A negotiation between Beximco Textiles Limited & Square Textiles Limited & its Outcome

Chapter One

Introduction

1.1 Introduction

From the very beginning negotiation is a part of business. The

businessman bargain and negotiate over their products on

various aspects. Different factors affect the negotiation

process. Culture is one of them. Culture is the unique

character of a social group. It encompasses the values and

norms shared by members of that group. It is the economic,

social, political, and religious institutions that direct and

control current group members and socialize new members

(Lytle, Brett, Barsness, Tinsley, & Janssens, 1995). All of

these elements of culture can affect negotiations. A

negotiation can’t be successful if the parties are not

familiar with each other’s culture.

Negotiation is a form of social interaction. It is the process

by which 2 or more parties try to resolve perceived

incompatible goals. (Carnevale & Pruitt, 1992). Negotiation is

a dialogue between two or more people or parties intended to

reach an understanding, resolve points of difference, to gain

advantage for an individual or collective, or to craft

outcomes to satisfy various interests.

Negotiation is the process where interested parties

resolve disputes,

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agree upon courses of action,

bargain for individual or collective advantage,

and/or attempt to craft outcomes which serve their mutual

interests.

Negotiation is usually regarded as a form of alternative

dispute resolution.

Negotiation occurs in business, non-profit organizations,

government branches, legal proceedings, among nations and in

personal situations such as marriage, divorce, parenting, and

everyday life. The study of the subject is called negotiation

theory. Professional negotiators are often specialized, such

as union negotiators, leverage buyout negotiators, peace

negotiators, hostage negotiators, or may work under other

titles, such as diplomats, legislators or brokers.

Negotiation is a science and an art. It is a science in the

sense that it is subject to a scientific discipline and to

measurements and criteria. It has its own basic concepts and

fixed rules that can be studied. Never the less, there is no

general theory of negotiation yet that can encompass and

explain the whole process, but there are a number of well-

developed theoretical approaches that both open the way for

and require much more testing and debate. There is another

aspect of negotiation that makes it an art. Diplomats who

negotiate are human beings. Such diplomats should be talented

to begin with. Then it is easy to develop their talents and

relevant skills by simulation, games and on-the-job training.

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Negotiation as a science needs intensive study of the

negotiation’s elements, and technical procedures and rules.

In an increasingly globalize world, policy-making is a matter

of national and regional as well as international

significance. For instance, it has been argued that policy

formation related to international trade agreements should

take into account broader issues of public welfare, natural

resource management and local subsistence economies in order

not to jeopardize the development and poverty reduction

prospects of developing nations and avoid an increase in

domestic conflicts. Negotiation is a central component of

national policy-making processes from setting agendas, to

determining what issues are to be addressed by policy makers,

exploring options, finding solutions and securing needed

support from relevant parties in order to ensure that planned

policies are sustainable.

2.2 Negotiation Objectives

In Negotiating Contracts the normal objectives will include

one or more of the following:

Achievement of an Organization's objectives

Creation of a long-term relationship between the parties

Motivation and Commitment to Work Together

To remove obstacles this may be there in future.

To exercise control over the manner in which the contract

is performed.

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To persuade the supplier to give maximum co-operation to

the buyer’s company.

Motives and Expectations: The initial phase of

negotiation in a business context has two objectives. One

is aimed at understanding the motives and requirements of

the counterparty. The second is to apprise the

counterparty of your expectations and motives. 

Chapter 2

Organizational Review

Beximco group is supposed to be Bangladesh’s largest private

sector industrial enterprise. It has targeted the industries

the country needs most for progress and improved living

standards. Beximco is also focused on those industries, which

make the most of Bangladesh’s competitive advantages in the

international market. Through its ongoing growth, it has

created industrial and management capabilities that will

serve the country for generations. Beximco’s industrial

sector includes jute, textiles, basic chemicals and

pharmaceuticals and marine foods. Non-industrial undertakings

are focused on real estate and construction, engineering,

media, information technology, trading and financial

services.

