REGARDING WATER QUALITY PROBLEM...131.1 Phase 1: Twin Lakes interest City Council in a joint venture to build a filtration plant...131.2 Phase 2: Twin Lakes Company disapproved of the ch
BACKGROUND
INTRODUCTION
Environmental sustainability poses a significant challenge for businesses and is a key aspect of business ethics Furthermore, effective environmental governance is crucial at both national and city levels Research indicates that authoritative oversight positively influences environmental governance, motivating companies to engage proactively in pollution control efforts.
The report outlines the ongoing negotiations between the City Council of Tamarack and the Twin Lakes Mining Company aimed at addressing critical environmental concerns such as water contamination, air pollution, and taxation It provides an analysis of both parties' viewpoints, taking into account their interests and influence throughout the negotiation process.
This report proposes actionable strategies and techniques for effective negotiation between the City Council of Tamarack and the Twin Lakes Mining Company, outlining the detailed negotiation process and its potential outcomes Additionally, the authors assess the effectiveness of the negotiation strategy, drawing valuable lessons applicable to similar cases.
Tamarack, located in Aitkin County, Minnesota, has a population of around 18,000 and relies heavily on the Twin Lakes Mining Company for its economic stability Approximately 2,500 residents, 60% of whom live within the city, are employed by the mining company, which also accounts for 33% of the city's real estate tax base, valued at about $5 million The city's economy benefits from summer tourism, but it remains predominantly one-industry, making it vulnerable to the mining company's operations If Twin Lakes ceases its activities, Tamarack would face significant unemployment and a substantial loss in tax revenue, impacting both the local economy and the state budget.
1.3 Background information of Twin Lakes mining company
The Twin Lakes mining company operates an open-pit iron ore mine, where topsoil is stripped from ore deposits using power shovels The extracted ore is then transported to a beneficiation plant located on the city's outskirts, where it undergoes processes such as crushing, washing, concentrating, blending, and agglomerating The processed ore is shipped by railroad to steel mills across the Midwest, while rejected materials are returned to the mine and the land is restored Today, beneficiation is essential for minimizing transportation costs of waste materials, purifying and blending ores with varying properties, and enhancing the value of fine ore through briquetting and pelletizing.
The Twin Lake beneficiation plant, situated about five miles from Tamarack, initially had minimal impact on local residents However, with the city's residential expansion, summer home development, and increasing operations at Twin Lakes, the plant has emerged as a significant concern for the community For years, the Tamarack City Council has been urging the company to address and rectify the most pressing operational issues.
CITY COUNCIL PERSPECTIVES & EXPECTED OUTCOME
Twin Lakes Mining Company has significantly contributed to environmental issues, particularly water pollution The mining activities lead to the continuous washing of iron ore granules and other impurities downstream, which severely impacts the water quality in Tamarack.
Air pollution poses a significant challenge for the Council, primarily due to the dust generated from mining, transporting, and crushing ore, which has led to a marked increase in airborne particles The problem is further intensified by heavy vehicle use on dirt roads during dry summer months While environmental issues have adversely affected the quality of life in the Tamarack community, Twin Lakes has made minimal efforts to tackle these pressing concerns Consequently, the city Council, in collaboration with the state of Minnesota and the federal government, is exerting considerable pressure on Twin Lakes to implement urgent environmental cleanup measures.
• Impacts of environmental issues caused by Twin Lakes on local citizens
Water quality is crucial for public health, as contamination of water bodies poses serious risks to residents Polluted water sources compromise the safety of drinking water, jeopardizing the health and well-being of local communities that depend on these supplies.
Prolonged exposure to air pollution can lead to respiratory problems, irritation, and various health issues for local residents, especially for those living and working near the mine and beneficiation plant.
The Tamarack City Council is committed to addressing the concerns of local citizens and the United Mineworkers Union The community's pressure, along with violations of water and air quality standards, is expected to prompt the City Council to take action regarding the operations of Twin Lakes Mining Company.
