Case study on negotiation
copperhead, one of the world’s major providers of global supply management software and services, helps companies reduce costs through efficient product and services sourcing. It has handled more than $50 billion worth of products and services in the oil and gas, other natural resources, retail, transport, finance, and Industrial sectors for customers Including General Motors, Nestle©, Shell, Japan Energy, Mediumistic, and Academy Cheapest. Shanghai-based JAM, one of the biggest gaming and hospitality companies in Asia, is owned by Chinese businessman Tan Www
Boo. This case study revolves around the period when KM has been a HyperCard client for six months, and the companies have signed an agreement to conduct projects.
The first, completed in March 2005 and tremendously successful, saved JAM some $1 million, and the second one is set to start. Lamprey’s with the results, JAM wishes to explore the possibility of other Joint endeavourers with HyperCard. To this end, a meeting is arranged between Jam’s Senior Vice-President of Finance Iris Ma and Hyperspace Regionalism’s Directorate Dubious, and attended by Jam’s
Vice-President for Procurement Henry Chow and HyperCard Sales Group Director Layton Pang. Ma is keen to explore more projects with HyperCard and has tasked Chow to follow up with Hypermarket soon as possible. The managing director of HyperCard suggests that a session be arranged with key stakeholders from both companies to discuss and assess possible opportunities for other KM projects.
The Scene Ma and Chow agreed to the suggestion and asked that a proposal be submitted to JIM after the opportunity assessment meeting that was attended by Chow, his assistant Mary he, who is also the purchasing manager, and two members from
HyperCard. Both parties Identified ten possible projects. Exe asked for a proposal to be submitted to KM through her, and HyperCard provided a competitive price package that Included services over a twelve-month period. As Is to be expected from a Chinese company like KM, Exe asked for a reduction in the licensing fee, additional program management days (at no extra cost), and an extension of the software term from twelve months to twenty-four months. In reply, HyperCard put in writing its discussions to date with JAM: 1. KM had agreed that HyperCard could add value to the projects Identified.
JAM would sign for a ten-project package to get a competitive price. 3. If HyperCard could meet SMS demands, the latter would sign the contract by May-end 2005. Exe agreed to point one above, but was noncommittal on points two and three.
After much discussion, HyperCard agreed to lower its fee and provide KM additional program management days at no additional cost. However, HyperCard said it could not agree to extend the twelve month term for use of the software without charging extra. Then, to complicate matters further, Exe suggested that KM could not commit to an agreement even If all the Issues were solved.
I nee most recent negotiations were contacted quilt nasally, slice HyperCard knew that Exe was not the decision maker and approval had to come from her top management. Negotiations to Date Hyperglycemia’s concern was how likely JIM would be to enter into an agreement even if the issues were resolved, and within what time frame.
JIM argued that the proposed price was beyond what it could afford, although it recognized the need for help from HyperCard to implement the projects, and that it needed twenty-four months to implement the ten projects due to its lack of manpower.
HyperCard took the position that, while it was prepared to look into the fee structure and program management term as part of the total package, the request for twenty-four months was not reasonable. Although it reasoned that other organizations were able to implement ten projects in twelve months, to satisfy JIM, HyperCard negotiated a mid- way solution: a maximum of eighteen months. When one week passed and there was no response from JIM, HyperCard asked if it would be prepared to sign if HyperCard acceded to its three requests.
Exe replied that she would submit the proposal for approval to her superiors, Tan and Ma, but added that there was no guarantee the agreement would be signed by the end of May. From Hyperspace perspective, all the issues presented by JIM had been resolved?yet there was still no deal.
When asked about the status of the project, JIM cited staff turnover, but then mentioned another possible IT project where there was a clear need for HyperCard. The discussion ended with JIM requesting that HyperCard prepare the preliminary work and submit yet another proposal.
Based on the updated information, it appeared that the IT reject might get underway earlier than the previously proposed ten projects. Moreover, given that this project had an entirely different scope, there was a strong argument to negotiate a separate deal for it. Whichever proposal JAM wished to undertake first, HyperCard was ready to negotiate and finalize an agreement, but it could not yet tell whether the latest development was a genuine project or a further stalling tactic.
Both parties acted rationally in the way the negotiations were conducted, and it helped that the relationship between them was excellent from the start. . HyperCard gave in to Jams demands in the hope of concluding the agreement quickly and starting the projects. But JIM continued to indulge in last minute wavering and only introduced a new project, which took the parties away from the initial negotiations. 3.
The way HyperCard responded to Jam’s delaying tactics, showed it’s patience and its determination to get the deal done. 4.
Meanwhile, JIM believed it was negotiating from a position of strength, having even gone so far as to assert that it had in-house a system similar to that of HyperCard that could probably fulfill its deeds, even though without the sophistication of the HyperCard product. 5. Going forward, it was critical that HyperCard engage with Ma, the senior vice-president and decision maker, since the groundwork had been laid with her staff.
But they were finding it difficult to do so due to the complicated hierarchy of the Chinese companies. . HyperCard reflected that maybe it should have asked for the agreement to be signed within a fixed time when it met Jam’s initial demands, although JIM had previously delayed decision making on other projects. Conclusions This case is typical of what vendors face in a competitive, hi-tech environment, and Illustrates ten opportunity teeny nave to reduce tenet price. Handle appropriately, a win-win outcome is not difficult to achieve. From this case study, at least two scenarios for short-term success can be derived.
First, assuming the vendor, is taking a tough stance, you can take a long-term perspective and conclude the first sale with a friendly, competitive attitude, countering the buyer’s demands with suitable offers, while never losing sight of your determination to bag the order. But, besides showing friendliness, flexibility, and determination, you must show the potential buyer that oh will be there for them over the long haul. For this you require people with leadership qualities in your team.
Should one lack high-quality leaders in your team, you have the option of a second scenario. In this case, you would show, right from the beginning,that your team comprises hard workers who will do whatever the buyer needs.
By adopting Chinese-style service orientation and dedication and making your team indispensable to the potential buyer, being available daily, and making yourself virtually a part of your opposite number’s staff?you could clinch a deal. HyperCard failed to show the requisite service orientation and commitment.
From the perspective of longer-term success, an initial achievement provides the opportunity for friendship to be cultivated with the client company’s key people, perhaps even with the CEO, the final decision maker. Should one eventually become accepted as “family,” the client will telephone you for what they want and no longer require competitive quotations. But to reach that point, you will have had to develop a genuine friendship and service orientation with those at the top of the client company.