2.1 History of Beximco:          

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Today the BEXIMCO Group (“BEXIMCO” or the “Group”) is the

largest private sector group in Bangladesh. BEXIMCO was

founded in the 1970’s by two brothers – Ahmed Sohail Fasiur

Rahman and Ahmed Salman Fazlur Rahman. Since the early days,

the Group has evolved from being primarily a commodities

trading company to a leading, diversified group with a

presence in industry sectors that account for nearly 75% of

Bangladesh’s GDP. BEXIMCO’s corporate mission is “Taking

Bangladesh to the world”.

As BEXIMCO has grown over the years, the flagship platform now

has operations and investments across a wide range of

industries including textiles, trading, marine food, real

estate development, hospitality, construction, information and

communication technologies, media, ceramics, aviation,

pharmaceuticals, financial services and energy. The Group

sells its products and services in the domestic Bangladesh

market as well as international markets. BEXIMCO is the

largest employer in the private sector in Bangladesh and

employs over 48,000 people worldwide.

The BEXIMCO name has now become one of the most recognizable

brand names in Bangladesh. It is synonymous with innovation,

trust and quality. The Group consists of four publicly traded

and seventeen privately held companies. The publicly traded

companies – Bangladesh Export Import Company Limited, Beximco

Pharmaceuticals Limited, Shinepukur Ceramics Limited and

Beximco Synthetics Limited – have a combined market

capitalization of approximately $702.25 million. The Group had5 | P a g e

total revenues of $834 million in the year ended December 31,

2010.

BEXIMCO encompasses one of South Asia’s largest vertically

integrated textile and garment companies. The Textile division

is a fully integrated manufacturer of cotton and polyester

blended garments for men, women and children, both for

domestic and export markets. State-of-the-art manufacturing

plants located in the vicinity of Dhaka provide the Group with

a highly cost effective manufacturing base. A majority of its

plants are in the BEXIMCO Industrial Park, a vertically

integrated self-contained facility. This facility provides

ready access to captive power generation, water purification,

liquid nitrogen, waste water treatment and other key

infrastructure. The Group’s global clients include some of the

world’s best known brands including BT, BASF, Chevron, Calvin

Klein, H&M, JC Penney, Macys, Zara, UNICEF, Royal Doulton and

Villeroy&Boch.

The textile industry in Bangladesh has been an important

contributor to the economy for centuries, and today is one of

the country's most crucial economic sectors. According to the

country's Ministry of Textiles and Jute, its textile and

apparel industry encompasses textile processes from spinning;

weaving; knitting including hosiery and knit dyeing; dyeing

and finishing; yarn dyeing; and sewing thread; up to the final

outputs, including ready-made garments and nonwovens such as

technical textiles.

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Taken as a whole, the textile industry is Bangladesh's number-

one export earner, accounting for approximately 80 percent of

the country's exports and foreign exchange earnings. Although

jute, cotton and other textiles constitute some of the

country's principal industries, the ready-made garments (RMG)

sector is by far the largest export-oriented manufacturing

industry in the country. The sector employs roughly 2.5

million workers, 80 percent of whom are women.

Over the years, BEXIMCO has developed in-house design

capabilities with teams based in Bangladesh and Spain. .

Furthermore it has partnered with some of the world’s renowned

design institutes, including Fashion Institute of Technology,

Parsons, London School of Fashions, NIFT and NID, for access

to talented designers.

Bextex Ltd. Has an installed capacity of 288 high-speed air-

jet looms in its weaving section and a high-tech dyeing and

finishing section with a capacity of 100,000 yards of finished

fabric per day. This company is located at the Beximco

Industrial Park

Bextex Ltd. Has a state of the art composite knit fabric

production mill, which serves the growing, needs of high-

quality knit garments exporters in Bangladesh. The project was

set up as a state of the art knit fabric knitting, dyeing and

finishing facility. During the year the Company produced and

sold high quality of knit fabrics and bringing forth all the

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latest in hard and soft technologies in knitting, dyeing and

finishing of knit fabric.