Here is a rewritten paragraph that complies with SEO rules:"In response to increasingly stringent environmental laws and regulations, the City Council is expected to uphold the cleanup requirements mandated by the state of Minnesota and the federal government, ensuring accountability for environmental remediation By collaborating with Twin Lakes, the Council aims to develop a viable plan that prompts immediate action to rectify violations and bring operations into compliance, thereby mitigating the environmental impact."
The City Council aimed to make the company comply with environmental regulations and ease pressures from local citizens as well as
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The Mineworkers Union is likely to support Twin Lakes in its environmental cleanup efforts by employing various strategies This support may include providing resources, offering guidance, and exploring potential partnerships with other organizations focused on environmental restoration to help the company comply with cleanup regulations.
The City Council aims to strike a balance between environmental protection and addressing local citizens' concerns while considering Twin Lakes' economic implications Their focus will be on executing cleanup operations effectively and efficiently to restore and maintain the area's environmental quality surrounding the mine.
COMPANY PERSPECTIVES & EXPECTED OUTCOME
Twin Lakes Company faces significant financial challenges that hinder its capacity to effectively manage an urgent environmental cleanup project The company's core operations focus on mining low-grade ore, which leads to increased production costs These elevated expenses arise from labor-intensive processes, such as cleaning and agglomerating, as well as the high transportation costs required to move the mined ore to the beneficiation plant.
The company faces significant external challenges due to fierce competition in the steel market, leading to a decline in demand for Twin Lakes' ore This reduction in demand presents a serious threat to the company's financial health, adversely affecting both immediate revenue and long-term profitability.
Despite financial constraints due to operational expenditures, Twin Lakes must prioritize resource allocation for strategic planning to address ongoing demand deficiencies This resource allocation is crucial for guiding the company's decision-making, particularly in responding to environmental concerns and regulatory requirements.
CorrectionalAdministrationCriminology 96% (113)8 multifaceted nature of these financial challenges that has led to the company's delay in formulating specific responses to environmental concerns and additional regulatory obligations.
The estimated $36 million needed for compliance with stringent environmental cleanup regulations poses a significant threat to Twin Lakes' financial stability and profitability This financial burden comes at a time when the company is already facing challenges from ongoing demand deficiencies and increased foreign competition Therefore, it is crucial for Twin Lakes to find a balance between meeting regulatory requirements and maintaining its financial sustainability.
The company believes that the current tax rates of $800,000 for utilizing city land for the beneficiation plant and $400,000 for right-of-way taxation are excessively high, significantly impacting their budget A detailed cost analysis of the environmental cleanup operation and annual taxation is provided in the table below.
Table 1: Company’s cost summary of environmental cleanup project and yearly taxation
Cost Summary of environmental cleanup project and yearly taxation (Company)
Sub-total Water Problem $20 million
Periodic oil spraying $0.8 million/ year
Sub-total Air Problem $14.2 million
Situation 1: No purchase of land
Tax on use of city land for plant $0.8 million/ year
Right-of-way flat rate $0.4 million/ year
Sub-total 1 Taxation Problem $1.2 million/ year
Tax on use of city land for plant $0.8 million/ year
Sub-total 2 Taxation Problem $3 - 3.2 million
Twin Lakes understands the complex financial demands of environmental compliance and the need for significant budget allocations To address these challenges, the company is committed to actively engaging with governmental entities, particularly the City Council, while also fostering collaborative relationships with the local community By encouraging stakeholder involvement and promoting a shared sense of responsibility, Twin Lakes aims to overcome the financial hurdles posed by environmental regulations, ensuring both its long-term sustainability and the ecological health of the region.
In response to urgent environmental challenges related to air and water quality, as well as taxation, Twin Lakes has taken a proactive approach by outlining targeted actions and strategies to effectively tackle these multifaceted issues.
Twin Lakes is committed to improving water quality through a collaborative effort with the City Council to build a $20 million state-of-the-art filtration plant This project is designed to comprehensively address water quality issues, protect the local ecosystem, and ensure adherence to environmental regulations.
To tackle air quality issues, Twin Lakes has developed a comprehensive plan that focuses on modernizing plant facilities to reduce emissions and improve air quality The initiative includes investing in infrastructure by paving and maintaining roads on the city's outskirts, along with periodic oil spraying to minimize dust emissions The total estimated cost for these enhancements is around $14.2 million.
