Question

Rainbow Paints Inc. is a leading paints company in Pakistan. In June 2019, the higher management of the company deliberated and decided upon the production targets for the year
2020. The procurement department was directed to order the supplies of required chemicals and raw materials from Chinese company i.e. XingPe Chemicals for the target production. The
supplies were expected to arrive in January-February 2020 but unexpected situations halted the normal operations in China due to the spread of a novel virus.

The situation created panic at Rainbow Paints Inc. as lack of supplies meant falling short of the targets and plunging in losses. The supplier was contacted but they were of the view that they cannot send the supplies as per the contract due to the lockdown. Now, conflict aroused between the parties as Rainbow Paints Inc. wanted the raw materials which the XingPi Chemicals cannot process due to restrictions from their respective government. It resulted in losses for Rainbow Paints Inc.

Rainbow Paints Inc. decided to consult an International arbitrator for the resolution of the dispute. During negotiations, the Rainbow Paints Inc. maintained that they faced losses due to
lack of supplies which did not reach them at the promised time. So, the supplier must not only compensate for it but also return their payments. While XingPe Chemicals insisted that they
couldn’t move ahead due to unexpected and unavoidable pandemic situation, so the losses must be shared. They also reiterated the resolve to provide supplies in the future without any delays if the situation permits. They insisted on keeping the contract intact while finding a middle ground for the current dispute.

After analyzing the case mentioned above, Identify the approaches to negotiation maintained by both the parties in conflict i.e. Rainbow Paints Inc. and XingPi Chemicals and explain them as per the scenario.

Answer 1

Ans

In this case

Rainbow paints Inc has adopted the Competitive negotiation or Distributive Negotiation also called Win-lose approach.

They are insisting that they should be compensated for the loss and the advance payment should be returned. Thus they are adopting a hard line approach.

XingPi Chemicals is adopting a compromise approach to this issue. they are willing to bear part of the loss and they want rainbow to bear the remaining loss. They are defending the delay on grounds of pandemic which is a force majeure issue. They are also promising to honor all contracts in future.