Bextex Ltd. Also has a cotton and polyester blended yarn-

spinning mill, with 122,000 spindles is one of the largest

spinning mills of the country. The mill was set up to feed the

country's export oriented industries. Bextex Ltd. Produces

specialized finishes of denim cloth for export in finished as

well as cloth only form.

2.2 History of Square Textiles Limited

In 1997,   entered the textile sector with its

manufacturing facilities of cotton yarn. Combining modern

technology with skilled manpower under  's unique

inspiring, atmosphere, this new   venture soon rose to the

top of the local textile industry. Today it has one of the

most sophisticated vertically integrated set-ups.

2.2 Square in Textile Business

SQUARE has over 12 years of experience in yarn spinning. The

industry is one of the largest producer of knitting & weaving

yarns in Bangladesh. Today it has one of the most

sophisticated vertically integrated set-ups by which we are

producing 90,000 kg of yarns every day. We are recognized by

our valued customers through qualigy products with committed

services.

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Mission

Our mission is the pole star of our vision for maximization of

production of quality life saving products and services

strictly on ethical and moral standards at minimum costs to

the society ensuring optimum benefits to the consumers, the

shareholders and other stakeholders.

Vision

Our conception of business germinated from our vision which

sees it as a means to the well being of the investors,

stakeholders, employees and members of the society at large by

creating new wealth in the form of goods and services that go

to satisfy the wants of all of them without distributing or

damaging the socio-ecological balance of the mother earth and

the process of human civilization leading to peaceful Co-

existence of all the living beings.

Objective

To strive hard to optimize profit through conduction of

transparent business operations within the legal & social

framework with malice to none and justice for all in

respective of gender disparity, caste, creed of religion or

region. 

• To create more jobs with minimum investments

• To be competitive in the internal as well as external

markets

• To maximize export earning with minimum imported in-puts

• To reduce the income gap between top & bottom categories

categories of employees9 | P a g e

• To promote corporate social responsibilities (CSR) amongst

all

Chapter Three

Literature Review

3.1 Common procedural stages of Negotiation and Diplomacy:

Both negotiation and diplomacy have some sort of common

procedural steps. They are

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Preparation stage: In this Stage both the negotiator and the

diplomat plan how to approach the actual negotiation and try

to learn as much as possible about their negotiating partners.

Both the negotiator and the diplomat need to understand their

own position And anticipate the position of the other party

through considering each party’s objectives, needs and

interests.

Relationship Building Stage: Relationship building starts when

the parties begin their discussion. The objective of the

relationship building stage is for the parties to get to know

one another. How much each party needs to know about the other

depends to a great extent on culture. Both negotiators and

diplomats try to build a good relationship before starting

negotiators.

Information Exchange: Information exchange involves each party

stating an initial position, usually in a formal presentation,

followed by questions, answers, and discussion. The meaning of

this stage varies depending on the negotiator’s and diplomat’s

cultural background.

Persuasion: Both Negotiators and Diplomats try to convince

their counterparts to accept their proposals. This might

involve the parties consciously trying to work toward a

mutually acceptable solution or one party using persuasive

arguments to influence the other.

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Agreement: Agreement is where the parties come to a mutually

acceptable solution, and in the process, each may make

concessions.

3.2 Integrative Negotiation

When a negotiation is integrative, it means that negotiation

is based on interest or otherwise negotiation strategy which

lay emphasis on win-win situation. The goal of Integrative

Negotiation is to make the parties’ interest compatible, so

that both sides can win. That is, reach an agreement that

satisfies their need. The goals of the parties are

integrative. Negotiations are not mutually exclusive. If one

party achieves its goals, the other is not precluded from

achieving its goals as well. The fundamental structure of

integrative negotiation situation is such that, it allows both

sides to achieve their objective.

While Integrative Negotiation Strategies are preferable, they

are not always possible. Sometimes parties’ interests really

are opposed as when both sides want a larger share of fixed

resources.