The company anticipates a reduction in taxes associated with the use of city land, moving away from the initially high tax rates Additionally, it expects a decrease in the sale price of land intersected by railroad spurs.
NEGOTIATION STRATEGY
ROLES OF THE TWO PARTIES IN THE NEGOTIATION
1.1 Interests of the two parties:
• Twin Lakes Mining Company’s interests:
Since 1941, the Twin Lakes Mining Company's largest regional office has been situated in Tamarack, Minnesota, where it has experienced significant growth and profitability As a result, the company prioritizes continuing its operations in this city during negotiations with the City Council and is committed to preventing any shutdown of its activities.
The Tamarack City Council has repeatedly urged Twin Lakes Company to address the environmental issues stemming from its operations, but the company has failed to provide effective solutions Consequently, both the state of Minnesota and the federal government have stepped in, threatening to suspend the company's operations if immediate action is not taken To avoid closure and promote sustainable development, it is crucial for Twin Lakes Company to tackle these environmental concerns However, declining ore demand has hindered the company's ability to fund necessary cleanup efforts independently In light of this, Twin Lakes Company aims to seek support from the City Council while minimizing costs during negotiations.
The City Council recognizes the vital role of Twin Lakes Mining Company in the development of Tamarack, a one-industry city, and aims to support the company's continued operations However, the adverse effects of air and water pollution from mining activities have raised concerns about environmental degradation and public health In response to the significant pressure from residents and the local United Mineworkers Union chapter, the City Council is focused on negotiating comprehensive solutions to the severe pollution issues while assisting Twin Lakes in addressing the community's environmental concerns.
+ Twin Lakes Company plays a vital role in the economic development of Tamarack city.
+ 2500 people accounting for 60% of people living within the city work for Twin Lakes Company.
+ 33% of the city’s real estate tax base consists of Twin Lakes property and operations.
+ The mining operations of Twin Lakes Company pollute the air and the water source of the city.
Due to a constrained budget, the company is unable to cover the full expenses of environmental cleanup operations, facing significant pressure from government authorities and environmental agencies.
+ Local governments might have the right to suspend the company operations if their activities negatively impact the environment and the health of local citizens.
+ City Council can also pressurize the company through strict laws and regulations to force them comply with environmental standards.
+ Many individuals and the local chapter of the United Mineworkers Union have put significant pressure on the City Council to support Twin Lakes Company in environmental cleanup operations
+ They also have limited financial capacity that cannot afford all initial suggestions from the company.
FACTORS AFFECTING THE NEGOTIATION OUTCOME
The Twin Lakes Mining Company plays a crucial role in the local economy, employing 60% of city residents This dependence means that any decline in the company's financial stability could lead to significant challenges for the community, with job loss being the most critical issue faced by citizens.
The financial health of the company is significantly impacted by the costly environmental cleanup efforts, which are necessary for improving local water and air quality in the short term and addressing ongoing operational issues in the long term This process demands considerable capital and resources, which the company is unable to tackle alone, especially given its existing financial burdens.
Citizens are primarily impacted by environmental pollution, but they often prioritize their jobs and livelihoods over environmental cleanup efforts.
-> Because of these 2 reasons, local citizens put pressure on the City Council to help Twin Lakes Mining Company in the environmental cleanup.
The environmental agency roles involve improving the quality of local water, land and air by tackling pollution, along with working with businesses to help them comply with environmental regulations
Twin Lakes Mining Company has breached environmental regulations, with its plant effluent and ponds negatively impacting water quality Additionally, the company's short-term approach to addressing air quality issues lacks sustainability.
The environmental agency is urging the company to adhere to environmental laws and regulations, necessitating an immediate clean-up of effluent from both the plant and the ponds, along with the implementation of a long-term solution to address air quality issues.
