Island Cruise Negotiation Analysis

Andra Berariu

University of Waterloo

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The following is an analysis of a fictitious negotiation about a cruise ship’s right to

visit a tropical island that is home to rare and endangered plant and animal species. In addition to

this, the inhabitants of the island are afraid of losing their local indigenous culture with the

frequent cruise stopovers.

Negotiation is a discussion between two or more disputants who are trying to work

out a solution to their problem and often have different views on the issue at hand. This

interpersonal or inter-group process can occur at a personal level, as well as at a corporate or

international level. Negotiations typically take place because the parties wish to create something

new that neither could do on his or her own, or to resolve a problem or dispute between them. In

the Island Cruise negotiation, Island Queen Inc. is interested in adding a Tropical Island to its

itinerary in order to stimulate passenger demand. Negotiations such as these occur on a regular

basis as individuals negotiate business deals in order to increase profit or company wellbeing.

External factors can play a huge role in the way a negotiation is executed and the outcome that is

achieved from it. In order to ensure that these outcomes are mutually beneficial for those

involved in the negotiation, we must carefully examine and take into consideration these external

factors which can dramatically alter our results. When observing the case of Island Cruise we can

see how various external factors present in the situation are complicating the future negotiation

between Island Queen Inc. and Tropical Island. These include but are not limited to the

traditional Island culture, risk of environmental damage, imbalance of power, and the

international Maritime law present. The following will focus on describing the three main issues

which are likely to influence the negotiation at hand and how they can be addressed in order to

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achieve the best outcome possible. This essay will observe these issues from Island Queen Inc.’s

point of view. The three main areas of focus will be the following: cultural issues, trust, and

power.

Culture is a very important variable affecting international negotiations. The values

and norms that are encompassed by culture can influence negotiations to a great extent.

Negotiations will occur differently contingent on what country and parties the business people

are negotiating within. Cross-cultural negotiations are influenced significantly by one's heritage,

country and cultural upbringing. For successful negotiations to occur, business people have an

obligation to consider the cultural context in which negotiations are conducted in order to

achieve a positive outcome from the bargaining. It is crucial that the business professionals of

Island Queen Inc. are well informed and well educated about the business etiquette and social

etiquette of the people with whom they are conducting business. Culture encompasses social,

political, economic, and religious institutions while at the same time it also reflects the unique

products produced by these groups such as art, architecture, and literature. In this specific

scenario, Island Queen Inc. must be aware of Tropical Island’s unique culture and beliefs in

order to ensure that the outcome is a favourable one. Failing to take into consideration cultural

norms, values, and beliefs could affect the decisions of the Island officials in an undesirable

manner. This area must be carefully analyzed given the Island inhabitants’ concern of losing

native traditions with the increased tourism generated from the cruise’s stop on the Island.

First of all, going into the negotiation, we must look at the Island’s culture as an

iceberg, and realize that only artifacts, institutions, and behaviours of the Island culture can be

seen, while values, beliefs, norms, and assumptions are hidden and not easily understood by

someone who is not part of that specific culture. Culture is composed of three dimensions:

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individualism versus collectivism, which refers to the basic human motive concerning the

preservation of the self versus the collective; egalitarianism versus hierarchy which refers to the

means by which people influence others in society; and direct versus indirect communication

which refers to the manner in which people exchange information and messages. In order to

effectively communicate with the mayor of Tropical Island, one must be aware of the cultural

dimensions which are present on the Island, especially because of the Island’s concern of losing

their culture in the process. For example, knowing if the Island society is individualistic versus

collectivist can allow us to better prepare for the negotiation and know what to expect from the

other party. Individualism vs. collectivism can indicate a culture’s core preferences and priorities

concerning goals. This is important for us as the negotiators because goals direct behaviour. For

collectivists, it is usually important to seek win-win outcomes whereas individualists are more

likely to treat all negotiations as win-lose. This is because individualist, out of self-interest, strive

for higher personal goals and are inclined to use tactics which increase their bargaining power.

By analyzing the Island culture we can see that it is mostly homogeneous. People speak the same

language, have the same societal customs, and are generally very protective of their culture.

