Patent War Game

This game is to simulate the patent war between Apple and Samsung so there are 2 (group of) players.
The rules are as the follows:

1. You will have 6 rounds to play with.
2. Every rounds, you can choose to invest in 1 of the 5 countries to gain points in every rounds.
3. The points gained are as follows:
   
   
4. In the game, you can use the patent war card once before your turn in every round to make
   your opponent to skip 2 rounds, but it will cost you points. The card can be used only once per group.
   
   

The 5 countries are as follows:

Tit for Tat - The Tablet Patent War of Two Giants

STORY BACKGROUND

The Characters

Apple Inc., formerly known as Apple Computer Inc., is an American multinational listed company headquartered in the middle of Silicon Valley. It designs its own computer operating system and consumer electronics, while it mainly sell the hardware through its own over 357 retail stores. It is one of the biggest mobile phone and PC manufacturers worldwide, and also a tech giant with most market value, which is estimated at up to 500 billion US dollars in February 2012. Nowadays, iPhone and iPad have become the best-selling electronic products. Apple has been able to create a high-end product with an appealing brand image which is associated as fashionable, innovative and creative.

Samsung Group is a South Korean multinational conglomerate headquartered in Samsung Town, Seoul. It comprises of numerous subsidiaries and Samsung Electronics is the flagship subsidiary of Samsung Group. In the smartphone market, the representative product for Samsung, the Galaxy S i9000, is the second best-selling mobile phone right after the iPhone and has become the only product that can compete with iPhone for market share.

The Story

CONFLICT HISTORY

Changes in Relationships

In the past, Apple and Samsung's partnership established based on the needs for both parties to collaborate and rely on one another to make products. During this time, a win-win situation of collaboration as supplier and customer prevailed.

As times goes on, both companies explored the opportunity in terms of partnership. Samsung focuses on manufacturing semi-conductors and Apple both focus on design and selling electronic devices. There are no conflicts since each other focuses on different market areas. Because of their vertical relationship, Samsung is accommodating by not joining the electronic devices market but only act as a supplier of semi-conductors.

However, the cooperation between the two companies broke due to Samsung entering the electronic device market later and starting to eat up Apple’s share market. The case switched from a win-win situation to compromise because Apple and Samsung focused on the high-end and low-end market respectively.

Today, due to the closer product similarity and market share, Apple and Samsung are playing a tough game in order to balance the relationship with each other. However, in fact, they are far more than mere competitors. Apple still needs to rely on Samsung to supply major parts and the partnership is still existing. Therefore Samsung is a very important co-operative enterprise for Apple by offering the components for producing iPhone and iPad. 

However, the software in Samsung’s smartphones is offered by Google Android, the sworn enemy of Apple. The Galaxy S and Galaxy Tab 10.1 are sold like hot cakes now and are gaining more and more market share, which might be the reason why Apple is willing to risk breaking its long-standing relationship with Samsung.

Trigger for the Patent War

Summary of the Evolution of Smartphones (Buck, 2011)

The above image clearly illustrates that starting from the early 1990's with IBM's Simon, the evolution and emergence of smartphones triggered a whole new era of technology and created an entirely new segment of mobile device users. Apple was the first company to launch a revolutionary mobile phone that completely changed the game. With its iPhone 3 released in 2007, Apple, according to strategic management terms, was the "first-mover". As the first-mover, Apple needs to do all it can to attack and counter-attack so called "early followers", such as Samsung or "late followers", such as Nokia. One way to win more market share might be through patent wars.


THE PATENT WAR PROGRESS

As the above image indicates, Apple and Samsung have been engaging in a long, arduous patent lawsuit process for over a year now spanning from Europe, the US, Australia to Asia. The patent disputes started when Samsung launched its Galaxy series in April 2011. Apple filed a lawsuit against Samsung, arguing that the company's smartphones violate its patents and should be banned from sale in Germany. That lawsuit followed another Samsung filed against Apple in a German court, alleging the iPhone maker violates several patents, including one related to how emoticons are displayed on-screen.
The legal battles are indicative of a maturing mobile market that’s in the middle of determining its long-term leaders with Apple, Samsung, Google and Microsoft.

Patent War Timeline

The following timeline illustrates the still on-going process between the two rivals, Apple and Samsung that started exactly a year ago. It clearly shows that both companies strongly believe in their position and that the other rival has broken their patents since there are no signs of either party backing down.

Legal Battle Timeline (Buck, 2011)

The current status of the patent war situation in April 2012 is that so far, neither company has been able to gain the upper hand. 


ANALYSES FROM DIFFERENT PERSPECTIVES

1. COMPARATIVE MANAGEMENT

Are Apple and Samsung Using Comparative Management?

Yes, this seems to be the case. But first things first, what is Comparative Management? It is defined as the simultaneous study of management or business practice in two or more different cultures, countries or companies. It analyzes the extent to which management principles and decisions are applicable from one country to another.

Why Germany?

Ok, so let's put the above in the context of this case. Apple is from the US and Samsung from South Korea. The first country Apple decided to sue Samsung was in Germany (Reisinger, 2012). Why Germany? It wasn't by mere coincidence. According to O'Brien (2012), German companies concentrate intensely on product quality and product service (e.g. Mercedes-Benz and Porsche) to provide competition on the basis of excellence in their products and services.

Additionally, German industries tend to work closely with governments, adhering to government standards, policies, and regulations. Virtually, all German products are subject to norms established through consultation between industry and government, with strong inputs from the management associations, chambers of commerce, and trade unions. Based on this, Apple must have thought it had a greater chance in beating Samsung in Germany since they believe that "the copying is so pervasive, they appear to be actual Apple products". They hoped German courts would come to the same conclusion as them. And Apple's possible comparative management research proves their decision right. Apple won the ruling in a Dusseldorf court in 2011 that banned the sale of the Samsung Galaxy Tab 10.1 tablet computer in Germany. However, Samsung quickly modified the device, releasing the Galaxy Tab 10.1N. Apple sued to block sales of the new device, but a court in Munich denied its request.