STRATEGY IMPLEMENTATION
The most effective negotiating strategy addresses two primary concerns: relationship and outcome The relationship concern reflects the significance of the connection between parties, considering past, present, and future interactions, while the outcome concern emphasizes the importance of achieving favorable results When maintaining a strong relationship is prioritized, negotiators are likely to manage emotions and minimize hostility Conversely, if the relationship is not a priority, negotiators may choose to withdraw from the conflict or aggressively pursue their desired outcome.
To assess the significance of the relationship between two parties, several key factors must be considered: the existence of the relationship, its positive or negative nature, the desirability of a future connection, the duration and history of the relationship, the commitment level and interdependence of both parties, and the effectiveness of their communication.
By analyzing the both parties’ attitudes toward these aforementioned concerns, the authors come to a conclusion which strategy each party has more tendency to employ.
3.2 The City Council’s and the Twin Lakes Company’s Strategy
The City Council recognizes the critical importance of its relationship with the Twin Lake Company, as 60% of residents are employed by the firm and it contributes 33% of the local tax revenue With local citizens exerting considerable pressure to support the company, the Council faces significant risks if Twin Lake decides to sever ties Despite budget constraints necessitating a focus on financial outcomes, the Council prioritizes maintaining this bond in their negotiations Consequently, their strategies are likely to lean towards an "Accommodating" approach.
• The Twin Lakes Company’s Strategy
While establishing a sustainable long-term relationship is essential for The Twin Lakes, the company prioritizes achieving profitable outcomes As a business focused on maximizing profitability, their primary interest lies in securing financial assistance Consequently, strategies that emphasize results, such as "Collaborative" and "Competitive" approaches, take precedence in their operations.
The City Council is adopting an Accommodating Strategy by prioritizing support for the company, showing less inclination to negotiate for cost savings Both parties are motivated by financial interests, but they also share non-financial concerns, including environmental issues and the government's apprehension regarding the potential shutdown of Twin Lakes Company in Tamarack City.
Based on the evaluation of both parties' concerns over maintaining relationship and achieving outcome, the authors expect the Collaborative
Strategy would be the most suitable strategy in this negotiation because of two main reasons
A collaborative strategy offers significant advantages for both the City Council and Twin Lakes Company, addressing environmental challenges and alleviating pressure from regulatory bodies in the short term In the long run, this partnership enhances the company's production efficiency and contributes positively to the social welfare of Tamarack City This case exemplifies how fostering long-term goals and relationships through collaboration can benefit both companies and governments alike.
The Win-Win strategy fosters a collaborative alliance between both parties, centered on a shared objective of addressing environmental challenges and promoting sustainable growth for Twin Lakes Company Successful implementation of this Collaborative Strategy relies on both parties possessing a comprehensive understanding of the issues, demonstrating a commitment to cooperation, and employing effective techniques to tackle current problems.
NEGOTIATION PROCESS AND OUTCOME
REGARDING WATER QUALITY PROBLEM
1.1 Phase 1: Twin Lakes interest City Council in a joint venture to build a filtration plant
In a crucial meeting with Tamarack's City Council, Twin Lakes Company presented a proposal to address environmental concerns tied to its operations.
Twin Lakes is committed to addressing water quality challenges by proposing a joint venture for a new filtration plant This facility is designed to eliminate water contamination and convert Beaver Brook into an alternative water source for the city In response to inquiries from a City Council representative, Twin Lakes emphasized the project's benefits, including enhanced environmental compliance and long-term water security.
The City Council faced valid worries about budgetary limitations In response, the Twin Lakes Official clarified the filtration plant's projected cost, which amounted to $20 million To highlight a shared commitment, this official suggested a cost-sharing arrangement divided equally.
The City Council has stated that, due to fiscal limitations and ongoing community programs, they cannot contribute the full 50% share Their maximum capital contribution will be restricted to 30%, influenced by budget constraints and the necessity for thorough contamination resolution.
• Analysis of negotiating techniques used:
In the initial phase of the joint venture proposal, Twin Lakes emphasized the long-term advantages of the filtration plant, including enhanced water quality and adherence to environmental regulations This approach aligns with Tamarack's future objectives and resonates with the City Council's commitment to sustainable solutions.