Given all these factors we can conclude that it is likely that Tropical Island is a collectivist

society. Although this can be beneficial for us given the win-win mindset that the culture should

theoretically exhibit, we must be cautious as it creates possibility for the citizens to be less

tolerant of those who are not part of the in-group (i.e. from Tropical Island). Secondly, we must

determine if the Island culture is egalitarian or hierarchical. During negotiations, egalitarian

cultures rarely use BATNA as a source of power, unless things are not progressing toward an

agreement because they would rather concentrate on the issues, priorities, and interest relevant to

the current negotiations. On the other hand, cultures that are more hierarchical tend to use all

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forms of power in negotiation, whether it is status, BATNA, and/or persuasion. We would hope

that the Island community is egalitarian as this would make the negotiation process easier and

increase the likelihood that our negotiation goals are reached, but running into a hierarchical

culture is also very possible so we must prepare effectively. Gathering further information about

the power relationships present on the island prior to the negotiation could help us choose our

negotiation representatives more effectively and prepare for an appropriate conduct of

negotiation which the other party views as being culturally acceptable. For example, if the Island

exhibits an egalitarian society, they are most likely to expect that each party voice their interests

through a back and forth exchange of ideas and discussions, and we must be well prepared.

Lastly, the Island’s communication style is also a very important component of the negotiation

process. In direct and indirect forms of communication, not only is information sharing methods

different, but information gathering procedures can be dissimilar as well. When cultures with

different communication styles meet at the bargaining table, the communication differences may

present difficulties during negotiations. While negotiators from low context cultures prefer to

share information and opinions directly through asking questions and getting answers, those from

high context cultures prefer to share information indirectly, often through sharing stories in an

attempt to influence the other party. Sharing priorities and preferences in a direct communication

society would often entail communicating in a question-and-answer fashion, as both negotiating

parties learn the other party’s priorities, what issues are mutually beneficial, and which issues are

purely distributive. This is the method we are often encouraged to exercise here in North

America, but since norms and values vary in each and every culture, we must be prepared to face

the possibility of encountering a high context party which may be less willing to discuss interests

directly and may have very different ways of expressing their thoughts and feelings on the issue

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at hand. These indirect methods could entail communicating through a third party, exhibiting

expressive communication to discharge emotion, and focus on the good of the group.

In addition to the three dimensions of culture discussed thus far, intercultural

negotiation also comes with some additional distinct challenges. There are three specific

challenges which are likely to arise in the Island cruise negotiation. They are: expanding the pie,

sacred values, and affiliation bias. Expanding the pie refers to the increased difficulty those

negotiating across cultures may have expanding the pie or joint gains in comparison to those

negotiating within a culture. We must look at Island Queen Inc. and Tropical Island as two

separate cultures with different interests, values, and norms. While Tropical Island officials are

proud of its rich native culture and lack of commercialism often found on other islands, Island

Queen Inc. boasts its luxurious cruise ships which cater to high class passengers and are

equipped with many expensive amenities. Island Queen Inc. can be considered a distinct culture

in itself which is very different from that of Tropical Island, therefore making future negotiation

more difficult. When combining two different cultures in a negotiation, it is very probable that

the expansion of the pie will be a lot smaller than if the negotiation took place within one culture.

Since the possibility of bargaining styles not corresponding is a lot greater in cross-cultural

negotiation, it is also more likely that we will not gain clear understanding of the other party’s

priorities and goals. Although both parties hold the shared goal of increasing profits, there are

other priorities which each party holds that may not be known unless effective discussion takes

place. All the small details which would otherwise be discussed in a negotiation may be omitted,

resulting in both the island and the cruise company losing out on potential value which could

have been created if the parties communicated more effectively. Sacred values are another

challenge that we may run into when negotiating with Tropical Island officials. Given the other