Similar Case for Microsoft vs. Motorola

Germany seems to be at the epicenter of global patent battles among tech rivals. For example, Microsoft's decision to move its European logistics and distribution headquarters from Germany to the Netherlands has generated a debate over patent law here, where it is easy to block the sale of a rival's product even before an infringement claim is verified. Microsoft cited the potential consequences of a lawsuit brought against it in Germany by Motorola Mobility as a factor in its decision to move its logistics center from the town of Duren, a small German town near the Dutch border, into the Netherlands.

Motorola Mobility has asked a court in Mannheim, Germany, to stop Microsoft from distributing its Xbox game consoles and Windows 7 operating system software because they use a video streaming technology that Motorola claims to own.

Making Use of Germany As a Springboard

According to Peter-Michael Weisse (Tolentino, 2012), attorney at intellectual-property litigation firm in Germany, the reason why Apple and Samsung might have decided to choose to sue each other in German courts is because if they've done any comparative management, both would come to the conclusion that German courts are inexpensive, fast, allow for a ruling within a year. Additionally the result in a German court will secure a commercial advantage compared to other courts in other European countries.

The same source continues stating: “If you want to conquer the European market and you’re being stopped in Germany, most of the time that’s enough to throw in the towel.”  (Tolentino, 2012). Many companies say if they cannot sell in Germany, it’s no use to go ahead with a product somewhere else.

Joachim Henkel, a professor of management at the Technical University in Munich, said big international companies were often seeking to exploit the German system for strategic advantage. Thus in the end, "usually, what masquerades as a patent dispute is in actuality a dispute motivated by business strategy", he states (O'Brien, 2012).

2. CREATIVITY AND MORAL

What is Creativity?

The fundamental argument is on CREATIVITY. What is Creativity?

According to the English dictionary, creativity means: "the ability to make or bring into existence something new" (Merriam-Webster, Incorporated, 2012). Thus, it means making something “new”. In other words, it is also the ability to create something novel and appropriate (Amabile & Khaire, 2008).

So what is “New”? It is quite arguable if a "New" component should be defined as “New”, or combining all existing components (but components not first used by you) into a never-existed product means “New”? Let's take for example the famous animation company, Pixar. In 1995, they created a feature film called "Toy Story".

A Toy Story  Poster (Wikimedia Foundation, Inc, 2012)

Toy Story has generally been perceived as “creating” something (i.e. the picture) "New". We don't believe anyone would think they are not creating.

However, how about the famous Japanese comic, Slam Dunk?

You may claim that it definitely is an original creation by the comic writer, Takehiko Inoue. Nevertheless, there are discussions on the web that some of the "drawings" are copy official NBA photos (National Basketball Association). Here are a few examples:

Example 1. Slam Dunk vs NBA photos (ComiPress, 2007)

Example 2. Slam Dunk vs NBA photos (ComiPress, 2007)

So here is a question for you:

Can it be defined as a new creation when Apple / Samsung combine their own creations (e.g. iOS 5) with others' creations (e.g. wifi) to make new products?

Apple Collides With Samsung (iPhone Zone, 2011)

Innovation

Someone would argue that Innovation is different from Creativity.

According to Joyce Wycoff (the president of ThinkSmart Learning Systems and founder of the Innovation Network, an organization focusing on helping organizations develop a core competency in innovation), innovation is a “mental extreme sport” that requires “pulling unrelated things together to innovate" (Karacapilidis, 2010). In short, it is not necessary to create all new components to “innovate” a product. The definition seems to answer the above question about Apple / Samsung innovating something, by pulling from others' creations together. However someone would still argue that the components (i.e. iOS 5, wifi) are not “unrelated things”. Thus, Apple / Samsung cannot be regarded as 100% innovators of smartphones according to the above definition of innovation.

Another example for you is their connectors.

Similarities between connectors (Iphone Active, 2012)

Did these companies copy from one another, or was this innovation a mere coincidence?

As we have mentioned, Apple and Samsung are not the sole innovator of smartphones, they are both “inspired” by other's innovations to complete their products. The logic is simple, Apple gathers up all the technology required and innovates some of the missing parts to complete the products. Also, Samsung is taking on a similar approach. One of the legal cases where Apple filed for a patent case in Germany is called trade dress. Apple is suing Samsung for similarities in the Galaxy device outlook that are almost identical to iPhone and iPad. Apple owns the design patents which show similarity, however, when we look at the electronic world, the similarity does not mean Galaxy violating Apple's patent.

Registered Community Design No.748280-0006
(Oblon, Spivak, McClelland, Maier & Neustadt, L.L.P., 2012)

Let's take a regular notebook computer as an example. A notebook computer has a flip monitor which fixed to the dock with a keyboard. Perhaps, no one would remember who innovated such design, but the design has become so common that almost every notebook computer share the same design. We don't see any companies suing each other for the notebook design. The reason is simple. The design of the notebook is based on its function, and the mechanical design has to be designed in such a way to work. Therefore, every notebook maker follows the design to produce their notebook.

Can this notebook design get a patent?

Tablets and smartphones are other innovations of electronic devices just like the portable notebook computers. Smartphones and tablets also have similar mechanical designs in order for the product to work. This time, Apple uses its patent design to claim that Apple is the inventor and prevents its rival from copying it. Indeed, Apple does not win most of the patent suing except in Germany which prohibits Samsung to sell its Galaxy products in Germany. Apple and Samsung smartphones have different button designs, therefore, the design is not identical. We do not encourage violating patents, but we have to understand some similaries are inevitable due to the function of the device which has to follow the rules of geometry of the human body.

Plagiarism

So can either Apple or Samsung be accused of plagiarism?