The City Council highlights budget limitations, underscoring the necessity of addressing future financial needs and ensuring the sustainability of any agreements In response, Twin Lakes voiced concerns regarding the proposed 30% share, advocating for a more equitable investment to guarantee equal commitment from both parties towards the project's success This situation emphasizes the critical need for a balanced and sustainable solution to meet their future requirements.
Attempt to secure an Agreement-in-Principle:
Both parties are employing negotiation strategies to emphasize the long-term benefits and future needs of their proposals, aiming to secure an Agreement-in-Principle (AIP) Despite differences in proposed capital shares, they seek common ground to address ongoing concerns and ensure a sustainable solution The Twin Lakes Official introduced a proposal focused on environmental impact and ongoing issues, setting the stage for an agreement In response, the City Council Representative requested additional details regarding the filtration plant's potential benefits for the Tamarack community, demonstrating a willingness to further explore the proposal and work towards an AIP.
1.2 Phase 2: Twin Lakes Company disapproved of the change in capital share and made arguments
Twin Lakes expressed their disagreement with the City Council's request for a 70%-30% capital share, citing budget constraints and highlighting that the City Council would benefit significantly from the filtration plant, which they valued at a minimum of 50% of the required capital.
Twin Lakes has disclosed its financial struggles due to mining low-grade ore and increased foreign competition in the steel market, which has diminished ore demand However, the company highlighted the significant benefits the City Council would gain from the proposed filtration plant, which would not only tackle current water contamination issues but also address future water scarcity concerns Given these advantages, Twin Lakes argues that it should bear at least half of the construction costs for the plant.
Due to the aforementioned reasons, Twin Lakes Company firmly maintained its request for a 50-50 share The company urged the City Council to empathize with their position and reconsider the potential benefits that would arise from this partnership.
• Analysis of negotiating techniques used:
In phase 1, Twin Lakes Company aimed to persuade the City Council for a joint venture by adopting a firm and confident tone When their proposed capital share was rejected, they transitioned to a deeper, slower voice with greater emphasis This strategic shift minimized conflict over capital shares and allowed the City Council to more effectively listen to and evaluate Twin Lakes' arguments.
Twin Lakes Company candidly disclosed its financial challenges, which hindered its ability to cover 70% of the construction costs, and provided a detailed explanation of the underlying reasons while appealing for understanding from the City Council This appeal for empathy proved advantageous, as the City Council, upon grasping the company's budget constraints, became more inclined to agree to a shared cost arrangement.
In advocating for the City Council's support, Twin Lakes Company highlighted not only the urgent need to address water contamination but also the looming threat of water shortages in the next two to three years By emphasizing the necessity for a new water source, the company effectively enhanced the likelihood of success for their joint venture.
1.3 Phase 3: Twin Lakes company offers a balanced share and after negotiating City Council accepts it.
Twin Lakes advocated for a 50-50 share, deeming it a fair arrangement amid the city's limited resources and the urgent need to address environmental issues impacting Tamarack's living conditions Recognizing the priority of this matter, the City Council responded to local citizens' calls for assistance in Twin Lakes' environmental cleanup efforts They agreed to cover 50% of the filtration costs, contingent on guarantees for the plant's long-term performance and sustainability Upon receiving this proposal, Twin Lakes committed fully to the project, leading to the signing of a deal that both parties hope will yield successful results.
• Analysis of negotiating techniques used:
The City Council empathized with Twin Lakes’ financial struggle and approved the deal of providing 50% of the filtration cost
The City Council has approved the deal with Twin Lakes company, but they have imposed restrictions to ensure the long-term performance and sustainability of the plant.
Decide what will be lost:
Twin Lakes strategically emphasized the potential negative consequences of failing to reach an agreement regarding the filtration plant, highlighting the significant benefits it would bring to Tamarack, including improved living conditions through effective water management By showcasing these potential losses, Twin Lakes aimed to instill a sense of urgency in the City Council to address this critical environmental issue.
