USAuto & AutoMex Problem Solutions

USAuto & AutoMex Problem Solutions - Problem Solution:...

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USAuto is a publicly traded corporation with obligations to its employees and stockholders to remain competitive in the automobile industry and increase profits. USAuto has recently seen declines in its profitability and growth. In an effort to meet the obligations that USAuto has to employees and stockholders, the company leadership enters negotiations with AutoMex, a company that produces and markets automobiles in Mexico. The initial negotiation round is unsuccessful. As an example of attitudes which can lead to failure, USAuto’s goal in the negotiations is to create an agreement with AutoMex that would lower USAuto’s costs by using AutoMex’s labor force. In failing to recognize the interests of AutoMex, the negotiation team for USAuto inadvertently creates a win-lose situation that leads to conflict (Kinicki & Kreitner, 2003). Moving forward, USAuto can meet and exceed its obligations to employees and stockholders by developing the skills and culture necessary for successful negotiations. Situation Analysis Issue and Opportunity Identification USAuto has been losing market share over the past few years. In addition, it is experiencing steadily increasing production costs. The combination of these two factors is leading to significant declines in the value of its stock, and the stockholders are not happy with that result. In order to reverse these trends, USAuto’s management decides to pursue a joint venture that can simultaneously reduce labor costs while opening up new markets for its automobiles. Seeing themselves as an industry leader, they approach AutoMex as a potential partner. The negotiation between USAuto and AutoMex does not go as planned, however. While it may make excellent cars, USAuto does not display the same excellence in negotiation, as is illustrated clearly in the issues identified in Table 1. Stakeholder Perspectives and Ethical Dilemmas Among the many stakeholders identified in Table 2, the potential conflict between stockholders and employees most affects USAuto. The management of USAuto’s goal to reduce labor costs naturally favors selecting a potential alliance with an organization such as AutoMex, which enjoys low labor costs. This goal aligns well with the stockholders of USAuto, who desire an increase in the stock’s value. Simultaneously, the employees at USAuto face the possibility of lost employment. One of the dilemmas facing USAuto is the concurrent need to reduce costs—and increase stock value—while maintaining commitments made to its employees. The ethical question facing the management of USAuto in this respect is deciding which group they value the most. In deciding to pursue the negotiation with AutoMex, management signals to employees that their most important allegiance is to their stockholders. This serves as another example of USAuto’s distributive approach to negotiations, and further illustrates a win- lose mindset. Page 1
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This note was uploaded on 02/22/2011 for the course MGMT 521 taught by Professor Richey during the Spring '10 term at University of Phoenix.

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USAuto & AutoMex Problem Solutions - Problem Solution:...

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