According to the English dictionary, plagiarism means: "an act or instance to steal and pass off (the ideas or words of another) as one's own: use (another's production) without crediting the source" (Merriam-Webster, Incorporated, 2012). Thus, it means that if someone directly copies other(s') idea as his/her own is defined as plagiarism. For instance, “copying” 100% content from a book and claiming the document was written by you. Therefore, how about this case? Apple / Samsung had their own separate product creations, so it seems that it is not 100% plagiarism.

Intellectual Property Protection

Hence, you may say that Intellectual Property Protection is for what the above arguments are all about. How does Intellectual Property Protection affect our daily lives?

The contemporary term of intellectual property is founded on 1867 by the North German Confederation that was granted the legislative power to protect intellectual property, aka Schutz des geistigen Eigentums. Generally, Intellectual Property is defined as "a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized under the corresponding fields of law" (Wikimedia Foundation, Inc., 2012). A wide range of intangible assets are protected under the intellectual property law where owners are granted certain exclusive rights including the product designs, while patents is one of the common types of intellectual property right.

In short, it is a question of whether the rights owner (who has the right for his / her intellectual property by “copyright-ing”, “trade-marking”, “patent-ing”, etc. legally) grants the rights to someone to use these patents. This is what Apple and Samsung are arguing in front of the judges.

Short Conclusion

Their interest are to have a clear brand image of being creative, while they desire to gain respects and appreciation of the customers.


3. ECONOMICAL AND FINANCIAL

Statistical Facts for the Economic Conflict

One major reason why Apple filed a patent war against Samsung is due to the threats of substitute by Samsung's Galaxy product line. According to Bloomberg.com, Samsung has overwhelmed Apple by becoming the world’s largest smartphone seller in the third quarter in 2011 after shipping 27.8 million units (Yang, 2012). Indeed, the tripled sales of smartphone in the last quarter of Samsung leaded its market share increase in more than 200%. Apparently, Apple is not happy with and is about to take every action to protect its market share and profit.

Smartphone Vendor Arena in H1 2011 (Kapetanakis, 2011)

According to the data collected in the first half of 2011, Apple and Samsung both have a substantial share of Smartphone market share, so Apple certainly looks on Samsung as its major rival. In the last quarter of 2011, iPad sales rose 111 % to 15.43 million units, while other tablets brands such as Galaxy Tabor ASUS were selling 11.63 million. The iPad's actual share is 83 % of the tablet market in the US. However, the most recent data shows that iPad has only a share of 57.6 % of the tablet market share and Galaxy Tab is still one of the rivals who is eating up the Apple’s share.

Substitutes Affect Market Demand

iPhone4 VS Galaxy S (Broes, 2011)

Since the functionality of the products produced by Apple and Samsung are very similar, their products are highly substitutable. By using concepts of demand and supply, the market demands of the product are easily affected by the highly substitutable product in terms of price and other forms of competition. Therefore, in order to lead in the fierce competition and seize the economic revenues, both companies are suing each other to increase one's production cost and increase entry barriers.

Trade-off Between Short-term Revenues & Litigation Costs

The cost of litigation itself can be considered as a fixed cost. However, it causes an extremely large drawback of the high and continuous expenses. Everyone understands that the longer the legal action continues, the larger the litigation cost will be. Simply put, it becomes a high variable costs in the long run. By comparing the loss in litigation and the benefit from reaping market shares in various countries, it is indeed a trade-off between winning the revenue stream in short run under the title of “original” company and the financial loss of litigation costs.

Short Conclusion

Based on the economic assumption of maximization, they are both profit companies that would like to maximize their profit in long run and short run. Both companies should really consider the litigation losses compared to the gains of the patent war.


4. INDUSTRY & MARKET

Increasing Market Rivalry

Market shares trends of iPad (Meghan, 2012)

Apple tried to recover the glory in 2011 of owning  94.3 % of the market share in 2nd quarter 2010 (Meghan, 2012). While losing market share for iPhone and iPad, Apple shows no willingness to yield even a step to its rival. The most effective way to prevent the uprising rival Samsung continuing to eat up Apple’s share is suing Samsung for violating their design patents. Therefore, the major reason for Apple suing Samsung is so obvious to seize the market shares from rising.

Applying Porter's Five Forces model to analyse the industry, we can conclude that threats of substitutes and the intensity of competitive rivalry is increasing. It is not easy to find a win-win situation to solve this conflict simply because they are fighting solely for the market share and using their own registered patent to prohibit each other from producing similar products.

Short Conclusion

Market research from VisionMobile (Liu, 2011)

According to above statistics from Visionmobile, the global smartphone penetration is only at 27 %.  It shows that Apple and Samsung do not dominate the phone market, so the market is actually not fully  exploited. There is still a bigger pie waiting for them explore, they should fight for the remaining 73 % instead of the smartphone market share within the 27%.


5. CUSTOMERS

Customer Attachment

From the customer perspective, Apple has earned their customers' trust. This is called brand loyalty. An example what brand loyalty is about, think of iPhone 4. The phone had a signal reception problem. When Apple discovered the problem, the company reacted to the problem quickly and solved the problem by providing free accessory to address the problem. According to an article published in Forbes by Scott Goodson (2011), he explained why Apple’s customer embracing huge loyalty towards Apple.

Firstly, Apple builds relationships with customers and social interaction with customers such as when Apple has new products release, Steve Job, who was the CEO, presents the products to the customers. By bringing his charisma into the equation, the customers feel they are deeply connected with the company brand.

Secondly, Apple shows their passions and visions to their customers. Apple’s mission statement is “Apple is committed to bring the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovation hardware, software and internet offerings”. The passions of Apple ensure the product to reach the highest quality and state-of-the-art-design, and people who purchase Apple's products would believe they own the Apple’s passion. With this emotional connection, Apple’s customers understand the situation and show forgiveness even the product has minor defects, and this is the power of brand loyalty. Therefore, Apple's customers not only purchase the electronic devices but also the passion built within the Apple's brand.