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party’s strong belief in native heritage preservation, we are very likely to run into fundamental

beliefs, customs, and assumptions which will not be negotiable by the other party. This will

make it harder for the negotiation process to flow smoothly. An example of this would be that

the traditional island mores forbid the Island council to accept any financial incentives from the

cruise lines. This in itself means that trying to offer the Island money in exchange for access to

its port is not a viable proposal because the cultural values are too important to those living on

the island and can be identified as sacred values. Because of the emotional unwillingness of the

other party to negotiate sacred values, it is more beneficial if we do not try to offer material

goods in exchange for giving up sacred value. This could be seen as an insult rather than a

compromise. The final cultural challenge we are likely to encounter during our negotiation is

affiliation bias. Affiliation bias happens when someone evaluates another person’s actions on the

basis of his\her affiliation rather than on the merits of their behaviour. People’s perception of the

acceptability of certain actions differs dramatically as a function of the perceived agent at hand.

In this situation, we can see how the community exhibits affiliation bias towards our company

based on previous negative experiences with the cruise industry. The Island community has

reservations about allowing cruise-based tourism on the Island because of the industry’s dismal

record of environmental compliance and poor enforcement of laws regarding ship pollution. This

will make it harder to negotiate because prior to the negotiation the other party has already

stereotyped us as profit seeking and environmentally inconsiderate. The reason behind this is

because we have been affiliated or associated with other cruise ship companies which have

conducted unethical business in the past. We must be prepared to face these preconceived ideas

and the opposition that comes with them during the negotiation.

Several things can be done in order to minimize the damage that these cross-cultural

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challenges can cause. The way we perceive and create our own reality may be completely

different to our counterpart's way of thinking, behaving, and feeling. Unfortunately, simply

having knowledge of their foreign language or foods is not enough to face and solve the problem.

First of all, we must find out how to show respect towards the Island culture. We cannot assume

that the other party will have the same customs as us or that our ignorance towards their customs

will be forgiven. Therefore, prior to the negotiation, detailed research about Tropical Island

customs must be completed so that we display the maximum amount of respect possible towards

their unique culture. Factors such as eye contact, displaying emotion, structure of discussion, and

perception of silence are some of the cultural elements which should be examined prior to the

negotiation. To better understand this, the following example should be taken into consideration:

While here in North America looking at someone directly in the eye can signal that you are

paying attention and is often considered polite and respectful, in other parts of the world this may

not be the case. It may in fact signal that you are challenging the person and can be seen as very

disrespectful. All these factors come into play when a negotiation between two different cultures

takes place. In addition, it is very important that we determine the intercultural conflict style

which will most likely be displayed by the other party while at the same time being aware of our

own. The ability to recognize and appropriately respond to the cultural differences in conflict

style will be critically important in effectively managing and resolving disagreements and

conflict which may arise during the negotiation. Developing awareness of these style differences

should begin with an examination of our own conflict styles. This will provide a clear window on

how we will likely frame and respond to a problem that arises or a conflict that erupts.

Recognizing how one’s own approach differs from others then becomes the basis for increased

sensitivity to difference and an improved ability to better bridge across these intercultural style

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patterns. Being mindful of the culture’s norms and values will allow us to create a negotiation

plan more effectively and be more informed as to what to expect when entering into the

negotiation. This will also allow us to better control our reactions and create offers accordingly.

The second external factor we will be analyzing is power and its potential effects

upon the Island Cruise negotiation. Negotiation power can be defined as the ability of the

negotiator to influence the behavior of another. Various types of power uses have the ability to

influence the outcome of a negotiation. Power is said to pervade all facets of negotiation. The

very idea of negotiation naturally raises images of power contests and tough bargaining,

however, this is not always the case. Personal power comes from many sources and power

imbalances can create outcomes which are less than favourable in a negotiation. To increase our

confidence as negotiators, we need to step back and analyze the sources of our personal power

and compare them with those of the party with whom we are negotiating. Since the BATNA is

the most important source of power in negotiation, this area will be the first factor examined.

