The Importance of Business Communications

A case study that shows how a business relationship can fall apart when communications between the partners are not maintained.

The importance of keeping the lines of communication with one’s business partner cannot be overemphasized. Both our domestic partnerships and especially our foreign partnerships are premised extensively of the degree and quality of the relationship that the parties have assumed. A relationship can only survive if the parties involved maintain a line of communications. This concept becomes even more relevant when the partnership entails an international agreement where the enhanced distance between the partners will exacerbate the need to keep in touch. An executive can only keep on top of things if they are in contact with their partners because otherwise, how are they going to know what’s going on?

Secondly, the line of communications needs to be a two way process and should flow back and forth. It happens that too many international negotiators do not take the time, and dismiss the need to include some frank discussion in how the two parties will maintain contact with each other. They assume wrongly that the communication process will evolve all in its own sweet time. The time to discuss the line of communications is when the venture is being negotiated. They should not consider the issue later, and after the fact, when serious problems suddenly arise and challenge the viability and the stability of the joint venture. The other problem occurs when the two parties neglect to keep in touch with each and simply allow their interest in their agreement to ‘wither on the vine’, while the agreement simply falls apart due to a genuine lack of interest.

Many joint ventures have collapsed or gradually fell apart needlessly due to a lack of communications between the parties involved. International agreements are especially prone to dissolution when the partners fail to maintain a respectable level of contact.

Take the case that occurred between one particular U.S. company and their Japanese partner for example. The agreement that they signed stipulated that the Japanese company would supply the manufacturing, management, and marketing components of the deal, while the American company would supply the technology.

The American representative, who was based in Hong Kong, met with their Japanese counterparts only once every three months where all aspects of the operation would be discussed.

 

In between these quarterly visits, the two parties exchanged communications through written correspondence and infrequent phone calls. To the Japanese partner, this periodic though infrequent contact signalled that the American partner was not overly committed to the relationship. Needless to say, the Japanese commitment to the partnership began to dwindle as well. As time progressed, the U.S. company’s strategy altered as they began to concentrate on a smaller product line. The American company never bothered to advise their Japanese partner of the change in their strategy. Also, due to this smaller line, there was the additional fiasco in that the Japanese company was not going to be receiving the technology it had negotiated with the American firm.

The Japanese took a dim view of what they now perceived as an agreement that was signed in ‘bad faith’. The Japanese became bitter as the relationship soured and ended in arbitration. What was the result the arbitration? The partnership was dissolved.

This illustrates the importance and need for communications. The American firm should have appraised their counterpart about the change in their strategy, but the Japanese should perhaps have communicated their displeasure earlier, rather than allowing their disgruntlement to fester. Never dismiss the importance and impact that a good line of communications can have on your business relationships, whether it be a domestic or a foreign relationship.

Reader Comments

Average Rating:

Total Comments: 6

View or Write a comment


Back to Negotiation Case Studies

This page's contents may be re-published in full or part - we ask only that you include an honest html link back to this site, preferably to our home or www.negotiations.com/training/ page.


 
Reader Comments

Average Reader Rating:       Comments: 6

share your comment


10 of 10 people found the following comment useful:

The Importance of Feedback - 2013 Oct 7
Commentator: Tracy Ware (United States - Pennsylvania)

"It is important to communicate with partners because if we fail to do so, the lack of feedback can cause misunderstandings and chaos. One partner may think we are saying one thing when we really mean another, but without correction the mistake may go without notice until an error occurs in the product line or program. This can be be costly to both sides.
If we are slow to communicate it may also give our partners the impression of lack of interest in the venture... They could decide it isn't worth it to do business with us and back out of the deal because they fear we are not enthusiastic about doing our part and it won't be profitable."

Useful Comment? Vote

1 of 5 people found the following comment useful:

I want Chinese - 2013 Jun 7
Commentator: Jacky Chen (China)

"why not make a Chinese translation?"

Useful Comment? Vote

7 of 8 people found the following comment useful:

Author and Year? - 2011 Nov 26
Commentator: Stephanie (France)

"Want to know who is the author and when he/she pubilished this article. Thanks"

Useful Comment? Vote

7 of 10 people found the following comment useful:

Negotiation Article - 2011 Feb 24
Commentator: Martel (United States - Virginia)

"Great!"

Useful Comment? Vote

7 of 11 people found the following comment useful:

good - 2010 Feb 8
Commentator: srijan banjara (Nepal)

"thanks"

Useful Comment? Vote

10 of 12 people found the following comment useful:

good - 2009 Jan 10
Commentator: shailendra p garg (India - Rajasthan)

"Excellent. In the present context of glolal meltdown this is more relevent to keep faith and trust alive of all patties particularly of oversea."

Useful Comment? Vote

This page's contents may be re-published in full or part - we ask only that you include an honest html link back to this site, preferably to our home or www.negotiations.com/training/ page.

 
.
.

Negotiation Newsletter

Confirm
No
Yes
111