REGARDING AIR QUALITY PROBLEM
The air quality issue in Tamarack is primarily caused by dust generated from mining, transporting, and processing ores, adversely affecting residents' health Two main contributors to this pollution are the manufacturing process at the Twin Lakes Company and the transportation of ores, particularly during dry summer months In response, the company has invested $8 million in innovative technology to control dust emissions from its plant Additionally, poorly maintained roads exacerbate the pollution problem, necessitating negotiations for effective solutions This article will explore the significant debate surrounding air quality and propose a structured negotiation process to address the concerns of both parties involved.
2.1 Phase 1: The Twin Lakes Company’s suggestions on problem resolution
The Twin Lakes Company has taken the initiative to address air pollution caused by mining and crushing operations by proposing an immediate solution with a budget of $8 million Their proactive approach demonstrates a commitment to collaboration and a readiness to work with negotiators to resolve ongoing environmental issues.
In the negotiation regarding road construction expenses, Twin Lakes Company struggled to establish a clear agenda despite initiating the discussion They proposed temporary, lower-cost solutions instead of more expensive long-term options However, the city council identified these proposals as merely short-term fixes that could lead to more complex issues down the line Consequently, the focus shifted to negotiating the financial responsibilities for the road construction throughout the city.
2.2 Phase 2: A dispute over the construction of dirty roads
After failing to propose a temporary solution for air quality issues related to ore transportation, Twin Lakes Company introduced a long-term plan that included paving all roads and annual maintenance During negotiations, they employed the "Discuss What Alternatives Remain" tactic to shift the conversation from negative to positive, regaining the City Council's attention The company highlighted their financial constraints, stating that the costs for road-paving and maintenance exceeded $5 million, and sought support from local governments They requested empathy from the City Council, suggesting that they cover 50% of the road-paving expenses due to budget limitations.
Twin Lakes Company expressed appreciation for the City Council's proposal but reiterated that covering 50% of road construction and maintenance costs exceeded their financial capabilities They proposed increasing the subsidy to 70%, which led to a discussion facilitated by government representatives using the "Take A Break" tactic Ultimately, both parties reached an agreement on long-term solutions to air quality issues, highlighting effective communication of their perspectives and needs throughout the negotiation process.
REGARDING TAXATION PROBLEM
3.1 Phase 1: Discussion about taxation for the use of city land
• Company suggests a tax cut of $300,000 annually for use of city land.
Argument by company Counter-argument by city council
The current annual tax rate of $800,000 is viewed as excessive, particularly since the mine's land, where the majority of production occurs, is located outside the city limits.
Only the beneficiation plant designated for the treatment of ore is located on the outskirts of Tamarack
The beneficiation plant, situated five miles from Tamarack, significantly impacts local residents both environmentally and in their daily lives Additionally, it influences the growth of residential areas and the development of summer homes.
The company already has to deal with the environmental cleanup project which requires substantial resources and occupies a substantial proportion of the budget for operation, potentially affecting the company’s profitability
The city council has helped the company in the environmental cleanup project both financially and socially to certain extents
It is ethically right that the company takes responsibility as the company operations degrade the environment and affect local citizens.
Currently, the company is experiencing financial hardships Hence, cutting costs is of top priority to the company
If the tax rate is kept unchanged, the company may have to resort to the option of workers' lay-off to ensure its survival
However, the impacts on local citizens would be considerable as 60% of local residents are working for Twin Lakes company.
Technique used: Feinting & Fait Accompli
The company strategically shifts the city council's focus to employment concerns, while the council emphasizes its commitment to environmental cleanup and corporate social responsibility From the company's viewpoint, these topics are delicate, prompting them to use diversion tactics to highlight their advantages over the council.
The company also presents what the consequence on citizens might be if the council turns down the proposal and hopes that the council will react desirably to its move.
The city is open to considering a tax cut, but only if potential trade-offs are identified While layoffs may impact local residents, the city’s budget constraints mean that a reduction of $300,000 in annual tax revenue would significantly influence funding for residential areas and home development projects.
The beneficiation plant situated on the outskirts of the city enables the company to reduce transportation costs associated with gangue, facilitating the purification and blending of ores This operational efficiency leads to increased revenue for the company, a portion of which should be allocated to benefit local residents.
