Harvard Case - SpiceJet and Jaisalmer: A Win-Win Negotiation during a Crisis
"SpiceJet and Jaisalmer: A Win-Win Negotiation during a Crisis" Harvard business case study is written by Priyanka Vallabh, Suresh Jayaseelan, Ashish Modi. It deals with the challenges in the field of Organizational Behavior. The case study is 18 page(s) long and it was first published on : Jul 13, 2023
At Fern Fort University, we recommend SpiceJet adopt a collaborative and strategic approach to its negotiation with the Jaisalmer airport authorities. This approach should prioritize building a long-term partnership that benefits both parties, while simultaneously addressing the immediate crisis of the airport's closure.
2. Background
The case study revolves around SpiceJet's predicament when the Jaisalmer airport authorities unexpectedly shut down the airport due to safety concerns. This closure jeopardizes SpiceJet's operations, potentially leading to financial losses and reputational damage. The main protagonists are Ajay Singh, SpiceJet's Chairman and Managing Director, and the Jaisalmer airport authorities, represented by the Airport Director.
3. Analysis of the Case Study
This case study presents a classic example of a crisis situation requiring effective negotiation and conflict resolution. We can analyze the situation using the following frameworks:
a) Negotiation Framework:
- Interests: SpiceJet's primary interest is to resume operations at Jaisalmer airport, ensuring minimal disruption to its schedule and customer experience. The Jaisalmer airport authorities prioritize safety and compliance with regulatory standards.
- BATNA (Best Alternative to a Negotiated Agreement): SpiceJet's BATNA is to find alternative routes or airports, potentially incurring additional costs and inconvenience. The authorities' BATNA is to maintain the airport closure until safety concerns are addressed, potentially impacting local tourism and economic activity.
- Power Dynamics: SpiceJet holds significant leverage due to its market position and the potential economic impact of the airport closure. However, the authorities have the power to enforce safety regulations and control airport operations.
b) Organizational Behavior Framework:
- Leadership Styles: Ajay Singh's leadership style is crucial in navigating this crisis. He needs to demonstrate decisiveness, emotional intelligence, and a collaborative approach to engage with the authorities effectively.
- Team Dynamics: SpiceJet's internal team dynamics are critical. Effective communication, collaboration, and a shared sense of urgency are essential for navigating the crisis and finding a solution.
- Organizational Culture: SpiceJet's organizational culture, emphasizing customer focus and a proactive approach to problem-solving, will influence its negotiation strategy and the overall response to the crisis.
c) Crisis Management Framework:
- Rapid Response: SpiceJet needs to respond swiftly and decisively to minimize the impact of the closure. This includes communicating effectively with customers, stakeholders, and the authorities.
- Problem Identification: Understanding the root cause of the airport closure is crucial for developing a sustainable solution. This requires open communication and collaboration with the authorities.
- Solution Development: SpiceJet needs to develop a comprehensive solution that addresses the authorities' concerns while minimizing disruption to its operations.
4. Recommendations
1. Collaborative Negotiation: SpiceJet should engage in a collaborative negotiation process with the Jaisalmer airport authorities, focusing on finding a mutually beneficial solution. This approach should involve:
- Active Listening: Understanding the authorities' concerns and perspectives is crucial for building trust and finding common ground.
- Open Communication: Maintaining open and transparent communication channels throughout the negotiation process is essential for building trust and resolving potential misunderstandings.
- Creative Problem-Solving: Exploring innovative solutions that address both parties' needs is critical for achieving a win-win outcome.
2. Addressing Safety Concerns: SpiceJet should proactively address the safety concerns raised by the authorities by:
- Conducting a Thorough Audit: Initiating an independent audit of the airport's infrastructure and safety protocols to ensure compliance with regulatory standards.
- Implementing Corrective Measures: Taking immediate action to address any identified safety deficiencies, demonstrating a commitment to safety and compliance.
- Providing Transparency: Communicating the results of the audit and the corrective measures taken to the authorities and the public, building trust and demonstrating accountability.