An Apple Fanboy (Jary, 2011)

Purpose of the Patent War

Therefore, what are their actual purposes of putting the issue of patent into the court room, in terms of influencing consumer behavior?

One of the purposes is to capture consumers’ perceptions that they are the “original” one. Once either of the rivals are perceived to be the “creative” one, consumers will turn to select them because of their moral thinking of choosing the original one, rather than the copied one. Although in the fast-moving industry of telecommunication, such “perception” may not last long. The actual influence on consumers’ buying behavior does not only occur at the beginning but will last longer than expected.

Short Conclusion

Both parties are building different images to attract consumers' purchases. Despite of similar products, they have their own strengths. Apple is perceived as innovative and creative while Samsung is perceived as having better periphery components and customization. They should further boost their brand to retain the consumers instead of stealing consumers who have completely different preferences. It can only save the cost to serve the fragmented segmentation without a wide range of preference, but also can provide more fitted services to gain more loyal consumers.

6. APPRECIATIVE INQUIRY

Negative emotion affects relationships

Imagine that you are the CEO of Apple and there are new products, that the features and the looks are very similar to Apple's, released by Samsung. It is readily understood that the negative emotion is induced and think of revenging the betrayer arose. Therefore, intuitively, the conflict management approach is switched to competing. The strong relationship between two companies become fragile and worse because of the vicious circle. Therefore, the legal action from both sides not only waste them a lots of money, but also harm their relationship and narrow their cooperation opportunities.
Moreover, the perception of Apple's customers may be affected by the patent war. Not only the negative news harms both the images of Apple and Samsung, but also the news annoy their fans filled with negative scenario. Their loyal customers may be unsatisfied about their aggressive legal actions and not focusing resource to provide better services and publish new products faster.

Short conclusion

Generative Metaphor Intervention Process (GMIP) is designed to re-frame the people from the negative and narrow perception to the appreciative and open views. It is comprise of 4 stages which are (1) journey into metaphor, (2) poeticizing the world, (3) possibility expansion, and (4) return to the original domain. (Barrett & Cooperrider, 1990). Actually, it synergies the principle of metaphor and positive psychology to re-frame the individuals in the group to toward enhancing current situation. With the help of establishing positive metaphor, the inquiry into the similar domain in appreciative nature can reawaken people's view with positive emotion. Therefore, both companies can co-create the opportunities to make better off.

POSSIBLE CONFLICT RESOLUTION SOLUTIONS

To analyze this case from different perspectives can provide a broader view to oversee the existing issues. This might also facilitate finding better solutions. Moreover, it underpins the importance for Apple and Samsung to start to start coming up with more creative solutions by viewing the problems from different angles and to enhance their flexibility in terms of core competences and brand.

To use different perspectives as inputs to come up with some solutions, the generic approaches of conflict resolution solutions can be applied to make both companies emerge as winners.

Expanding the Pie Using the Industry & Market Analysis

To solve the conflict between Samsung and Apple, they should break the existing frame of fighting each other in the patent war. To think of expanding the existing pie, it is crucial to understand what are their interests and existing resources. The Industry & Market analysis shows that there emerge is still a remaining 73 % of unexploited market for other featured phones. Therefore, we should first redirect the focus from the smartphone market to the bigger picture of the whole mobile phone market including featured phones.

Besides, Apple and Samsung should focus their resources on developing countries such as South America, which has only 17 % of the smartphone market share. Furthermore, their economy is booming and their consumption power is growing which provides a huge potential and reasons for Apple and Samsung to fight for.

ADR Mindset Breaks False Conflict

According to Thompson (2009), negative emotions might cause companies to believe their interests are   incompatible, he refers to this as false conflict. Apple attacked Samsung by suing them because they felt threatened by their similar products, so Samsung instinctively had no choices but to sue Apple to defense itself. Moreover, due to the nature of adversarial in litigation, the patent war easily lead to negative emotions for both companies.

We propose Apple and Samsung use Alternative Dispute Resolution (ADR) which is a joint venture between both parties and their attorneys. It can be used by introducing third parties as mediators to settle the conflicts (Allison, 1990). With the helps of the mediator, Apple and Samsung can readily take a different approaches by leveraging their understanding of each other's perspectives to solve the conflict.

Use Perspective Understanding & Trust to Form Strategic Alliances

Samsung and Apple rely on each other to make the magic happened, therefore, both companies should maintain good relationship with each other. It is because Apple is heavily relies on Samsung to supply major parts for its products such as RAM and high quality displays. Samsung is the only company capable to produce these parts in high quantity to cater to Apple's needs.

By using perspective taking (Trötschel, Hüffmeier, Loschelder, Schwartz, & Gollwitzer, 2011) as a tool for negotiation and taking advantage of long term cooperation, they can compromise in sign contracts to form strategic alliances to reestablish the trust relationship. Since there are more opportunities out there, reinforcing their partnership not only fully leverages their existing competence and helps to develop new competences, but also can enjoy new market growth together.

Capitalizing on Identifying Various Differences

To make both companies emerge as winners, understanding and capitalizing on their differences in valuation, expectations, risk attitudes, time preferences and capabilities can help to achieve a win-win situation (Thompson, 2009). Since both companies formerly had good relationships with each other increasing moving parts to come up with integrative agreements might help with this stalemate situation.

Differences in Valuation

Apple and Samsung have their own strategic directions and brand image. Apple focuses on building an innovative and creative brand, so it values the originality with very heavy weight. While Samsung is using its market share and synergy to reduce transaction costs, it aims at improving continuous efficiency by having a coherent production line and diversifying the markets (Lee & Lee, 2007). Therefore, they can reach an agreement that Apple concentrates on the high-end market by selling innovative products, and Samsung focuses on the lower-end market and sign tighter agreements of continuously providing the large amounts of semi-conductors for Apple for sustainable revenue and to lower overall cost by enjoying the economies of scale.

