MIMT 5210:

Managing Global Complexity

Session 3:
Dispute Resolution & Use of third parties

Melody M. Chao
Spring 2023
Preparation for upcoming classes
March 7 & 14 (Sessions 5 & 6)
Team negotiation simulation preparation (materials
distribute a week ahead)
SHARC
Tipal Dam
March 21 (Session 7)
Wrap-up
Preparation for upcoming classes
March 28 (Session 8)
Exam
Part 1: Individual, ~20 MC, 30 min (close-book)
Propose your own questions by March 19!
Might be selected for the exam!
Part 2: Group, ~2 essays, till end of class (open-book)
Reflection paper
From the last session…
 Deal making
Simulation exercise: Sweet Shop
Culture & negotiation strategies
Use of S&O, Q&A, MESOs strategies
Role of cultural stereotypes
Improve effectiveness in intercultural
negotiation
Our beliefs matter!

 Dispute resolution
Myti-Pet
Session 4’s focus
 Dispute resolution
Simulation exercise: Myti-Pet
Power dynamics
Deal making vs. dispute resolution
The importance of planning
Making agreement & contract
 Contract & law
 The role of culture
Emotion: Functions & dysfunctions
Bases of dispute resolution
 Interest-, right-, & power-based

 Using third parties

Arbitration
Mediation
Discussion questions
 What are your roles?
 CEO of Myti-Pet
 CEO of Rawmat
 What is the conflict about?
 Who has more “power”?
Did the power dynamic change throughout the negotiation?

Myti-Pet Rawmat
Discussion questions
 What is the nature of this negotiation?
How is this negotiation similar or different
from the previous ones (Yerba Mate &
Sweet Shops)?
 Not given structured planning!
More like how things are in reality
 Involves complex issues
So many things to consider!!!
 Conflict & potential litigation (vs. not
closing a deal)
 Linked BATNA
Interdependent (vs. Independent)
WATNA
 Cost minimization (vs. maximize gain)
Discussion questions
 What did you do during the “planning”
stage?
 Did you form a general impression of the
situation? Did you rely on your memory?
Did you write & take notes?

 How important is it? Why it is important/not

important?

 Lot of info to process, more structured

planning, more prepared, easier to process
info  More contract detail & clarity
 Can be used as a check list!
 [See sample planning documents]

Discussion questions
 What is involved in “planning”?
 Note down your agenda
 Goals that you would like to achieve
 Help you to get focus
 Provide the “background” for this discussion

 Itemize issues (note interests & priority)

 Legal charges?
 Payment of last shipment from Myti-Pet ($250K)
 Recaliberation costs due to poor Rawmat product quality
($200K)
 Payment arrangement for the above items
 New contract
 Duration
 Meat flour & wheat flour (tonnage & price; timeframe)
 Specification (water / fat)
 Payment arrangement (from who to whom?)
 Future penalties (circumstances, conditions, terms)
 2 Shipments daily
 When to resume delivery (specific date)
 When to make payment for future shipment
 Good to have: Ways to deal with future dispute
 Other issues…
Elements of a “good deal”?
 Show good faith; Rawmat make amends (e.g., forgive
payment of $250K or refund recalibration costs $200K)
 Tighten specifications
 Agree to future penalties that cover recalibration costs
 3-year contract (allows opening of new factory)
 Increase tonnage for meat flour contract
 Order wheat flour from Rawmat (benefit both)
 2 shipments a day (benefit both)
 Note: Myti-Pet should negotiate price per tonnage as
they will almost double their order!
Elements of a “good deal”?
 Ways to deal with future disputes
 Include clauses about alternative dispute resolution
(ADR)
How receptive people are
toward inclusion of ADR clauses?
What are the implications of… ?
Look at your own contract…
 Show good faith; Rawmat make amends (e.g.,
forgive payment of $250K or refund recalibration
costs $200K)
 Tighten specifications
 Agree to future penalties that cover recalibration
costs
 3-year contract (allows opening of new factory)
 Increase tonnage for meat flour contract
 Order wheat flour from Rawmat (benefit both)
 2 shipments a day (benefit both)
 Note: Myti-Pet should negotiate price per
tonnage as they will almost double their order!
 Ways to deal with future disputes
[self-assessment & contract eval]
About reaching an agreement…
 Do we have to reach an agreement at
that time?
 Look at your contract with your partners again
 Were all the terms clearly written (Reality check:
The when, how, where, and who for each term?)
 Would you have written that differently? Take note
of the things that you might have kept and
changed
 What if I realize that something that we
have discussed during the negotiation is
missing in the contract after signing it?!
 What if I was “just kidding”?
A side note on…
 Contract & law…
 What type of legal system are you in?

