Harvard Case - Negotiating with the Cuban Sugar Industry (A): No Way Out?
"Negotiating with the Cuban Sugar Industry (A): No Way Out?" Harvard business case study is written by Christoph Burger, James G. Clawson. It deals with the challenges in the field of Organizational Behavior. The case study is 2 page(s) long and it was first published on : Sep 20, 2011
At Fern Fort University, we recommend that the US sugar industry, represented by the American Sugar Alliance, adopt a strategic approach to negotiating with the Cuban sugar industry. This approach should prioritize a collaborative and mutually beneficial outcome, focusing on long-term sustainability and economic growth for both parties. This strategy will involve a combination of change management, cross-cultural business relations, and negotiation and conflict management techniques to address the complex political and economic realities of the situation.
2. Background
This case study focuses on the complex relationship between the US and Cuban sugar industries. The US sugar industry, heavily reliant on government subsidies and protectionist policies, faces a potential threat from the re-emergence of Cuba as a major sugar exporter. This situation presents a critical juncture, demanding a strategic approach to navigate the challenges and opportunities associated with the Cuban sugar industry's re-entry into the global market.
The main protagonists are the American Sugar Alliance (ASA), representing the US sugar industry, and the Cuban government, responsible for the Cuban sugar industry. Both parties have distinct interests and perspectives, shaped by historical tensions, economic pressures, and political considerations.
3. Analysis of the Case Study
The case study presents a complex scenario where the US sugar industry faces a significant threat from the Cuban sugar industry's potential resurgence. To analyze the situation, we can utilize the Porter's Five Forces framework to identify the key forces influencing the industry dynamics:
- Threat of New Entrants: The Cuban sugar industry's re-entry represents a significant threat to the US industry, particularly given Cuba's potential for low-cost production.
- Bargaining Power of Buyers: The US sugar industry faces limited bargaining power as buyers have numerous alternative sources of sugar.
- Bargaining Power of Suppliers: The Cuban government, as the primary supplier of sugar, holds considerable bargaining power.
- Threat of Substitutes: The availability of alternative sweeteners like corn syrup poses a threat to both the US and Cuban sugar industries.
- Rivalry Among Existing Competitors: Competition within the US sugar industry is intense, with players vying for market share and government support.
Furthermore, the case highlights the power and politics in organizations at play. The ASA, as a powerful lobbying group, utilizes its influence to protect the interests of its members, while the Cuban government seeks to leverage its sugar industry for economic growth and political leverage.
4. Recommendations
The US sugar industry should adopt a multifaceted approach to negotiating with Cuba, focusing on the following key aspects:
a) Collaborative Engagement: The ASA should proactively engage with the Cuban government, fostering open communication and building trust. This can be achieved through:
- Cross-cultural business relations: Understanding Cuban culture, history, and political context is crucial for effective communication and negotiation.
- Difficult conversations: Addressing historical tensions and political sensitivities with sensitivity and respect is essential for building a constructive dialogue.
- Leadership styles: Adopting a collaborative and inclusive approach, emphasizing mutual benefit and shared responsibility, can facilitate a more positive negotiating environment.
b) Focus on Sustainability: The ASA should advocate for sustainable practices in the Cuban sugar industry, emphasizing environmental protection, fair labor standards, and responsible production methods. This can be achieved through:
- Corporate social responsibility: Promoting ethical and sustainable practices in the Cuban sugar industry can enhance the industry's reputation and attract international support.
- Innovation: Encouraging the adoption of modern technologies and sustainable practices in Cuba can contribute to long-term growth and competitiveness.
- Organizational change: Implementing changes within the Cuban sugar industry to address sustainability concerns requires effective change management strategies and strong leadership.
c) Competitive Advantage: The US sugar industry should focus on developing a competitive advantage through diversification, innovation, and value-added products. This can be achieved through:
- Growth strategy: Diversifying into new markets, developing value-added products, and investing in research and development can enhance the US industry's competitiveness.
- Leadership qualities: Strong leadership, strategic thinking, and a commitment to innovation are crucial for driving these changes within the US sugar industry.
- Employee engagement: Empowering employees, fostering a culture of innovation, and investing in talent development can drive long-term success.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The ASA's core competency lies in advocating for the interests of the US sugar industry. This strategy aligns with its mission by seeking to ensure the industry's long-term viability and competitiveness.
- External customers and internal clients: The strategy considers the needs of both external customers (consumers) and internal clients (sugar producers) by promoting sustainable and ethical practices that enhance the industry's reputation and appeal.
- Competitors: The strategy acknowledges the threat posed by the Cuban sugar industry and aims to mitigate it by fostering collaboration, promoting sustainability, and developing a competitive advantage.
- Attractiveness ' quantitative measures if applicable: While it is difficult to quantify the potential benefits of a collaborative approach, it offers the potential for long-term economic growth and stability for both the US and Cuban sugar industries.
6. Conclusion
The US sugar industry faces a critical juncture with the potential re-emergence of the Cuban sugar industry. By adopting a strategic approach that prioritizes collaboration, sustainability, and competitive advantage, the ASA can navigate this complex situation and ensure the long-term viability of the US sugar industry. A collaborative and mutually beneficial relationship with Cuba can lead to shared prosperity, economic growth, and a more sustainable future for both parties.
7. Discussion
Alternative approaches to negotiating with Cuba include:
- Confrontational approach: This strategy would involve aggressive lobbying efforts to pressure the Cuban government and limit its sugar exports. However, this approach could lead to escalating tensions and potential trade disputes.
- Ignoring the threat: This approach would involve maintaining the status quo, hoping that the Cuban sugar industry does not pose a significant threat. However, this strategy could lead to a decline in the US sugar industry's competitiveness and market share.
The recommended strategy, focusing on collaboration and sustainability, offers a more sustainable and mutually beneficial outcome. However, it carries risks, such as the potential for political instability in Cuba or the failure to achieve a mutually agreeable outcome.
8. Next Steps
The ASA should implement the following steps to implement the recommendations:
- Form a task force: Assemble a cross-functional team of experts in international business, negotiation, and sustainability to develop a comprehensive strategy for engaging with Cuba.
- Conduct research: Gather information on the Cuban sugar industry, its production costs, and its potential for growth.
- Develop a communication plan: Establish clear communication channels with the Cuban government and develop a strategy for building trust and fostering open dialogue.
- Engage in pilot projects: Initiate small-scale collaborative projects with Cuban sugar producers to demonstrate the benefits of sustainable practices and shared economic growth.
- Monitor progress: Regularly assess the progress of the negotiations and adjust the strategy as needed.
By taking these steps, the ASA can navigate the complex challenges and opportunities presented by the Cuban sugar industry and ensure the long-term viability of the US sugar industry.
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Case Description
Suitable for MBA, EMBA, GEMBA, and executive education program in coursed on negotiation and intercultural management. This case is based on actual negotiations and data. The scenario has been adjusted and simplified for teaching purposes. The case describes the situation of Philip Fisch, a sales representative of a German midsize engineering company, in his negotiation efforts to close his second deal with Juan Antonio Fajardo Duque, vice minister of the Cuban Ministry of Foreign Trade. It provides general information about the situation (UVA-OB-1019, the A case) and confidential information for students playing the roles of Fajardo and Fisch (UVA-OB-1020 and UVA-OB-1021, the B and C cases, respectively).
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