Differences in Risk Attitudes

Apple has invested in innovative products for a long time, thus it can be deemed that it is more likely to risk-taking in new products. On the other hand, Samsung  usually acts as the early-follower with lower price product because of its low-cost strategy, so it is more risk-averse. Apple can have an agreement with Samsung on providing the components for Apple with higher priority and ensuring not to join the new markets for a certain time period. Thus, risk-seeking Apple can reap the risk revenues from the new products markets first, while Samsung can enjoy stable advance incomes.

Differences in Capabilities

The comparative advantages of Apple and Samsung are differ a lot because of their resources. Apple is good at designing new products to exploit market while Samsung has gained great bargaining power because it is involved in diverse industries. Therefore, Samsung can cooperate with Apple in other industries, while Apple can make use of Samsung's network to extend the usefulness of its product with products in different industry such as remote printing for printers and projecting to TV.

In terms of their capability to attract consumers, Samsung and Apple each have their own fans and different people have their preferences for different phone systems. Some people are in favor of Android because of flexibility and capability to transfer files between PC smoothly. While other favor Apple's platform because of convenientceand compatibility with other Apple devices. 

Therefore, to fully utilize their assets, they should have a clear vision and understand on their target groups. Apple should not run off its track because their customers' loyalty is built on the vision "to bring the best personal computing experience to student, educators, creative professionals and customers". On the other hand, Samsung can capture the sales from people who do not share the same vision as Apple and desire to join the Android family. 

Differences in Expectation

Apple's positioning indicates it is looking forward to growth in segments such as high tech, and neat and cyber designs such as black and white. While Samsung targets at segments that desire to have tailor-made products to show personality such as pink smartphones. Therefore, they can further invest and gain revenues from their targeted segments instead of grasping market share from the same segments.

CONCLUSION

To conclude, the patent war can be solved by using the analyses of moving parts between the two parties. Both companies should make package deals to come up with strategic alliances, they can both maximize their strengths when concentrating their efforts in developing new markets and to retain the existing ones instead of wasting resources on fighting with each other. In the current industry and market situation, there are still many other rivals. Therefore companies should collaborate to fully exploit their core competencies and to emerge as industry leaders.


LATEST NEWS

According to the current news (Levine, 2012), Apple and Samsung started taking their first step toward win-win situation by trying to resolve the patent lawsuit. They agreed to have a settlement conference by introducing a San Francisco-based magistrate judge as mediator on 17th April, just like our suggestions of using ADR. The final imminent seems to be come out a resolution in short time.

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Liu, R. (2011, November 28). Smartphones still at only 27% of global market share. Retrieved from SlashGear: http://www.slashgear.com/smartphones-still-at-only-27-of-global-market-share-28198423/

Meghan, K. (2012, March 7). The iPad is losing market share. Can the new iPad stop the bleeding? (infographic). Retrieved from VentureBeat: http://venturebeat.com/2012/03/07/ipad-tablet-market/

Merriam-Webster, Incorporated. (2012). http://www.merriam-webster.com/dictionary. Retrieved April 14, 2012, from Merriam-Webster Online Dictionary: http://www.merriam-webster.com/dictionary

Oblon, Spivak, McClelland, Maier & Neustadt, L.L.P. (2012, January 31). APPLE V. SAMSUNG: SUMMARY UPDATE - JANUARY 2012. Retrieved from Protecting Designs: http://www.protectingdesigns.com/blog/2012/1/31/apple-v-samsung-summary-update-january-2012.html

O'Brien, K. J. (2012, April 13). Germany: The Place To Go for a Patent Battle. Retrieved from CIO Today: http://www.cio-today.com/news/Germany-Is-the-Place-for-Patent-Fights/story.xhtml?story_id=0310031R8PHI

Reisinger, D. (2012, January 20). Samsung patent lawsuit against Apple struck down in German court. Retrieved from CNET: http://news.cnet.com/8301-13506_3-57362623-17/samsung-patent-lawsuit-against-apple-struck-down-in-german-court/

Thompson, L. L. (2009). Win-Win Negotiation: Expanding the Pie. In L. L. Thompson, The mind and heart of the negotiator (3 ed., pp. 74-95). Upper Saddle River, New Jersey, USA: Pearson/Prentice Hall. Retrieved from http://lib.cityu.edu.hk/record=b1858063

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Trötschel, R., Hüffmeier, J., Loschelder, D. D., Schwartz, K., & Gollwitzer, P. M. (2011, October). Perspective taking as a means to overcome motivational barriers in negotiations: When putting oneself into the opponent's shoes helps to walk toward agreements. Journal of Personality and Social Psychology, 101(4), 771-790. doi:10.1037/a0023801

Wen, C., & May. (2011, April 27). 蘋果與三星互告事件觀察. Retrieved from 科技產業資訊室: http://cdnet.stpi.org.tw/techroom/pclass/2011/pclass_11_A116.htm

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Summary of Blog extension

The reason behind this blog extension is to sift through the great amount of comments our group received from our other classmates - thank you for that!

Some comments did stand out in particular in our two blog posts:

1. Seeking management’s decision from different departments is the best way to resolve conflicts within a working group
2. Winning Ways of Negotiations: Reframing Inhibitors Into Collaboration

With this blog extension our idea is pick out those comments and based on them to re-assess and re-frame our project documentation and even our conclusions and final recommendations.

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"Seeking management’s decision from different departments is the best way to resolve conflicts within a working group."

Comment made on Feb 25, 2012 01:03 AM



Thank you Beehive for providing us with a classic scenario of what people at workplace usually come across in Hong Kong. I think a lot of us feel déjà vu when we read this example.

