Strategy & Finance
The U.S.-China trade war between 2018 and 2019 offers a fascinating case study in negotiation strategy — or, in many respects, a lack thereof. Examining the escalation of tariffs under the Trump administration and China's calculated responses offers valuable lessons when compared to established negotiation frameworks, such as "Getting to Yes" by Roger Fisher and William Ury and "Never Split the Difference" by Chris Voss. 📈
Negotiation Situation Overview 🧰
President Trump initiated tariffs on Chinese goods, increasing rates progressively from 34% to 84% and ultimately to 145%. Initially, China refrained from responding, but eventually matched the tariffs in a tit-for-tat manner. Trump publicly called for a dialogue with President Xi, expressing readiness to "make a deal." China remained unmoved. Ultimately, Trump rolled back some tariffs without securing significant concessions.
Comparative Analysis: Key Negotiation Techniques 🧵
1. Getting to Yes: Principles-Based Negotiation 📄
Separate the people from the problem 👥🔧: Trump's negotiation personalized the trade conflict, often publicly challenging Chinese leadership, which likely entrenched opposition rather than fostering cooperation.
Focus on interests, not positions 🔄: Trump's escalation fixated on "winning" or imposing tariffs rather than clarifying underlying interests, such as intellectual property protection or market access.
Generate options for mutual gain 📊: The strategy lacked collaborative solution-building, relying instead on threats and escalation without offering mutual benefits.
Insist on objective criteria 📝: The tariff decisions appeared impulsive rather than grounded in neutral standards or transparent economic goals.
2. Never Split the Difference: Tactical Empathy and Emotional Control 🔍📊
Tactical Empathy 👨👨👦: Trump's public moves showed little tactical Empathy. He failed to acknowledge China's domestic political pressures and economic concerns, which are crucial for influencing their behavior.
Controlled Emotionality 😐: The public "call me" moments reflected emotional urgency, which weakened perceived bargaining power. Chris Voss emphasizes appearing calm and indifferent to outcomes to maintain control.
Calibrated Questions 🔠: Instead of asking "how" questions to engage China in solving mutual problems, Trump's Approach dictated terms and demanded compliance, limiting dialogue.
No Deal is Better than a Bad Deal ❌: Trump's tariff rollback, without securing significant concessions, suggests a deviation from this principle.
Where the Strategy Diverged from Best Practices 📉
Trump's Approach leaned heavily on "power negotiation" — using economic pressure to extract concessions — but neglected the equally critical relational and procedural aspects emphasized by Fisher, Ury, and Voss. By revealing its urgency and inconsistency, the Trump administration reduced its leverage over time. In contrast, China's calculated patience exemplified control, focus on interests, and tactical silence. 💪
Forward-Looking Lessons 🔬
Negotiators today can extract powerful lessons:
📐 St a communicated "why" to provide purpose and credibility.
🔄 Focus negotiations on interests, not emotions or optics.
🤝 Apply tactical Empathy to understand the pressures your counterpart is facing.
🤦 Maintain emotional control to avoid signaling desperation.
📋 Prefer no deal over a poorly constructed agreement.
By marrying principled negotiation (“Getting to Yes”) 🔄 with tactical negotiation ("Never Split the Difference") 🔬, leaders can negotiate more effectively, securing results that are durable, fair, and strategically sound. 🌟
Sources: 📃
Fisher, R., Ury, W., & Patton, B. (2011). Getting to Yes: Negotiating Agreement Without Giving In. Penguin Books.
Voss, C., & Raz, T. (2016). Never Split the Difference: Negotiating As If Your Life Depended On It. Harper Business.
McKinsey Global Institute (2019). "Globalization in Transition: The Future of Trade and Value Chains." Link
Goldman Sachs Research (2019). "Trade War Escalation: Macro Impact." Link
In July 2004, Domino's Pizza went public at $14 per share. A month later, Google launched its IPO at $85. Few in the financial world would have dared to predict that, over the next two decades, a pizza chain 🍕 would edge out one of the most innovative tech companies 🧠 in history in total shareholder return. Yet, by early 2024, Domino's had delivered a staggering 7,428% return compared to Alphabet's 6,976%.