To begin with, BATNA refers to the best alternative to reaching a negotiated

agreement. Simply put, the BATNA is a way for a negotiator to still achieve their goal even if

the target they are trying to achieve is not attained in the negotiation. The BATNA is one of the

most important sources of power in a negotiation for both of the parties participating and

therefore it should be carefully analyzed and planned prior to the negotiation. When an

individual has a strong BATNA, they are less dependent on the opposing party to reach their

needs than they would be if they had a weak alternative or no alternative at all. When parties

have many options besides the negotiation, they have more leverage in making demands.

Overall, the better your BATNA, the greater your power. It is also important to note that the

effect of the BATNA is dependent on the zone of possible agreement. When the bargaining zone

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is small, BATNAs exert a stronger effect on resource allocation than do contributions; however

when the bargaining zone is large, contribution exert a stronger effect than BATNAs. Through

applying this concept, it is safe to assume that the bargaining zone in our negotiation will be

relatively small. The reason behind this assumption is because Tropical Island council members

are forbidden from accepting any financial incentives in exchange for a favourable agreement. In

addition, the Island’s main focus is on agriculture and not tourism; this in itself will give them an

incentive to not agree to anything outside of their limits because their wellbeing is not strictly

dependant on the cruise line. Lastly, the damage to the marine ecosystem seems to be of major

concern since this is an important source of income for the Island citizens. Disturbance to this

could potentially mean losing significant revenue in that particular industry, which would most

likely make the other party hesitant to reaching an agreement beyond their boundaries. All these

factors combined give us an indication that the other party’s BATNA and walkaway point may

be quite strong. Although there is no sure way of knowing, we can come to an educated

conclusion that the zone of possible agreement (ZOPA) will not be very extensive and therefore

the power of the counterparty’s BATNA will be rather great. In addition, since we place a high

value on obtaining the rights to stop on the Island due to its reputation of being pristine and

exotic- the other party’s contributions to the negotiation are seen as important to us. Achieving a

favourable settlement in the negotiation could potentially mean a great increase in passenger

demand for the Island Queen as well as a rise in profits for our company. We must take into

consideration that our analysis of the other party’s BATNA is an assessment of perceived power.

This means that we are interpreting the other party’s potential power, and this may not always be

square with reality. Regardless, it is important to be prepared to face a strong BATNA from the

mayor of Tropical Island in case that this does arise. In regards to our own BATNA, we must

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ensure that we also have clear alternatives so that during the negotiation we are not easily

manipulated. In creating our BATNA we want to ensure that it is not too weak so that the other

party has the ability to hold even more power over us, but also not too strong so that the

probability of reaching an agreement in the negotiation is at stake. Overall, it is important that we

take a clear but flexible approach in case unexpected circumstances occur. Although we want to

have a clear idea of what our best alternative approach is, we must not let this completely shape

our negotiation since circumstances can change. A sudden shift in conditions can immediately

affect the strength of either one of the party’s walkaway points during the negotiation process

and ultimately their bargaining power.

The second aspect we will observe is the type of power present in this negotiation.

The main type of power which may be a source of concern in this negotiation is legitimate

power. Legitimate power is derived from the ability to influence because of position. A person at

a higher level has power over the people below. However, each person with legitimate power

uses it differently. People with a lot of legitimate power could use their positions of authority to

'instruct' other parties to follow certain procedures. Although this may not be the case in our

situation, it is important to note that the person we will be negotiating with has a high level of

legitimate power in the eyes of the Island inhabitants. Gil Egan, the mayor of Tropical Island, is

responsible for making all major decisions on the Island and this privilege was granted to her

through election. It is therefore safe to assume that she will act in the best interest of the Island

and fairly represent the opinions and needs of those inhabiting it. This could potentially be an

issue as the Island as a whole is generally against the idea of allowing Island Queen to disembark

on its territory. Gil Egan’s title of mayor in itself holds a lot of authority and legitimacy and with

this comes power. Ultimately, the mayor holds the power in determining if the cruise ship will be

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allowed to regularly visit their territory. Captain Stuart Bing, representing the Island Queen, also

has authority because he is the director of the ship, but his authority is not necessarily as great as

Gil Egan’s because he is not at the top of the pyramid. Above him are the CEO and board of

directors who he must also report to and who ultimately run the company.