I agree with Beehive that indeed it’s a myth. Involving different departments before making a decision is important to get buy-in but not the ultimately best approach. The core of the issue is how people, groups & corporations can capitalize on the different perspectives and conflict of interest among different departments to resolve conflicts, generate different ideas and better their ideas in a timely manner. How can we do that? I think leadership plays an important role in collaboration.
It seems to me that the group can’t collaborate well because they do not have enough interest or care in this particular product, the subsequent policy drafting & discussion it entails and so they only voted for what’s convenient/ best for their respective department(s). Where is the buy-in? There is not enough thawing in Kurt Lewin’s vocabulary of a change process. Where is the project manager?

In the context of Hong Kong where collectivism is high as pointed out by Beehive, I will go one step further and challenge ourselves and think if we can leverage the very same high collectivism characteristic to create a project team with team members with:-
-A high sense of belonging of the group/company
-Depend on one another in decision-making
-Value team work?

Aren’t these familiar attributes of what people in a high collectivism have?
 

 **************************************

Agreed with what Kersten said that leadership plays an important role in collaboration between different perspectives and conflict of interest. As one of the in-group person in the conflict, we have reviewed again what is happening out there.

(A) Sources of Conflict (McShane, Von Glinow (2010)):

1.   Incompatible Goals

Business – Maximize sales and revenue volume, in terms of actual sales and revenue figure.

Risk Management – Minimize organization’s risks exposure, in terms of loss ratio; bad debt figure; impairment.

Operations – Need easy-to-follow procedures, minimize operational lost.

2.   Differentiation

Business – Younger, more aggressive, strike balance in business and risks (what we believe we are and, actually, it should be done with Risk Management).

Risk Management – Middle age, more pessimistic, the department to be blamed when having high impairment, keep as low as possible on their KPIs (bad debt, impairment).

Operations – Generally older, want zero operational defect.

3.   Interdependence

No difference for different departments.

4.   Scarce Resources

Although it is correct for most of the organizations, departments are inter-related with each other. For example, the more flexible the credit policy is, the more competitive the organization could be, and more business can be generated, thus more resources. But if the credit policy is too loose, although more business can be generated, bad debts will be higher to the organizations, thus revenue cannot be maximized, resources will be less (as a result).

5.   Ambiguous Rules

Not really the major source of the conflict mentioned.

6.   Communication Problems

a.   Lack of opportunity to communicate

We don’t think we have less opportunity to communicate upfront. But once the policy had been discussed several times but no compromising point can be made on all items, people started to communicate in e-mails (to avoid confrontational situation). Communication becomes remote and relies on stereotypes.

b.   Some people lack the necessary skills to communicate in a diplomatic, non-confrontational manner

We found that as we are avoiding face-to-face confrontational situation, a more confrontational manner started to show in e-mails. As this manner started from one side, the other will be “fought” back as normally expected; although our perception is that they had “actively” put those confrontational wordings in the discussions.

c.   Perception of conflict reduces the motivation to communicate

This is exactly the one of the causes of confrontational manner shown in e-mails

(B) Interpersonal Conflict-Handling Styles (McShane, Von Glinow (2010)):

1.   Problem solving (Strive for a mutually beneficial solution-win-win orientation)

Preferred when interests are not perfectly opposing; parties have trust, openness and time to share information; issues are complex.

2.   Forcing (Win the conflict at the other’s expense)

Preferred when having a deep conviction on the position; requires a quick solution; the other party would take advantage of the cooperative strategies.

3.   Avoiding (Smooth over or avoid conflict situations altogether)

Preferred when conflict becomes too emotional; cost of trying to resolve the conflict outweighs the benefits.

4.   Yielding (Giving in completely to the other side’s wishes)

Preferred when other party having substantially more power; issue is less important to certain party.

5.   Compromising (Looking for a position in which you make concessions to some extent)

Preferred when parties have equal power; time pressure exists for resolving the conflict; parties lack trust and openness for problem solving.

In the situation, “opposing” parties are having equal power to each other. The said policy had been discussed for over 8 months (for us it is a simple policy), thus time pressure existed. And because of differentiation in different departments, it is quite a problem to seek mutual trust and openness to the solutions. So it seems that Compromising or / and Problem Solving style is suitable for the situation.  

But we believe both opposing parties were thinking they have a deeper conviction, and even some would think they have more power (in terms of grading) to another. So finally, some of them were using Forcing to settle the conflict.

(C) Structural Approaches to Conflict Management (McShane, Von Glinow (2010)):

1.   Emphasizing Superordinate Goals

We believe it is what leaders should do (in the condition that the senior management of different parties believe collaboration and work together).

2.   Reducing Differentiation

One of the ways is to create common experiences, like job rotation between departments. But we don’t think it can be very feasible in the banking industry.

3.   Improving Communication and Understanding

Good and an effective intervention can improve understanding of each other.

4.   Reducing Interdependence

In terms of polled interdependence, but may not be applicable to this situation.

5.   Increasing Resources

Same as 4.

6.   Clarifying Rules and Procedures

Same as 4.

As a result, emphasizing superordinate goals and improving communication and understanding with teams by senior management of the organization can improve inter-team relationship and resolve conflicts at the moment and in the future.

(D) ~~CHANGE~~

With the above conflict management styles, the most important and basic thing is to CHANGE.

The mentioned CHANGE does not only relate to the working level of conflicting teams, but also to their management. As we mentioned, this conflict situation must be solved by the management.

According to Lewin’s Force Field Analysis Model effective change occurs by unfreezing the current situation, moving to a desired condition and then refreezing the system so that it remains in this desired state.

Lewin’s Force Field Analysis Model 

The above image indicates that. First of all, management had to increase their communication and fully understand the organization goals (Unfreezing). It can be achieved by regular meetings and having discussion on how to collaborate (Change).

Then, the management team should pass their successful collaboration discussions to their subordinates and increase changes for different parties having the opportunities to meet in formal and casual ways (Refreeze), so that subordinates know what the bosses are doing and they will work like them.

Once a more peaceful environment has been developed, previous conflicts must be settled and new conflicts must be minimized.