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3.3 Characteristic Of Integrative Negotiation

Ø It focus on commonalties rather than differences

Ø It attempt to address needs and interests, not positions

Ø It commit to meeting the needs of all involved parties

Ø Exchange information and ideas

Ø Invent options for mutual gain

Ø Use objective criteria for standard of performance.

Past experience, based perceptions and truly distributive

aspects of bargaining makes it remarkable that integrative

agreements occur at all. But they do, largely because

negotiators work hard to overcome inhibiting factors and

search assertively for common ground. Those wishing to achieve

integrative results find that they must manage both the

contest and the process of negotiation in order to gain the

cooperation and commitment of all parties. Key contextual

factors include:

- Creating a free flow of information

- Attempting to understand the other negotiator’s real need

and objective

- Emphasizing the commonalties between the parties and

minimizing the differences

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- Searching for solutions that meet the needs and objectives

of both sides.

3.4 Key Steps In Integrative Negotiation Processs

There are four major steps in the Integrative Negotiation

Process:

1. Identify and define the problem

2. Understand the problem and bring interests and needs to the

surface

3. Generate alternative solution to the problems

4. Evaluate those alternatives and select among them.

3.4 1. IDENTIFY AND DEFINE THE PROBLEM

The problem identification step is often the most difficult

one and it is even more challenging when several parties are

involved. Negotiator need to consider five aspects when

identifying and defining the problems.

§ Define the problem in a way that is mutually acceptable to

both sides.

§ State the problem with an eye toward practicality and

comprehensiveness

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§ State the problem as a goal and identify the obstacles to

attaining this goal.

§ Depersonalize the problem

§ Separate the problem definition from the search for

solution.

3.4.2. UNDERSTAND THE PROBLEM FULLY

Identify interest needs – Many writers have stressed that a

key step in achieving an Integrative Agreement is the ability

of the parties to understand and satisfy each others interest.

Identifying interest is a critical step in the Integrative

Negotiation Process. Interests are the underlying concerns,

need or desires that motivate a negotiator to take a

particular position. However, in as much as satisfaction may

be difficult and understanding of the underlying interest may

permit them to invent solutions that meet their interest. More

so, several types of interests may be at stake in a

negotiation and that type may be intrinsic (the parties value

it in and of itself) or instrumental (the parties value it

because it helps them derive other outcomes in the futures.

TYPES OF INTERESTS

§ Substantive Interests - related to the focal issues under

negotiation

§ Process Interests are related to the way a dispute is

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§ Relationship Interests – indicate that one or both parties

value their relationship with each other and do not want to

take actions that will damage it.

3.4.3. GENERATING ALTRNATIVE SOLUTIONS TO THE PROBLEM AS

GIVEN:

In addition to the techniques mentioned above, there are

several other approaches to generating alternative solution.

These approaches can be used by the negotiators themselves or

by a number of other parties. Several of these approaches are

commonly used in small groups. These include: Brainstorming:

In brainstorming, small groups of people work to generate as

many possible solutions to the problem as they can. Someone

records; the solutions without comment, as they are identified

participants are urged to be spontaneous, even impractical and

not to censor anyone’s ideas. The success of brainstorming

depends on the amount of intellectual stimulation that occurs

as different ideas are generated.

3.4.4. EVALUATE AND SELECT ALTERNATIVES:

The fourth stage in the Integrated Negotiation Process is to

evaluate the alternatives generated during the previous phase

and to select the best ones to implement. When the challenge

is a reasonable, simple one, the evaluation and selection

steps may be effectively combined into a singly step. For

those uncomfortable with the Integrative Process, though we

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suggest a close adherence to a series of distinct steps:

definitions and standards, alternative, evaluating and

selection. The following guidelines should be used in

evaluating options and reaching a consensus.