In order to overcome the power issues stated above, we must take precautions and

carefully plan our approach to avoiding the damage which can be caused by power imbalances.

First and foremost it is crucial that we understand that every time somebody makes a power

move, it requires endorsement. If we do not endorse the power move, this reduces the other

party’s power. In order to avoid having a negotiation with no solution, we must avoid

reciprocating power moves that the other party might make. There are also several methods we

can use in order to increase our bargaining power in the Island Cruise negotiation. The first

method entails generating different options, all of equal value to themselves which we can

present to the other party. An example of this would be to agree on coming to the Island a certain

amount of times per month, but alter the dates in which this would occur in order to better

accommodate to the Island’s concern of damaging the marine eco system. The best way to avoid

making unilateral concessions is to generate several options to present to the other party. The

more options we provide to the other party, the more bargaining advantage and power that we

will hold in achieving our goal of having rights of disembarking on their Island. Secondly, in

order to gain power it is important that we signal our BATNA but we do not reveal it. A good

example of this would be to imply that if Tropical Island does not agree to our terms, we have

discovered another island which has similar qualities. We would not want to implicitly state this,

but rather give clues that if no agreement is reached, we do have other options available to us.

Since Tropical Island knows that it is unique in the qualities that it possesses, this gives them

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power over us in the negotiation. If we successfully signal our BATNA, this will balance out

some of that power, indirectly telling the other party that we do have other options available to

us. We want to ensure that the other party does not know our BATNA or walkaway point as this

can interfere with our ability to create the maximum amount of value and it also significantly

reduces the power we hold. In this specific negotiation, creating a psychological contrast effect

may also be effective in gaining power and persuading the other party into being in favour of our

offer. For example, we can begin by telling stories of other cruise ships that were less than

ethical in their visits to exotic islands. This will not only make our offer seem more favourable,

but it will also help us convince Gil Egan that our ship truly is better than the other options

available.

Lastly, the issue of trust between the two parties will be examined. Trust can be

identified as a key element of successful conflict resolution. This is not surprising insofar as trust

is associated with enhanced cooperation, information sharing, and problem solving. When there

is little trust between the negotiators, making concessions is not easy. First, there is the dilemma

of honesty. On one hand, telling the other party everything about your situation may give that

person an opportunity to take advantage of you. However, not telling the other person anything

may lead to a stalemate. Trust concerns how much you should believe of what the other party

tells you and how much you are willing to disclose to them. If you believe everything this person

says, then he or she could take advantage of you. But if you believe nothing this other person

says, then reaching an agreement will be very difficult and having a positive business

relationship in the future will not be possible. The search for an optimal solution is greatly aided

if parties trust each other and believe that they are being treated honestly and fairly. It is

important that trust is established between the two parties in this negotiation because the

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negotiation agreement will be present for at least six years in which the parties will need to

interact with each other and trust that they are acting fairly and ethically. Achieving trust from

the Gil Egan and the Island’s citizens may be slightly difficult given their negative view of the

cruise ship industry and its dismal record of environmental compliance. Since reputation is a

significant factor of trust in this negotiation, we will start by examining the impact of reputation

on our negotiation with Island Queen Inc.

Reputation is important in negotiation because it helps the other party predict your

moves. The concept of trust can play a critical role in the success of a negotiation and so it

follows that having a reputation of being trustworthy can help a negotiator immensely. If a

negotiator has a reputation of being trustworthy it allows individuals who have not previously

negotiated with them to believe that the negotiator will act in accordance to past performances.

