Luna Pen Harvard Case Analysis PDF

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International Comparative Management Luna Pen Harvard Case Analysis Notes...

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Maria Tyrina MGMT 309 Eileen Daspro 29 September 2020 Luna Pen Case Notes The Luna Pen Case centered around two companies DGG and Global Service, and a decisionmaker Erika Graeper. Erika Graeper is a German woman with a background in electrical engineering who got an MBA from the University of Texas. Erika sought to expand her interests beyond engineering so studying in a business school in America seemed like a perfect opportunity. Upon graduation, Erika worked for Dell Computer in Austin, Texas, for two years. Still, after the company implemented some changes, Erika felt that she was not getting the experience she hoped for, so she opened up for new opportunities. When visiting her family back home in Frankfurt, she found out about a luring vacant position at the DGG. DGG originally began selling greeting cards, but with its expansion, it moved to a fast-growing company that distributes supplementary computer supplies internationally with its annual revenues accounting for around 850 million euros. When Wilhlem Mann from DGG offered Erika a position centered around working with Asian-suppliers of products DGG put its labels on, he was impressed with her extensive business and technical skills. Although he believed that she had a great experience working with non-European cultures, Erika doubted her cross-cultural communication proficiency. Still, she was confident that she would easily be able to learn and adapt. At the time Erika was about to start university, her grandma gave her a Luna Pen. Although it was not as luxurious as other fountain pens like Montblanc, it was still very elegant. When Erika began working at DGG, she came across an interesting old letter during the first month of her job. The letter was forwarded from her boss with an instruction to respond and was about the matter of the Luna Pen. The letter originally came from Cecil Armstrong, a president of an Australian office supply company. It was addressed to Herr Henrich Dumart, an ex-director of Luna company, before its acquisition by DGG. The message expressed Armstrong's interest in supplying Luna Pens from DGG because of increased demands and his dissatisfaction with deliveries from his current manufacturer, Mr. Alven Fenn, from the Global Service Company in Taipei. Erika was taken by surprise since, to her knowledge, Luna Pens was long out of production but even more because they were associated with a Taiwanese company. With a confusion of what to respond to Armstrong's proposition and a lack of understanding about the Luna Pens situation, Erika decided to ask around the company and gather more info. One of her colleagues was able to provide some interesting information regarding the history of Luna Pens. The company manufacturing these pens was a small company previously owned by Herr Dumart and his family for more than 50 years before it was sold to DGG. DGG acquired Luna in 2005, but because of its negative profitability, quickly abandoned the company and tore down the factory where the pens were manufactured. This supposedly marked an end to the era of Luna Pens, but with the letter from Armstrong, new questions arose. While being on a business trip in Asia, conducting meetings with various DGG suppliers, Erika strangely came across a pen with a LUNA logo on its box. After carefully examining the pen, it was the same as the one Erika's grandma gave her, and inside of the box, there was a small warranty slip from the Global Service Company. Without hesitation, she bought the pen first in the duty-free shop in Malaysia and then an identical one in a small stationery store in Hong