(E) Latest updates on relationship between Business and Risk Management:

Certainly, there is no Conflict Management had occurred. During the time that business was cooling down in Jan and Feb of 2012, Risk Management colleagues had changed their manners a little bit. So we also changed ours to avoid a relationship conflict and influence working as partners.

But after entering March, they changed back to the manner they had after the conflict incident by using verbally confrontational wordings during different meetings.  For example, in the discussion on a policy’s latest review, our team had suggested to refine wordings in order to make it clearer, they rejected.

References

McShane, S. L., & Von Glinow, M. A. (2010). Organizational Behavior (5th Edition). Singapore: McGraw Hill/Irwin.

Photo source:

samvara.dreamwidth.org

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"Winning Ways of Negotiations: Reframing Inhibitors Into Collaboration"

Comment made on Feb 25, 2012 05:56 PM

I am glad that Beehive brought up Maslow’s Hierarchy of Needs Theory, and the importance of fulfilling higher level of needs. Housing allowance (since it is shelter) achieves the ‘physiological’ of needs, which is at the bottom of the hierarchy. Medical insurance offers a secure environment and absence of illness; fulfills an upper level of needs, which is ‘safety’. Paid annual leave can increase the ‘belongingness’ of the employee. Finally, a better job title accomplishes the need of ‘esteem’. By fulfilling the ego needs, the employee gains respect from others and social recognition. However, in the above win-win outcome, it did not accomplish the need of ‘self-actualization’, which is the highest level of Maslow’s Hierarchy of Needs. Since ‘self-actualization’ is a growth need, which it constantly develop even after it is achieved, the person will desire more of this need, instead of less (McShane & Travaglione, 2007). In order to achieve ‘self-actualization’, the organization needs to know what the employee wants in long term. Through improving reward effectiveness and re-designing job, the employee can gain self-fulfillment. 

Job design is “the process of assigning tasks to a job, including the interdependency of those tasks with other jobs” (McShane & Travaglione, 2007, p.179). The goal of the corporation in job design is to construct employment that can be performed productively; nevertheless workers are motivated. According to job characteristics model, job characteristics, such as skill variety, task identity, task significance, autonomy and feedback, can influence the outcome of work motivation, growth satisfaction, and work effectiveness. Rotation, enlargement and enrichment can increase work motivation. Job rotation refers to shifting from one job to another. It allows employees to learn from different roles of company and become multi-skill. Job enlargement is to assign additional tasks within existing job, which permit employees to increase skill variety and combine skills to finish the tasks on hand. Job enrichment is giving the employees more responsibility, through delegation and empowerment. 

McShane, S. & Travaglione T. (2007). Organizational Behavior on the Pacific Rim (2nd ed.). McGraw-Hill.

**************************************

Based on the above comment we received on our blog entry about negotiations, we would like to re-evaluate our negotiation process. The comment gave us food for thought what our final package result would look like if we would integrate Maslow’s Hierarchy of Needs Theory to it. To clarify Maslow's theory, let us illustrate it as a pyramid (as it most commonly is depicted).



Maslow Hierarchy of Needs



The primary needs Maslow identified fall into five groups:

1. Physiological: breathing, food, water, sex and sleep
2. Safety: of body, employment, resources, morality, family, health and property
3. Social: love, belongingness, friendship and family
4. Esteem: self-esteem, confidence, achievement, respect of and by others
5. Self-actualization: morality, creativity, spontaneity, problem solving and acceptance of facts

As the commentator points out that with the housing allowance, our employee is able to achieve the lowest level needs, i.e. the ‘physiological’ needs. What was also mentioned was that the medical insurance offered by the employer will offer a secure environment and absence of illness. This would then again fulfill the needs for safety. When again the paid annual leave can increase the employee's sense of belonging within the work community. Last, but not least a better job title accomplishes the need of "esteem".

It does seem that our negotiated package deal was able to cover all the lower level needs of the employee. Additionally according to Maslow people are motivated to take care of their lower level needs before the higher-order needs. 

However due to the comment, we did come to realize a shortcoming in our package deal. Where is the highest need of all? Self-actualization? The commentator suggests to have a look at job design. We thought this was an excellent way to create a sense of higher achievement for the employee.

Job re-design

The goal of job design is simplifying, enriching, enlarging, or otherwise changing jobs to make the efforts of each employee fit together better with jobs performed by other workers. Our idea here is that with the job re-design the employer could enjoy improved performances by the employee. How could this be achieved? In our blog post context, the job re-design for the employee could mean assigning him to work with another team on projects that require a lot of creativity and thinking-out-of-the-box, where he/she would be able use his/her problem solving skills even better. At the same time, we believe the employer should then decrease the employees day-to-day administrative burdens, such as documentation and irrelevant team meetings.

Therefore based on the comment and our re-evaluations, we would like to suggest the following contracted items at the end of the negotiation:

1. Housing subsidy, which will also reduce income tax
2. Comprehensive medical insurance
3. Increased paid holidays
4. New job title
5. Job re-design

References
http://blogs.forrester.com/nigel_fenwick/10-03-12-secret_successful_social_communities_4_social_needs
http://ivythesis.typepad.com/term_paper_topics/2009/09/job-redesign-improving-performance.html

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"Winning Ways of Negotiations: Reframing Inhibitors Into Collaboration"

Comment made on Feb 25, 2012 08:50 PM

I agreed perspective taking is a powerful tactic for negotiation. However, I found that many bosses just pretended to step into other’s shoe, but not really wanted to identify the actual needs of employee. When I resigned last year, my boss negotiated with me over two hours and I told him what my wants and concerns. He pretended to take my perspective and ask many questions about my new company and job natures. He tried to analyze and make comparison between my current and new job for me. However, after negotiation, I found that he still didn’t understand my needs and solve my problems. He challenged my decision of resignation and all his comment on my new job was bad and subjective. I felt a strong antipathy towards him and realized that he took advantage of my trust as I shared information with him and believed that he will provide advice from my points of view.