The Oxford English Dictionary describes reputation as “the beliefs or opinions that are generally

held about someone or something” (“Reputation”, 2014). The reputations people hold affect how

others deal with them during negotiations. As previously mentioned, given our involvement in

the cruise ship industry, we have already formed a slightly negative reputation in the eyes of the

Island people. Although we are one of the best options available in terms of revenue for Tropical

Island, we must still ensure that we build a good reputations in the eyes of the mayor prior to the

negotiation date. This reputation could be built on factors such as showing constant ethical

behaviour and genuine concern for the Island’s needs and reservations. This is very important

because the reputations assigned are highly internally consistent. Once the other party has

decided that we are trustworthy or the not, other qualities about us will be perceived as consistent

with this impression and this will ultimately affect their decision of reaching an agreement with

us or not. It is also important to note that reputation is built on a combination of first and second

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hand information. Since we cannot control what may have been said about our company in the

past, we can focus on building trust and a positive reputation upon our meeting with the mayor

and in the weeks prior to the meeting. In order to repair what may be already tarnished

reputation, it is important that our entire company behaves ethically, rather than only focusing on

what the negotiator verbally says to Gil Egan on the day of the negotiation. Evidently, the

importance of reputation does not only apply to the Island’s view of Island Queen Inc. but rather

applies to both parties equally; therefore it is equally important that the mayor’s reputation is

positive in our eyes. Reputations are critical assets, which need to be purposefully built and

carefully protected. Since reputations are too important to be left to chance, we need to

understand the impact of our reputation, and must work to maintain that reputation throughout

the negotiation in order to achieve our best possible outcome. Given this specific situation where

the island’s native culture and local ecology is at risk, it is crucial that we gain their trust through

building and displaying a positive reputation to the other party.

Given the significant importance of establishing trust in this negotiation, the

remainder of the discussion on trust will focus on ways in which we can effectively build trust

with the mayor of Tropical Island. We specifically will focus on taking the cognitive route to

building trust which is based on rational and deliberate thoughts and considerations. This is a

better approach in the Island Cruise negotiation because it involves a business scenario rather

than a personal one, where manipulating emotions may be more effective. To begin with, the

most important task in building trust is for both parties to focus on a common goal. The common

goal that Island Queen Inc. shares with Tropical Island is the increase in revenue which they both

desire and could potentially obtain if an agreement is successfully reached. Trust is the

confidence that develops in a negotiation when the actions of both parties support a common

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goal. When both parties are set to gain or lose depending on the achievement of the goal, then

each person has an increased level of investment in the goal being completed. When both parties

believe that they need each other to achieve their individual goals and that other options are

limited, trust between parties will naturally increase. A way in which we can trigger this trust-

building process is by highlighting the unique benefits we can provide and by emphasizing the

loss that might result from an impasse. Secondly, it is important that we focus on the future.

Recognizing that as a result of this negotiation, it is likely for the two parties to network in the

future will in fact aid us to interact in a friendlier manner during the negotiation and as a result

trust each other more. Going in with the mindset that we will interact with this party again, will

encourage us to problem solve more effectively, regardless of whether this turns out to be true or

not. In order for this method to be effective, both parties must be willing to take on this mindset

which looks at the big picture rather than only at the conflict at hand. Overall, when negotiators

expect to have future interactions with the counterparty, they expect negotiations to be friendlier,

are more satisfied, and are more likely to use a problem-solving bargaining style which is

essential for a successful negotiation. Lastly, we must transform any personal conflict or tensions

which may be present between us into task conflict. This is especially important in our situation

because task conflict plays a big role in stimulating creativity in problem solving because it

forces the negotiation parties to rethink the problems and arrive at outcomes that everyone can

accept. Task conflict, also known as cognitive conflict is largely depersonalized and consists of

argumentation about the project, merits of ideas, and plans. As we can see, this is a much more

effective method as it avoids targeting people personally and instead focuses on the actual

subject matter. Task conflict will help us in enhancing our relationship, given that the other party

is comfortable with also engaging in this style of problem solving.

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Overall, in order to achieve a satisfactory outcome in the Island cruise negotiation

we must carefully take into consideration three important external factors: culture, power, and

trust. Observing these factors will help us to effectively prepare for the negotiation and the

potential difficulties we may be faced with when interacting with the mayor of Tropical Island.

Citations:

"Reputation.": Definition of in Oxford Dictionary (British & World English). N.p., n.d. Web. 12

Dec. 2014. Retrieved from

<http://www.oxforddictionaries.com/definition/english/reputation>.

*Other information sources obtained from PACS 323 course notes and lecture slides, University

of Waterloo.

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