To get started…
Refresh your memory on the various barriers to communication mentioned in your textbook on pages 338-340, to see why it is important to find effective ways of communication, and how managers can overcome barriers to communication. Check out how managers should communicate when negotiating on pages 347-349. Then, read about the turbulent negotiations between sugar miller Wilmar and Queensland Sugar Limited (SQL).
So, to summarise…
Although it may seem like the most common and innocent household item, sugar seems to be the newly discovered household nasty. Nonetheless, there is no denying that as a society we depend on and consume sugar regularly. Two main parties involved in the sugar production process, the growers and the sugar mill, have been having trouble getting along in Queensland over the last two years, and now, this relationships seems to be breaking down.
The main issue Wilmar has is around joint marketing. Wilmar has been part of SQL’s marketing group, and would now like to lead it. If the miller promotes sugar, presumably, and do so successfully, it would be good for everyone: both the miller and the growers. But the growers are unhappy with this proposed arrangement because they believe that the agreement will come at the expense of their economic interest.
Wilmar on one had claimed that they have consulted the growers, and received positive feedback for their proposal. The growers, on the other hand, claimed that this is not true. The growers are now saying that Wilmar’s terms were "commercially unreasonable" and forced unnecessary costs and risk onto growers who chose to access QSL. They challenged Wilmar to make public its terms in the interests of fairness and transparency.
Wilmar has refused to release its 'on supply' agreement terms, and accused QSL of breaching commercial confidentiality; a claim QSL refutes.
One major sticking point, excuse the pun, is when the ownership of sugar is transferred. Wilmar insists that ownership of the sugar would not change hands until it was loaded onto the ship, which they claim is "global industry standard terms", whereas the growers ask for ownership to be changed at the point of delivery to the terminal. Keep in mind that while you are the owner, you are responsible for the goods, and any damage while it’s under your ownership is also your problem. Wilmar executive argues that this has already been agreed upon, and is not clear why it is now being rejected.
Wilmar also claim that more and more growers join the agreement with them, as they exist the SQL group. Just think, if you were a grower singed up with SQL, what effect would hearing that would have on your decision to join or refuse Wilmar.
Some issues to notice and pay particular attention to here are…
- Barriers to communication
- Ways to overcome barriers to effective communication
Consider the following questions for discussion…
- What barriers to communication would disrupt good outcomes in negotiations? How would you overcome them? Why?
- If you were to represent Wilmar in the negotiations discussed in this case, how would you prepare for it? How would you prepare if you were to represent Queensland Sugar Limited?
- What is your view on the actual communication that took place? What barriers do you think are present in the negotiations described in this case? How would you overcome them?