Obviously, he showed the bad example of perspective taking and turned this useful tactic as inhibitor. Thus, I think the important point to use this tactic is “how to take other’s perspective”.

Here are some tips:

1) Put own perspective away temporarily – before taking other’s perspective, don’t think yours. It will make your mind clear in order to ask and listen from others objectively.

2) Ask and listen - in a negotiating situation, ask simple and open-end questions to find out what the other person's concerns and use listening responses to make sure you heard correctly.

3) Don't argue - arguing is about trying to prove the other person wrong. However, it is useless to prove the other one wrong in negotiation process. You only can state your disagreement or comment in gentle and respective way.

**************************************

Thank you for sharing your real-life experience with us. Since we’re taking the role as the employee focusing on the inhibitors, the final win-win outcome inevitably benefits the employer a little bit rather than the employee. In our win-win negotiation process, the employer does has taken into consideration the employee’s perspective and offered what the employee wants. Salary is not the only element that the employee cares about, according to the Maslow’s Hierarchy of Needs Theory, just as our first blog extention mentioned, there’re still higher level of needs that need to be fullfilled. What we offered is not only the money, but also other things such as a sense of security, achievement and etc. In our win-win negotiation process, we’ve done the most for both the employee and the company, we have even generated benefits from a third party.

And also, thanks the respondent for raising quite good tips for the perspective-taking strategy.

For us, using the perspective-taking strategy means that we need to connect our minds, such as our emotional experience and the way we think, with the counterparty. Perspective-taking is not trying to understand others in one’s own perspective, it means change your own perspective to others’ perspectives. However, in the business area, we’re not making friends by using the perspective-taking strategy, we use it to manage employees and generate benefits.

Actually, perspective-taking strategy has two usages:

1. One is that taking the perspective of the counterparty to understand what the counterparty really wants and satisfy the wants and needs in order to keep the relationship. 
2. Another objective of taking counterparty’s perspective is to find out the BATNA of the counterparty in order to offer the not-that-good but reasonable and acceptable offer to save the benefits for oneself. In the real society, we think most of the employers would use the perspective-taking strategy in order to achieve the second objective because they have their own mission as in a higher level of the position, standing for the company and saving profit for the company rather than considering the benefits for the employee.

The position of the employer can not be defined as wrong in this real case, but we have to say that his perspective-taking skill is really weak so his intention is too easy to be exploited. It’s obvious that the boss wants to retain the respondent but he used the wrong expressions.

The most important thing in the perspective-taking strategy is to be a real actor, if one wants to convince others, he/she should convince him/herself so as to gain the counterparty’s consensus.

References

www.zreading.cn/archives/2396.html

http://baike.baidu.com/view/20312.html

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"Winning Ways of Negotiations: Reframing Inhibitors Into Collaboration"

Comment made on Feb 24, 2012 11:59 PM

I agree with Winky that increase the pie is important and it is somehow the best way to arrive a Win-win outcome in the environment with limited resource. Also, I would like to add my opinion on how to enhance the quality of the outcome by looking at the interest of both parties.

Frankly, if I am the employee, I may not agree with the offers provided in the given example. As mentioned in above we need to take a close look to the expectation and valuation of both side in order to arrive a integrative outcome. The proposal offered by Beehive is good, but as an employee, I would rather the employer offer the paid raise and I would allocate the resource myself. It seems to me that this is just the best offer provide by the employer, instead of a best offer preferred by the employee.

Thus, I would suggest that the Employer and the employee should list out all their expectations and focus what they interested the most and turn it into a “interest-based” negotiation. For example, I try to listed some expectation of the employee and the employer, and I can link up the “performance Bonus” on the employee side and the “increase performance and efficiency” and making more profit” on the Employer sides. The better the performance of the employee, the better the company's performance and his bonus.

Employee's focus:

- paid raise

- career opportunity

- performance bonus

Employer's focus:

- reserve talent staff

- increase performance and efficiency

- Making more profit

- capturing opportunities

Besides, I think giving a new job title to the employee doesn't help to enhance the employee's satisfaction in long term term. Also, the employee may still ask for paid raise shortly; Or he may use the new job title to look for a new job. On the other hand, promoting the young and in-experienced staff may decrease the loyalty of other unit head. This is actually what happened in my company last year. Thus, the employee should think about the constituency and potential impact of the offers.

                                          **************************************

Thank You for your suggestion, as our initial idea was to break our team into two groups, one acting as the employee and one as employer to give some of constrains and background information for the discussion. We understand some of the situation might not be go exactly as it would in reality, but it brings an idea about different people might have different needs at different level according to the Maslow’s hierarchy needs (see our reply earlier). You are right; the employee might want to have their salary rise instead of other benefits offered by the company. To look at this compensation in a neutral perspective. Using money as an incentive is perhaps the most expansive incentive (Yu and Li, 2000) the company can offer. Our ultimate goal is achieve to a win-win situation instead of one side taking advantage of the other. Therefore we have come up with various solutions that will both benefit the employee and employer.  

Employee's focus:
- paid raise
- career opportunity
- performance bonus

Employer's focus:
- reserve talent staff
- increase performance and efficiency
- Making more profit
- capturing opportunities

According to the points listed above, these values are based on self-interests. If one of the side's look solely at their own self-interests, the only way to solve the problem would remain and often a deal would not be easily made. It is because self-interests often lack the willingness of “expanding the pie” and the pie means the focus with different perspective and methods. Self-interests might be the problem that prevent someone from achieving a win-win situation.

Indeed in our blog we listed that our employee did not get an salary rise, but he broke it down into different things such as vacation days and medical insurance which are equivalent to the salary rise or of even more value than that. This is the benefit of “thinking outside the box” and preventing self-interest; sacrifice something you were stubborn to get and in return get something greater than you expected.

References

P. L. Yu and J. M. Li (2000) Lecture Notes in Economics and Mathematical Systems, Volume 487, Part 1, 45-5