Transcript of Luna Pen: Negotiation Strategy

Transcript of Luna Pen: Negotiation Strategy ( Group C )

A Case Study
Erika Graeper
Luna Eclipse?
Luna Pen
A Puzzling Request
Erika Graeper receives a letter from Cecil Armstrong (Brisbane, Australia).
He complained of difficulties in obtaining LUNA pens for his retailers.
LUNA pens had been out of production for years!
Alven Feng of Global Service was the supplier.
Her grandmother gave her a LUNA pen as a gift.
A degree in electrical engineering, as well as an MBA from the University of Texas, Austin, in 1999.
She worked for a German audio speaker manufacturer, Dell and finally DGG.
A brief history of the Luna Company:
It was owned and operated by the Dumart family for almost 60 years
Annual revenues in 1980’s were c. US$10 million
In late 1980’s, the company was sold to a larger stationery company and Herr Dumart stayed as a manager

AbdulWahab Haji
Ahmad Al-Nijadah
Amr Naboui
Khaldoon Said
Wassim Qawadri
Kuwait Univ.
MBA Program
Negotiation Skills

In early 1990’s, DGG acquired the stationery company
DGG tore down Luna’s factory after it started to make losses with the death of Herr Dumart
Luna existed on papers only
Luna Rising?
Erika went on a trip to Southeast Asia. Accidentally, she found some Luna pens being sold in duty-free shops and local stores at around $50.
Erika asked about the origin of pens and found out that Global Service Company that’s owned by Alven Feng.
Erika found out that Mr. Feng—or somebody behind him—had neatly stepped into the vacuum that had been left when DGG tore down the Luna factory.
Erika bought two pens and kept detailed receipts. And for good measure, she also bought a bottle of Luna brand ink.

DGG
OPTIONS
Preparing to negotiate
“ How should I start the discussions?”
Aggressive vs Conciliatory
Female diadvantage
Erica scheduled to be in Taipei in one week
Negotiating with different cultures
Difference in body language
Chinese “suck … audibly around the teeth”
Don’t want to say NO
Erica scheduled to be in Taipei in one week

Alternative Approaches
A
B
C
D
Fax Feng requesting a meeting with him in Taipei next week. Outline your understanding that Global Service Company has built a considerable business using the Luna name without DGG’s permission. Raise the issue of back payments for past misuse of the name, and a possible license or sale for future use.

Write Feng that his company must cease its unauthorized use of the Luna name, and that DGG is prepared to file lawsuits if necessary. Unless your company asserts its rights, Feng has no reason to negotiate.

Contact other companies in Southeast Asia that might be potential buyers of the Luna name, in order to determine their possible interest. Also, write Feng and tell him DGG is planning on selling the rights to the Luna name. Request that he come to Frankfurt in the near future to discuss the settlement of this matter.

Fax Feng, introduce yourself, and tell him that you will be in Taipei next week. Ask if there is any convenient time to discuss your recent discovery that the Luna pen is selling well in the Far East, under his company’s marketing strategy. Let him know that DGG is interested in some form of partnership with Global Service.

Erika resolved the mystery and brought the information to her boss .
the following points were discussed between Erika and her boss :
Check the legal situation with the legal department .
DGG is not interested in getting back to Pens industry .
DGG has to check what such a suit would get them .
Erika has concluded after doing research that Fountain Pens business is coming back .
on our agenda . Anything you can get out of this will be a windfall.”

Erika and Her boss proposed the following Alternatives :
Bringing a suit against Feng and Global Services to recover damages for past trademark violations .
Negotiate some sort of settlement with Feng either through sort of on-going licensing arrangement or an outright sale
DGG might find some other enterprise that would be interested in buying Luna’s goodwill.

Mann asked Erika to take a decision herself and said : ““We have much bigger things on our agenda . Anything you can get out of this will be a windfall.”

DGG
LEGAL POSITIONS
Legal position of DGG seems not to be that strong.
In this kinds of suits the complaining party measures its damages in terms of lost market share and tarnished reputation but DGG had voluntarily left the market .
Trademark violation cases are time consuming and expensive as they need to hire an advocate in each country where Global services selling Luna pens.
Conclusion : The situation seemed to call for some negotiated solution.

Luna Negotiation Case Analysis

In the Luna case that involved the companies DGG and Global Service, DGG was trying to receive payment for trademark infringement of a pen that Global Service was currently producing. In the negotiation, Erika did not have a very strong BATNA, which was getting another company to manufacture the Luna pen after a potential lawsuit that would likely only force Global Service to cease production. DGG's interest was simply to receive money for the use of the trademark because they had no intentions of resuming the Luna pen part of their business but still wanted the payment for its use or a potential partnership that would benefit both parties. However, Global Service's interest was simply to keep manufacturing and distributing the Luna pen as it represented 25% of the company's revenue. If Global Service could not negotiate with DGG and possibly be forced to stop producing the pen in a lawsuit, Global Service would have only one BATNA, which is to find another pen to manufacture instead of the Luna pen.

While I liked many of Erika's approaches in negotiating, I still would still have changed many things. I strongly agreed with her first two approaches in dealing with Mr. Feng as she displayed a very polite and accommodating attitude in her first message to the CEO and then properly asserted herself when the CEO was clearly brushing her off. In the first message she sent, I thought it was a great idea to be very courteous and polite because she does not know this person and she does not want to start the negotiation poorly. Furthermore, when the CEO clearly did not have any interest in speaking with her, she grabbed his attention by sending the threat that she intends to file a lawsuit. She did not lose control and start an argument, but she used the strategy of "Use the Power to Educate" like in Getting Past the No to force Mr. Feng to take her seriously. I thought this was an excellent tactic because the CEO's next response indicated that he was not out of town while also admitting that he knowingly took their product without consent and was willing to pay for the use of the name.