Money and Pa Negotiation Expectations
CASE STUDY 4B
Bankers Guarantee: China
Your client requests your company to present a bond, or banker’s guarantee, for 20% of the contract sum that you are currently tendering on. You ask the client to remove the bond requirement from the contract entirely, or at the worst, reduced to 10%. The client says this request is unacceptable, as their exposure would be too high and would subject them to too much risk. They also claim that the end customer, the Shanghai City
Government Board, is demanding 20% retention from all the primary contractors for the entire project.
Details:
Supplier: Park Pipe Ltd, Seoul.
Contractor: Chic Koon Industries, China.
Site: New Shanghai Docklands (under construction)
Project: Supply of pipe and fittings
Project value: W 4,000,000,000
Interest rate on loans: 5% pa
Negotiation Expectations:
Park Pipe: To have the retention monies reduced to nil.
Chic Koon: To get the full 20% retention money.
Information required from all Students:
Your agenda for the planned negotiation.
Your ‘Best alternative’
Your ‘Worst alternative’
Your proposed strategy for the negotiation
Your expected outcome
Negotiation
Each team will have a 4 person negotiating team, and each person will need to actively participate during the negotiation. You will negotiate the deal to a satisfactory conclusion, taking particular care to negotiate with ethical tactics. You can, however, use any tactic or strategy to win the deal. You should ideally take into account the time-value of money.
Submit your team strategy and expectations to the teacher prior to the negotiation. Use the note page below to prepare
Case 4B – Notes
BATNA:
To reduce banker’s guarantee to nil from the contract.
WATNA:
Only pay 10% of banker’s guarantee with additional condition.
Your proposed strategy:
1. Assess the other party’s target and resistance point. 2. Mange the other party’s impression of the
Bankers Guarantee: China
Your client requests your company to present a bond, or banker’s guarantee, for 20% of the contract sum that you are currently tendering on. You ask the client to remove the bond requirement from the contract entirely, or at the worst, reduced to 10%. The client says this request is unacceptable, as their exposure would be too high and would subject them to too much risk. They also claim that the end customer, the Shanghai City
Government Board, is demanding 20% retention from all the primary contractors for the entire project.
Details:
Supplier: Park Pipe Ltd, Seoul.
Contractor: Chic Koon Industries, China.
Site: New Shanghai Docklands (under construction)
Project: Supply of pipe and fittings
Project value: W 4,000,000,000
Interest rate on loans: 5% pa
Negotiation Expectations:
Park Pipe: To have the retention monies reduced to nil.
Chic Koon: To get the full 20% retention money.
Information required from all Students:
Your agenda for the planned negotiation.
Your ‘Best alternative’
Your ‘Worst alternative’
Your proposed strategy for the negotiation
Your expected outcome
Negotiation
Each team will have a 4 person negotiating team, and each person will need to actively participate during the negotiation. You will negotiate the deal to a satisfactory conclusion, taking particular care to negotiate with ethical tactics. You can, however, use any tactic or strategy to win the deal. You should ideally take into account the time-value of money.
Submit your team strategy and expectations to the teacher prior to the negotiation. Use the note page below to prepare
Case 4B – Notes
BATNA:
To reduce banker’s guarantee to nil from the contract.
WATNA:
Only pay 10% of banker’s guarantee with additional condition.
Your proposed strategy:
1. Assess the other party’s target and resistance point. 2. Mange the other party’s impression of the