The council can only agree with the company's proposal if the city can receive $100,000 in the year that the company’s sale of ore exceeds its annual target
Technique used: Ask for empathy & Using a quick close
The city council mentions the limited city budget, which the company in its financial hardship can relate to.
After rounds of negotiation about water and air issues, the city council senses a “quick close” of a $100,000 trade-off may work.
• The company agrees with the city council’s proposal of $100,000 trade-off from excess sales.
3.2 Phase 2: Discussion about the selling price of city land
• The company propose to buy the land if City reduce selling priceArgument by company Counter-argument by city council
The current rate of $2.2-$2.4 millions is excessive and completely out of the company’s budget, moreover, the company needs funds for the environmental clean up.
If the council disagrees the company will continue to pay the flat rate of
$400,000 annually for right-of-way use instead of buying the land.
The council agree to sell the land for a lower rate of $1,8 million under certain conditions:
The council maintains the authority to oversee the land and impose restrictions if the company's operations impact the city Additionally, the company must submit a report for any proposed expansions.
The company proposes to purchase the land at a reduced price, anticipating a favorable response from the council If the offer is unsuccessful, the company will remain obligated to pay the flat rate without acquiring the land.
Technique used: Setting limits The city agrees to sell the land at a lower price only if the company satisfies the two conditions.
• The company agrees with the proposal and agrees to pay installment payments in a 2-year period
The company has agreed to the new rate but highlighted a concern regarding the immediate payment of $1.8 million, which would disrupt its financial plan They have proposed an installment payment plan of $75,000 per month or $900,000 annually over a two-year period.
The company agrees with the new rate, however, asks for an additional installment payment plan right at the end.
NEGOTIATION OUTCOME
After the negotiation process, Twin Lakes Company and the City
Council have reached agreements and received appropriate benefits within each party’s expectation
The company has received substantial financial backing from the city council, which has significantly lowered its environmental problem expenses from over $36 million to around $20-22 million in the first year Specifically, the city council will cover 50% of the costs for building the filtration plant and 70% of the road-paving expenses Additionally, the tax on city land usage for the plants has been reduced from $0.8 million to $0.5 million annually, alongside a 25% decrease in land costs.
To conclude, the outcome of the negotiation has helped Twin Lakes
Company to prevent financial risks and the possibility of bankruptcy, while also providing effective solutions for the severe environmental problems caused by the company’s production activities.
Table 2: Comparison of environmental cleanup cost summary before and after negotiation
Cost Summary after negotiation (Company)
Capital share for filtration plant building
Problem $20 million Sub-total Water
Plant Improvements $8 million Plant Improvements $8 million
Paving Roads $4.8 million Yearly maintenance $0.6 million/year
Yearly maintenance $0.6 million/ year 30% of Paving
Periodic oil spraying $0.8 million/ year
Problem $14.2 million Sub-total Air
Situation 1: No purchase of land Tax on use of city land for plant $0.5 million/ year Tax on use of city land for plant $0.8 million/ year Recompense for excess sale $0.1 million/year Right-of-way flat rate $0.4 million/ year Purchase of land $0.9 million/ year in 2 years
Taxation Problem $1.2 million/ year Sub-total Taxation
Situation 2: Purchase of land TOTAL $20 - 22 million
Tax on use of city land for plant $0.8 million/ year
The recent negotiations have enabled the city council to effectively manage its limited budget while fulfilling its responsibilities to the community By addressing critical environmental issues that impact the health, employment, and well-being of residents, the council ensures that the company adheres to environmental and social ethics This approach not only strengthens the long-term relationship with the primary source of tax revenue and local jobs but also supports the city's core industry.
STRATEGY EVALUATION & LESSONS LEARNED
STRATEGY EVALUATION
To assess the effectiveness of the collaborative strategy, it is essential to consider various aspects of both parties' interests, encompassing both financial and non-financial factors This evaluation includes analyzing the benefits and drawbacks of an accommodating collaborative approach.