 Contract & the role of culture

 E.g., The notion of “You just need to trust me”
Discussion questions
What is the role of emotion?
Did it help or hurt you during the dispute
resolution process? How was your
experience like?
The role of emotion
Disputants
Often unable to take a “cool” rational approach to
dispute resolution
Might walk out of the negotiation, even if it is not of
their interest to do so
Tend to take things personally
Were your partner angry? Were you angry?
For those who feel angry, how did your partner
respond?
For those with an angry partner, how did you
respond?
The effect of anger
 Potential outcomes of anger?
 Feel more powerful; induce cooperation
 Elicit reciprocal anger & desire to retaliate
 What might shape the outcomes?
 Cultural norms
Appropriateness of expression
Meaning of anger
 Remember this…?
 How to de-escalate?
 Do not reciprocate an emotional outburst
 Call for time to cool off
 Acknowledge feeling without making
concession
 Clarify goal
Determine who is right or wrong?
Find a mutually satisfactory solution?
 Suggest involving a third party
Strategic approaches to resolving disputes
 Interests
 The reasons why claims are made and rejected
 Needs and concerns underlying parties’ positions
 To do: Q&A, S&O, MESOs
 Rights
 Determine who is right and who is wrong under some
standard of contract or law
 To do: Use legal standard, industry standard, etc.
 BUT standards can be seen as self-serving! The dispute would
not have existed in the first place if there is an agreed upon
‘objective’ standard!?
 Power
 Status, BATNA, WATNA, … also overconfidence?
 To do: Flex your muscles!
 Rawmat: Established corporate! Who cares about little Myti-Pet?
 Myti-Pet: We are small and have nothing to lose!
 It can be costly to use power! You might win a tree but lose a
forest!
“I was never ruined but twice: once when I lost a lawsuit,
and once when I won one.” ~Voltaire
 BUT often time, the situation might induce us to focus on
wining the tree…
Strategic approaches to resolving disputes

 Did you started the Myti-Pet negotiation

with interest, rights, or power?

 Where should we get started?

 Interest? Rights? Power? Something else?
 What do you think?
Session 4’s focus
 Dispute resolution
Simulation exercise: Myti-Pet
Power dynamics
Deal making vs. dispute resolution
The importance of planning
Making agreement & contract
 Contract & law
 The role of culture
Emotion: Functions & dysfunctions
Bases of dispute resolution
 Interest-, right-, & power-based

 Using third parties

Arbitration
Mediation
Arbitration

Private adversarial procedure

 Disputing parties / their agents present their views of the situation
and their analysis of the relevant standard for decision
 Arbitrator
 Hears both sides’ arguments and interprets the contract or law in the
context of the dispute
 Has authority to impose an outcome
 Decisions enforced by legal systems

New York Convention

Mediation
Independent third party without authority
Facilitated negotiation
Mediator
Facilitate information exchange
Engage in reality testing
Focus on BATNA & WATNA
Active listening & help parties to ‘listen’ to each
other
Mediation
Guess: Who are advocating for mediation?
 Mediation
27

Neighborhood
dispute

What is your initial reaction?

What would you do in this situation?
What might be the things/issues that you need to
consider to settle this dispute?
What might be the “steps” that you take?
What is the role of a mediator?
Mediator Preferences

Happy Candy, Inc.

Mediator Preferences

 Manager A is a Ombudsman with whom each has

worked in the past, and had a close friendship, and who
has given both of them valuable advice in the past.

 Manager B is a Ombudsman who neither of them knows

or has interacted with in the past, but who is known to
be willing to give advice.
Video: Mediation in Action

Background
 A dispute between a computer manufacturer, Hi-Tech and
its distributor in South America, Prosando.
 Involves a conflict mediator.

 Note:
 Look beyond the surface!
 What might be “real”? What might seem “unreal”?
 What might be applicable to us nowadays? What might not
be applicable?
 What do we learn?
Video
Take note of the following questions (also on Canvas)
1. How did the mediator “open” the session? What was
mentioned?
2. What are the “stages” involved in mediation?
3. What approaches did each party use at different
stages? Right? Interest? Power? Or…?
4. What happened in the first joint session?
5. What are the goals of the initial private caucuses?
6. What are the goals in the later private caucuses?
7. How “prepared” was the mediator overall? How can
you tell?
8. As a disputant, how to benefit from the process?
9. As a mediator, how to mediate the dispute?
How did the mediator “open” the session?
What are the stages involved in
mediation?
Shuttle mediation

Face-to-face mediation
What approaches did each party use at different stages?
Right? Interest? Power? Or…?
What happened in the first joint session? What is
the purpose?
What are the goals of the initial private caucuses?
Common mistake in initial caucuses
Techniques of mediator
Session 4’s focus
 Dispute resolution
Simulation exercise: Myti-Pet
Power dynamics
Deal making vs. dispute resolution
The importance of planning
Making agreement & contract
Emotion
 Using third parties
Arbitration
Mediation
Processes involved
Role of mediator & disputants
Mediation techniques