1. Narrow the range of solution options

2. Evaluate solution on the basic of quality, and

acceptability

3. Agree to the criteria in advance of evaluating options

4. Be willing to justify personal preferences

5. Be alert to the influence of intangibles in selecting

options

6. Use subgroups to evaluate complex options

7. Take time out to cool off

8. Explore different ways to logroll.

3.5 Factors That Facilitate Successful Integrative Negotiation

We have stressed that successful Integrative Negotiation can

occur if the parties are predisposed to finding a mutually

acceptable joint solution. Many other factors contribute to a

predisposition toward problem solving and a willingness to

work together to find the best solution. These factors are

also the preconditions necessary for more successful

integrative negotiation. These factors includes:-

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- some common objective or goal

- faith in one’s problem – solving ability

- a belief in the validity of one’s own position and the

other’s perspective

- The motivation and commitment to work together.

- Trust

- Clear and accurate communication

3.6 Challenges to Using Integrative Negotiation:

Integrative negotiation can be tricky to set in motion, sincenegotiation sessions are often volatile. A considerable amountof trust must be established in order for the opposing partiesto be able to work towards satisfying each other’s interests.Also, a successful integrative process requires both sides tobuy into that approach. If one party is determined to use awin-lose “fixed pie” approach, the other side is more or lessforced to use the same method. Teamwork cannot happen ifpotential team members are competing against each other.Furthermore, short-term thinking can lead one party to makeuse of whatever force is available to it to effectivelystrong-arm the other, without considering the long-termramifications affecting their future relationship. While mostnegotiations have elements of both competition and

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cooperation, the best outcomes are brought about by thinkingin terms of the health of the ongoing relationship between theparties, rather than only an individual signed contract orcompromise.

Chapter Four

Practical Negotiation Steps

In this case negotiation between Beximco textile limited and

square textiles limited, practical negotiation is done in

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seven steps. These elements are explored in the following.

4.1. Identifying interests

According to Fisher and Ury, the first step in principled

negotiations is to identify the interests involved in an issue

area as opposed to dealing with positions of the negotiating

parties.

In this case Both Beximco textile limited and square textiles

limited, for both party main interest is Slub denim (20oz).

4.2. People

Another element of integrative strategies involves People. In

Getting to Yes, Fisher and Ury argue that parties in a dispute

often forget that the other side consists of people who, just

like themselves, are subject to the human frailties such as

emotions, potentials for misunderstandings and mistaken

assumptions. Another rule for the principled negotiator is

therefore to separate the people from the problem. This means

finding a way for solving a problem without getting distracted

by personal elements, and coming to an agreement in a manner

that will preserve the relationship.

In this case Both Beximco textile limited and square textiles

limited, both party negotiation team consists of marketing

people and production specialist. So there is no communication

problem arise regarding marketing or production terminology.

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Also decision marking person was present in negotiation table.

So there was no change of miscommunication.

4.3. Alternatives

In order to set realistic goals, negotiators must start by

considering certain fundamental questions: where will each

side be if no agreement is reached? What alternative solutions

are available for meeting your goals if you cannot count on

the cooperation of the other side? As seen earlier, attention

to alternatives is an important feature of distributive as

well as of integrative-based approaches. However, in contrast

to the emphasis that is placed onbconcepts such as reservation

points and bottom lines in positional approaches to

bargaining, integrative approaches tend to take a slightly

more nuanced view of the role of alternatives in negotiation.

Fisher and Ury argue that it is crucial for both parties to

know their Best Alternative to a Negotiated Agreement (BATNA)

both before and throughout all stages of a negotiation. Fisher

and Ury argue that having a resolute bottom line can come at

high costs. By its nature, a bottom line can be inflexible and

onerous. It can prevent creative thinking

and lock parties into positions that may prevent them from

coming to a favorable solution.

4.4. Identifying the options

Once parties have begun to build relationships and to exchange

information in order to gain a clearer understanding of the

interests at stake, the parties should turn to the task of

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generating options. In negotiations, options are possible

solutions to a problem shared by two or more parties. In

integrative bargaining, options represent possible ways of

meeting as many of both parties’ interests as possible. As the

story of the orange reveals, when two people (or two companies

or two nations) get locked into solutions or habitual patterns

of thinking, they easily become blinded to the possibilities

that a little creative thinking might reveal. Because the

process of identifying options, or possible solutions to a

problem, promotes creative thinking and expands problem-

solving capabilities, it is as critical to the negotiation

process as identifying underlying interests. Generating

options through techniques such as brainstorming —a technique

which involves inviting all parties to list any idea that

comes to mind without criticizing or dismissing those ideas -

helps to encourage creative thinking about a problem and

increases the chances that the parties involved will formulate

a “win-win” solution.

