.

Additional information

Must focus on the Hula Hoops perspective and analyze the terms of the agreement proposed by your side after having researched international trade agreements between involved countries, USA and Indonesia, the economic power and growth of the shoe retail industry, the impact of WFTO on business, the cultural perspective as a great influential factor, and any other factors might interfere with, based on PESTEL analysis (politics, economy, societal issues, technology, environmental legal implications).

Additional information: - Both firms are considered colossal in the field - HR Capital higher than 9K in both companies - 2021 global revenues of $ 10 billion

Clarifications There are three involved parties o Indonesian manufacturer o American Hula Hoop distributor and retailer o American Elora distributor and retailer

- The theme of the negotiation is the ethical decision of whether to support or not and in what way or to what extent, the child labor in the manufacturing company of their subsidiaries in an Asian country. - We are in this group negotiate on the behalf of Hula Hoop multinational. - Elora multinational pushes towards the exclusion of child labor in the refereed subsidiary country.

Answer the QUESTIONS as per above case study 1. Choose the members of the committee considering the already existing board of managers. Any additional individuals or changes must be justified. 2. Identify the interest and the position of both involved parties/firms. 3. Identify the bottom line on the behalf of your party. 4. List all actions that must be done to prepare for the negotiation. 5. Describe the negotiation strategy and the negotiation style as a member of the Hula Hoop multinational. 6. What issues are most important to you? (List in order of importance) 7. What is your BATNA? Reservation Point? Aspiration Point? 8. What are your sources of power?

9. What do you think are the issues that are most important to your opponent? (List in order of importance) 10. What do you think is your opponent's BATNA? Reservation Point? 11. What do you think are your opponent's sources of power? 12. Think and briefly discuss the involvement of other parties that might be involved or interested in this negotiation (strategic mapping) and why. 13. Consider and address potential biases in this negotiation. 14. Briefly address the zone of the agreement since your assignment will not determine the negotiation agreement. There will be no outcome. You may think of a contingent contract instead.