Avoiding Competitive well as opportunities and challenges that arose from the final agreements are analyzed as below:
Twin Lakes employs a strategic approach to mitigate financial risks and avoid bankruptcy while effectively addressing the significant environmental challenges stemming from its production activities This strategy not only enables Twin Lakes to maintain its operations but also supports the city's development and responds to concerns raised by environmental agencies.
City Councils can effectively manage their limited budgets by implementing strategies that prioritize the welfare of the community and tackle pressing environmental issues, ultimately safeguarding the health, jobs, and quality of life for their citizens.
Despite the financial support from City Councils, including tax reductions on city land use, a 25% decrease in land costs, and shared expenses for filtration plant construction and road paving, Twin Lakes Mining Company faces significant environmental expenses The company is projected to spend $20-22 million in the first year alone, which poses a considerable strain on its budget.
City councils have reached an agreement to lower taxes on the use of city land for plants, resulting in a 25% reduction in land costs Additionally, they will cover 50% of the construction costs for filtration plants and 70% of the expenses for road paving However, these measures have led to significant strain on the state budget.
The joint venture between Twin Lakes and City Councils for the construction of a filtration plant and road paving will provide additional funds for Twin Lakes to sustain its operations and invest in research and development of new products This collaboration will also enable City Councils to allocate more resources towards enhancing the city's infrastructure and utilities.
The ongoing partnership between the company and City Councils is poised to accelerate local industry development, ultimately benefiting the community in the long run.
Although Twin Lakes and City Councils create a joint venture, City
Councils have decided to reduce taxes, a move that may impact their budgets for residential development and summer home expansion projects This decision could potentially slow down the progress of these residential initiatives.
In summary, while addressing environmental issues requires significant financial investment from both parties, this expenditure alleviates governmental pressure and fosters sustainable long-term development.
LESSON LEARNED
2.1 How to manage negotiation Tensions
Initially, the Twin Lakes Company firmly disagreed with the deal but recognized the City Council's limited resources and pressures They allowed the local government to voice its challenges while highlighting the benefits of an equal capital share for constructing the filtration plant, including compliance with environmental regulations and meeting citizen needs This approach helped Twin Lakes establish credibility with the City Council and ultimately persuaded them to agree to a 50-50 funding split.
• Creating Value, Not Distributing It
In the third negotiation, the government shifted its focus from merely dividing resources to exploring innovative solutions They committed to providing assistance while also modifying their revenue collection methods to align with the company's current financial circumstances.
2.2 How to implement collaborative strategy successfully
This negotiation leads us to lessons how to use the collaborative strategy successfully:
In successful negotiations, establishing common goals is crucial, as both parties can achieve different benefits while working towards a shared objective The Twin Lake company aims to operate profitably, while the City Council seeks to resolve environmental issues, ultimately fostering a thriving community with a clean environment This alignment of interests ensures that both the company and the council can achieve their desired outcomes.
Listening is essential in negotiations, as it allows both parties to understand each other's justifications and proposed solutions This exchange of information not only clarifies the issues at hand but also enhances the effectiveness of the current negotiation strategy.
Focusing on our attitude is essential in negotiations, as it is conveyed through facial expressions and non-verbal cues like nodding and maintaining eye contact These signals indicate a willingness to engage in collaborative negotiation Additionally, the choice of words plays a significant role; using neutral language and impersonal terms, such as “our” instead of “your,” fosters a cooperative atmosphere.
In the final negotiation, the City Council not only sought to expand the benefits but also reduced expenses by agreeing to sell the land for a low price of $1.8 million, while incorporating specific conditions into the agreement.
2.3 How to adapt Tactics in real negotiations
In the negotiation process, the Twin Lakes Company strategically initiates discussions to address current challenges, which allows them to establish control and influence the negotiation's direction This approach is effective primarily when the City Council lacks clarity on environmental solutions For instance, in the initial role play, the company's primary objective was to convince the City Council of the advantages of building a filtration plant, highlighting benefits for both the company and the community.
In the recent role play, The Company strategically delayed introducing a small yet advantageous adjustment until both parties expressed satisfaction with the negotiated outcome This approach allowed them to secure a beneficial deal more easily than if they had raised the adjustment during the negotiation process.
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