Kong. Soon, Erika found a correspondence with the letter from Armstrong, and upon her arrival back to Germany, she notified her boss of her interesting findings from the trip. When Erika showed Mann, her boss, a souvenir from Asia, he could not believe what he saw. Knowing that the Luna company had been long abandoned and Luna pens' production was terminated, such circumstances sparked Mann's attention. Erika presented all the details on the situation to her boss and showed the correlation with Armstrong's letter. With the conclusion that the Global Service Company, owned by Alan Feng, was selling counterfeit Luna pens, Erika and her boss came across three main options for DGG's further actions. First option circulated about the idea of filing a lawsuit against Global Service Company for trademark infringement. The second option was leaning more towards the win-win outcome, referring to negotiating some deal with Feng concerning the future use of the Luna trademark and the prior royalties. Since DGG was not interested in resuming Luna pen production, the third option focused on DGG finding an alternative company that could potentially be interested in buying Luna's rights. Although the Luna pens case was not the most significant thing on DGG's agenda, there were various ways which the company has identified in regards to proceeding with this matter. Each one of them required extensive research regarding DGG's legal positioning, negotiation strategy, and the differences between the two cultures. From a legal standpoint, DGG was not in the best position for filing a lawsuit against the Global Service Company. Although there were still some possibilities to win over some punitive damage, it would be quite challenging because practically DGG has left the market and abandoned the Luna brand a long time ago. Another aspect of potential concerns was the financial side of the issue. Not only prosecuting such a lawsuit would require hiring a local legal expert. Thus it would be very expensive, but also in the case of losing in court, there is a big chance DGG would be held responsible for paying all the legal costs of the winning party. Erika was excited to be taking the lead on the case. Although her boss did not want her to get overly engaged with it as there were more significant matters concerning DGG, the situation seemed to call for a negotiation solution. In the nearest future, Erika had another upcoming business trip to Asia, which presented an excellent opportunity to contact the owner of Global Service Company, Alan Feng, and proceed with the Luna Pens case. Although Erika was confident about getting the necessary support for her negotiation strategy, due to a lack of knowledge regarding Taiwanese culture and Feng's way of doing business, she did not know exactly which communication approach would be the most appropriate and effective. Erika was debating whether she should open negotiation by getting straight to the point and threatening Feng with a legal action or taking a less aggressive approach and discussing a possible relationship with Global Service Company. She also raised questions about whether it would be more beneficial to invite Feng to Germany to set the ground for the familiar territory negotiations. Although negotiating on your territory usually presents great advantages, for DGG in the current situation, such an option might not be the best. DGG will gain more benefits by negotiating at the counter party's territory because it shows serious intent and presents opportunities to learn more about the other company. Before the upcoming trip to Taipei in a week, Erika began to research the culture of the counterparty and its behavioral and communication styles. She found some books on crosscultural communications and negotiations in her apartment and carefully went over the pages regarding Taiwanese and Chinese cultures. After conducting some research, Erika had a slightly better understanding of the counterparty's culture, but she still lacked knowledge of Feng's way of doing business. Although people in a culture usually share the same values and beliefs, Erika wasn't confident that such stereotypes apply to all the individuals. She was quite nervous about

her first-ever solo negotiations, and so a week in advance, she decided to sketch out her negotiation strategy to be the most prepared. While sketching her negotiation strategy, Erika has encountered some difficulties. She was not sure about which approach to negotiation was best. There were a couple of different tactics that she could incorporate into her negotiation strategy, but each of them presented pros and cons. Without extensive knowledge about the counterparty and solely based on the counterparty's cultural assumption, it was necessary to choose an approach that had the least chance of a negative outcome for DGG. If I had been in Erika's shoes, I would center my negotiation around a win-win strategy because it would be best for the DGG company. I would first establish mine and the counterparty's BATNAs. From reading the case and learning about both companies' backgrounds and the Luna Pen issue, the two companies have very different BATNA's and unfortunately for Erika, DGG does not have a strong one. DGG's BATNA was finding a different company to manufacture Luna Pens after a potential lawsuit. On the other hand, if Global Service Company could not come to a peaceful venture agreement with DGG, their BATNA would find a different type of pen and continue their sales. After establishing the BATNA's, I would start sketching my negotiation outline, keeping in mind certain aspects: ●

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DGG is not looking to restart Luna Pen manufacturing; instead, the goal is to gain financial incentives from receiving royalties from Global Service Company for the past, present, and future sales. DGG has long abandoned the Luna brand, and any positive outcome from the case would be a windfall. It is crucial to avoid any approaches that could potentially hurt DGG, and thus it is essential to stay away from any litigation. Be aware of the cultural differences between DGG and the Global Service Company and Feng’s way of doing business. Use Global Service Company’s BATNA to establish a correct approach to negotiations and use the win-win strategy to obtain potential gains.

With the already established BATNA of the two parties and things to keep in mind mentioned above, I would immerse myself in more research to avoid cultural miscommunication. From the options presented at the end of the case, option D seems like the best move for Erika and the DGG company going forward because it suggests an approach that could open up a possibility of some partnership, which could further lead to the profitability of both parties. On the other hand, the worst option would be B because it is very aggressive and gets straight to the lawsuit idea, which can be very inappropriate in collectivist cultures. Suppose Erika would choose to open up negotiations in a manner of Option B. In that case, she is risking losing the possibility of a negotiation right away because, in that situation, Feng technically has no reason to negotiate at all....