Cobalt Systems and Silverlight Electronics Negotiation
Cobalt Systems and SiverLight Electronics BY ViC038
Present the discrepancies of business practices, policy and strategy between the 2 countries Cobalt Systems is a multinational corporation present in more than 50 countries divided into regions. Cobalt Systems is a highly centralized organization as all the operations throughout the world are overseen by 13 US based ‘Management Board’ members. The company large number of layers between the Management Board and the local employees (hierarchical organization) doesn’t allow much room for empowerment.
It is an ethnocentric company with a people oriented culture that rovides all its local employees around the world with extensive training in order to socialize them to the Cobalt culture. Moreover, Cobalt Systems insists on fully owning its foreign subsidiaries as they are seen as “national assets” (where national refers to American). Therefore the company doesn’t trust its foreign subsidiaries and is paranoid about losing technological secrets to competitors. Silverlight Electronics is a Korean based company selling its high tech products in Korea and abroad.
It is part of the SiverLight Chaebol; a family of firms held together by cross-ownership and lose personal ties. The SilverLight Chaebol offers a horizontal multi-industry integration. Therefore, SilverLight’s products are mostly the result of the SilverLight Chaebol’s work rather than from SilverLight Electronics itself. The company has enjoyed the government’s help and national protectionism over the past 40 years which has mainly contributed to the success of the company and some of its competitors (Samsung Electronics, Daewoo Electronics… . The company is thus closely tied to the government and is seen by the majority of the population as a Korean pride. Its many rewards from the government reflect this aspect. The company as a strong corporate family oriented identity where employees are socialized into the SilverLight family and ideally work for the company for their entire career. We can clearly see that some kind of a Joint venture between Cobalt Systems and SilverLight Electronics will inevitably face difficulties: Both companies have strong corporate cultures and own pride.
SilverLight wants its employees to do things the ‘Silverlight way and Join the ‘SilverLight family for the rest of their careers whereas Cobalt wants ll its employees around the world to adopt the Cobalt culture. Cobalt sees its subsidiaries as national assets that have to be closely protected from competitors and therefore fully owned by Cobalt whereas SilverLight is seen as a Korean pride by the Koreans and the government and is cross-owned by a multitude of firms forming the SilverLight Chaebol.
Cobalt’s world operations are overseen by 13 US based Management Board members creating a hierarchical organization whereas SilverLight is part of a horizontal multi-industry organization (the SlverLight Chaebol) nd he still closely tied to the government due to historical reasons. Using the cross-cultural criteria defined in class, list the expected discrepancies 2. in the behavior of the Korean and US negotiators. Asian cultures time is no relevant at all.
It is probably why it was the Korean company rather than the American one who decided to take a break in the negotiation process. Therefore, the American negotiator will have to learn to take his time and not rush the conversation directly to business matters. It is important to know that Koreans want to get to know the people they are going to make business with and see if a rusty relationship can be created. It is even truer when it comes to Joint venture or alliances.
Talking business at the very first meeting before creating any trust between the two negotiators is therefore not the right thing to do when approaching an Asian company. Regarding the hierarchy criteria, both negotiators should be from equal status within their company. For the Asians, it would be disrespectful to negotiate against someone less important in the company than the Asian negotiator. A well as it would be disrespectful to negotiate with a Junior employee. Asians use indirect ommunication whereas Americans use direct communication.
This is usually the cause of great difficulties in international negotiations. Both negotiators should be aware of this before negotiating. The Americans should try to be less direct and the Asian should try to be more specific and straightforward to avoid confusions in the negotiation. The Asian family oriented culture will be more willing to reach a win-win deal that is really mutually beneficial. The American, being more individualistic, will try as much as he can to expand the pie as much as possible on his side rather than niformly.
This could lead to serious trust problem from the Korean who could decide to back up and cancel the negotiation. 3. Which walk-away points do you expect from both parties on the 5 topics of the negotiation? Walk-away points Cobalt Systems SilverLight Electronics Equity ownership Top Management 100% Koreans but with Cobalt’s culture Mix of Koreans and Americans Technology American technology if it can be protected or Korean Mix of Korean and American technology Accounting Standards International standards Joint venture’s name English name