3. Building a Long-Term Partnership: SpiceJet should aim to establish a long-term partnership with the Jaisalmer airport authorities, fostering a mutually beneficial relationship. This can be achieved by:
- Investing in Infrastructure: Exploring opportunities to invest in the airport's infrastructure, potentially improving facilities and enhancing operational efficiency.
- Supporting Local Tourism: Collaborating with the authorities to promote tourism in Jaisalmer, leveraging SpiceJet's network and marketing capabilities.
- Creating Shared Value: Identifying opportunities for joint ventures and collaborations that benefit both parties, fostering a sense of shared ownership and responsibility.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Mission: SpiceJet's core competency lies in its ability to operate efficiently and provide affordable air travel. The recommendations align with its mission to connect people and places while prioritizing safety and customer satisfaction.
- External Customers and Internal Clients: The recommendations prioritize the needs of both external customers (passengers) and internal clients (employees), ensuring a smooth and safe travel experience.
- Competitors: By demonstrating a commitment to safety and collaboration, SpiceJet can differentiate itself from competitors and enhance its reputation in the market.
- Attractiveness: The recommendations are attractive from a financial perspective, as they aim to minimize operational disruptions and foster long-term growth opportunities.
6. Conclusion
By adopting a collaborative and strategic approach to negotiation, SpiceJet can navigate the crisis at Jaisalmer airport, achieving a win-win outcome that benefits both parties. This approach will not only address the immediate crisis but also lay the foundation for a long-term partnership, fostering sustainable growth and enhancing SpiceJet's brand reputation.
7. Discussion
Alternatives Not Selected:
- Legal Action: SpiceJet could pursue legal action against the authorities, but this would be a lengthy and costly process, potentially damaging its reputation and hindering its operations.
- Ignoring the Concerns: Ignoring the authorities' concerns would be irresponsible and could lead to further escalation of the crisis, potentially jeopardizing the safety of passengers and damaging SpiceJet's brand image.
Risks and Key Assumptions:
- Negotiation Breakdown: There is a risk that the negotiation could break down, leading to a prolonged closure of the airport and significant financial losses for SpiceJet.
- Unforeseen Circumstances: Unforeseen circumstances, such as regulatory changes or technical issues, could impact the implementation of the recommendations.
Options Grid:
| Option | Advantages | Disadvantages | Risk |
|---|---|---|---|
| Collaborative Negotiation | Win-win outcome, long-term partnership, enhanced reputation | Time-consuming, requires compromise | Negotiation breakdown |
| Legal Action | Potentially force authorities to reopen the airport | Costly, time-consuming, reputational damage | Unfavorable legal outcome |
| Ignoring Concerns | Short-term cost savings | Reputational damage, safety concerns, potential escalation | Further closure, legal action |
8. Next Steps
- Immediate Action: SpiceJet should initiate a collaborative negotiation process with the Jaisalmer airport authorities within 24 hours of the airport closure.
- Short-Term Goals: Within one week, SpiceJet should conduct a thorough audit of the airport's infrastructure and safety protocols, identify corrective measures, and communicate these to the authorities.
- Long-Term Goals: Within one month, SpiceJet should develop a comprehensive plan for investing in the airport's infrastructure, supporting local tourism, and fostering a long-term partnership with the authorities.
By taking these steps, SpiceJet can navigate the crisis at Jaisalmer airport and emerge stronger, establishing a long-term partnership that benefits both parties and enhances its brand image.
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Case Description
Tourism, the fulcrum of the livelihoods for residents of Jaisalmer, India, was significantly affected during the second wave of the COVID-19 pandemic that occurred in January 2021. The situation worsened when SpiceJet, the only airline operator of Jaisalmer, announced the suspension of its operations, citing low passenger load and high operating costs. With the support of Ashish Modi, their district administrator, the Jaisalmer community tackled the issue using a first-of-its-kind initiative called "the citizen-airline partnership model." The interplay between the Jaisalmer community and SpiceJet management unveiled finer aspects of negotiation during a crisis. Would the model succeed in a win-win negotiation?
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