How is it possible that a company rooted in flour, cheese, and tomato sauce outperformed the architects of artificial intelligence 🤖, digital advertising 📱, and cloud Computing ☁️?
This isn't just a story about numbers. It's a story about strategy. 🧭
A Tale of Two Models ⚖️
Domino's didn't invent a new industry. It mastered an old one. The Company invested early in digital ordering and delivery logistics, repositioning itself as a fast-food brand and a tech-enabled logistics platform 🚚. By 2020, over 75% of its U.S. sales came from digital channels (source: Domino's Annual Report 2020).
Meanwhile, Alphabet aggressively diversified its portfolio beyond its core ad business. From YouTube and Android to Waymo and Verily, its moonshot projects 🌕 demanded enormous capital but delivered uneven returns. According to a report from CNBC (2023), Google's "Other Bets" have accumulated over $30 billion in losses since 2015.
Where Domino's focused on optimizing an already profitable model 💰, Alphabet pursued exponential Innovation—often without a clear pathway to monetization. While both strategies are valid, one had a more consistent impact on earnings and free cash flow 📊.
What Makes Growth Valuable? 📈
Growth alone is not a business strategy. It must be rooted in clear unit economics, defendable moats 🏰, and efficient capital allocation. Domino's leveraged a franchise model to scale globally with minimal capital expenditure. Franchisees absorbed most of the expansion risk, while the corporation reaped the benefit of growing royalties 💵. In 2022, Domino's reported a return on invested capital (ROIC) of over 35%, according to Morningstar.
Compare this with Alphabet, where return metrics fluctuate due to constant reinvestment. Its core advertising margins remain strong, but the aggregate ROIC is diluted by ventures in hardware, healthcare, and autonomous vehicles 🚗. McKinsey (2022) emphasizes that companies maintaining strategic focus and disciplined reinvestment outperform more diversified peers over time.
The Perils of the Tech Mirage 🌫️
The market often equates "tech" with "growth." But not all growth creates sustainable value. In a report titled "Capitalism Reinvented" (BCG, 2023), the authors highlight how the next generation of outperformers will not necessarily be those riding technology waves 🌊 but those embedding technology into strategic execution.
Domino's fits that profile. It used data to optimize delivery routes, predict demand, and refine customer interactions. It didn't invent new technologies—it applied them ruthlessly to improve margins and customer experience 🧑🍳📦.
The Strategic Investor's Mindset 🧠💼
Investors and executives alike should ask:
Why is this Company growing? 🤔
Is the growth rooted in product-market fit and strategic clarity? 🎯
What is the capital intensity of that growth? 💸
Can the model sustain a competitive edge over time? 🛡️
These questions filter hype from durability. Bain & Company noted in its 2021 Global Private Equity Report that deals that succeeded over time aligned with value creation plans grounded in operational improvements, not just revenue scale 📌.
Looking Forward 🔮
As the capital environment tightens, strategy will matter more than story. The next decade will not reward the noisiest innovators but the most disciplined operators 🛠️. Domino's taught us that even a pizza company can outperform Silicon Valley giants—if it knows its "why," scales intelligently, and allocates capital like a hawk 🦅.
Technology is a tool 🧰. Strategy is the architecture 🏗️. Without the latter, the former is just noise.
📊 Comparative Returns Since IPO
Table below
References:
Domino's Pizza Annual Reports (2015-2023)
Alphabet Inc. 10-K Filings (2015-2023)
CNBC: "Alphabet's Other Bets Have Lost $30 Billion Since 2015" (2023)
McKinsey & Company: "What Matters Most? Five Priorities for CEOs in the Next Normal" (2022) - https://www.mckinsey.com/
BCG: "Capitalism Reinvented: How Companies Are Rethinking Value Creation" (2023) - https://www.bcg.com/
Bain & Company: Global Private Equity Report (2021) - https://www.bain.com/
Morningstar: Domino's Company Profile & ROIC Data (2023)