In this case both party was not in situation to reject or

search for more party to negotiate. So there were no other

options.

4.5. Criteria/Legitimacy

When bargaining over positions, negotiators create a situation

in which one side must concede his original claim in order for

the negotiations to succeed. Positional bargaining is

bargaining in which two sides lock into incompatible

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positions. According to Fisher and Ury, this can lead to a

contest of wills, bitterness, and deadlock. They maintain that

when negotiations are approached in this way, even when a deal

is made, it may come at a high cost.

In this step Beximco textile limited and square textiles

limited, both party negotiation team checked fabric quality,

fabric strength as per requirement. Production people

thoroughly checked this part. When production QC gives

assurance that fabric quality is ok than marketing people

starts negotiation about pricing.

4.6. Commitments

A negotiated settlement is only enduring if all parties honor

the commitments that they make. Of course, those that fail to

follow through on their promises stand to suffer a loss of

integrity, be subject to the resentment of the other side, and

risk that their partner in the negotiations (and possibly

others outside of the deal as well if word of their reputation

escapes) will refuse to deal with them in the future. No party

to a negotiation should intentionally create commitments that

they do not intend to honor.

In this stage, Beximco textile limited and square textiles

limited, both party negotiation team agrees to set a mutual

price. They fixed fabric delivery date, payment method,

quantity of fabric will purchase, transpiration method etc.

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7. Communication

Negotiation is only possible through communication. Fisher and

Ury maintain that feeling heard is also a key interest for

both sides in a negotiation. Good communication can change

attitudes, prevent or overcome deadlock and misunderstandings

and help to improve relationships. Moreover, good

communication skills are essential to cogently relay your

message, and to thoroughly understand the message of the other

side (Wondwosen, 2006). In addition, integrative approaches

stress the importance of sharing information as a means of

uncovering interests and of helping parties to explore common

problems or threats. Still, negotiators are frequently

hampered in their roles by common communicational errors or

inefficiencies

When deal is done regular commumication happends with both

party regarding delivery issue, fabric fault, replacement of

fabric, payment etc. This regular communication helps to built

a good relationship between both party.

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Chapter Five

Conclusion

In conclusion, whether a negotiation is distributive or

integrative, negotiation should focus on substance which will

produce a mutually beneficial agreement at lower cost and also

focus on relations in which the parties maintain civil

relations of mutual recognition and respect and improve their

joint problem solving ability.

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In the end, negotiation is a process that can be approached in

many ways. No matter what strategy company choose, success

lies in how well you prepared. The key to negotiating a

beneficial outcome is the negotiators’ ability to consider all

the elements of the situation carefully and to identify and

think through the options. At the same time, negotiators must

be able to keep events in perspective and be as fair and

honest as circumstance allows. Because a common ground or

interest has brought the parties to the negotiating table, a

negotiator can benefit by trying to capitalize on this common

ground. By looking at the other side as a partner rather than

an opponent and by working together, negotiators have an

opportunity to craft a solution that will be beneficial to

both sides

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Resolve Disputes, and make Decisions Across Cultural

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Hodgetts ,Luthan, Doh- International Management (6th

edition) (The Mcgraw-Hill companies,2006).

Brett, J., Adair, W., Lempereur, A., Okumara, T.,

Shikhirev, P., Tinsley, C., Lytle, A., Culture and Gains

in Negotiation, 14 N. J. 1, 63 (1998).

Corne, P., The Complex Art of Negotiation Between

Different Cultures, 47 ARB. J. 4, 50 (1992).

Gelfand Michele J.,Brett Jeanne m., The handbook of

Negotiation and Culture,(Stanford Business Books,

California, 2004)

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