It is with pleasure that the two firms come together at a negotiation table to discuss business. Excalibur Engines is one of the best engineering firms in the land. It is known for producing a fair standard of products to the market. It is upon this basis that we, as Knight Engines have decided to seek your products to help us deal with the large order we have from the government. It is a business deal that the two companies stand to benefit and therefore has to be taken with the seriousness it deserves. As a company, which is out to provide quality products and the nature of the order we have, there is a huge task to ensure that the products we deliver to the client are of high standards (Freeman 2010, p. 78). The department where the products are required is very sensitive and we cannot afford to deliver substandard products that may fail in the process of their consumption.
This would cause damage to the government and its populace. The two companies stand to lose a lot in case the engines fail. First, the reputation would be completely lost in the market. There would be very few, if any, of the client who will be willing to buy our products. We stand to lose the market share that has taken us a lot of time and other resources to build up. We, therefore, have to approach this issue as a team. We stand to benefit as a unit, and this negation will help us in this. We, therefore, have to approach this discussion with open minds, ready to take a common ground that stands to benefit all of us. As a team, we shall succeed.
The Role of Excalibur Engine Parts
As Knight Engines, we approach Excalibur as a partner. This is but the first step towards a long-lasting relationship in this industry. From Excalibur, we need the Class ‘A’ engines. We have had several engineering companies offering to deliver the products to us, but the deal we have from you is the best. Other firms are offering to deliver the products at a slightly longer period, a fact that may not be in a position to meet our present requirement. We, therefore, expect you as Excalibur Engines to provide use with Class A pistons. This would have to be availed within two weeks. The time limit is short but enough to produce quality products that will be in a position to produce the desired results. It is your role, therefore, to produce pistons of very high quality. Quality should be in no way is substituted with time. Time is paramount in this contract, but quality must be maintained. It is important to appreciate that you will be tasked with a key role and the success on your side will be of importance to all the involved parties.
The Role of Knight Engines
As the Knight Engines, we have the responsibility to deliver the engines to the government within the specified period. The engines that you will deliver to us will be used to develop the engines that have been ordered by the customer. We have a responsibility to you in two ways. We will be responsible for producing goods of high quality that would meet the expected standards. Should we fail to do this, your brand may be in jeopardy, now that you have insisted that your brand symbol must be on the product. As you know, you can trust us to deliver products of high standards to the customer, a fact that would make your brand be viewed with favor in the market (Warner 2011, p. 93). We also have the responsibility to pay you. We would compensate you when you deliver the products to us. The terms of payment would be based on the agreement that would be made in this discussion.
Benefits to Excalibur Engine Parts
Excalibur Engines stands to benefit in several ways. Direct marketing is one of the challenging tasks for any firm, especially if the firm is young in the market and is little known. Customers will fail to appreciate the value of the firm because of a lack of witness. It is therefore invaluable that when such a firm gets an opportunity to market their products to such customers, they seize it and do it in the best way possible so that such a customer may realize their potential. We provide you with this precious opportunity to reach out to the largest organizational customer: the government. Your firm stands to get an opportunity to display the government the worth. The brand will be known and there is a possibility that such a customer may consider giving it a mega tender in the future. This would be the best benefit that Excalibur stands to benefit.
We will also remunerate your firm for the products that you will deliver. This will compensate for the costs that were incurred in the production process and you shall remain with profits. This will ensure the sustainability of the firm.
Benefits to Knight Engines
We have our benefits too that we would get from the entire project. As a firm that has been registered a growth in the past few years, and the fact that your products, which we do not specialize in, it would be of great benefit to use to develop a lasting relationship with you. This would see the two firms form a collaborative relationship where we would collaborate in major tenders in a bid to ensure that we continue to deliver quality products to the customers. We would also benefit from this arrangement by delivering the engines to the customers within the time specified, and of high standards. This would help us gain the trust of the customers. Through this, we may stand a chance to win another contract with this customer, should such opportunity arise. Just as it would to you, this would help us ensure sustainability at the firm.
The Value to be paid by Knight Engines for the Pistons
The negotiations are expected to develop a lasting relationship. We expect to develop a bond that would tie the two firms together for a considerably long time. The negotiation should therefore take a win-win approach. None of the team would therefore be expected to cannibalize on the other as this may stand to injure the relationship (Isenhart & Spangle 2003, p. 38). We therefore would factor in all important issues that would help both of us feel fair enough with the deal. The contract is between our companies (Knight Engines) with the government. The government, therefore, expects us to make all the parts of the entire engine. Our limited capacity has forced us to outsource your company. Under a normal circumstance, the pistons we are purchasing from you should bear our brand, as we would be expected to pay its full value. However, we have accepted that your brand name would remain in the pistons. This may put us in a precarious position.
The customer may view this as a lack of expertise on our side to your favor. They may see us as people who are not in a position to handle the task, which was given alone and therefore may fail to consider us in the future if such an opportunity may arise. We, therefore, face a serious risk by allowing this arrangement. However, given our standing in the market, we are not afraid to take the risk for a reputable firm like yours so that you may rise to the standards that are high enough to your worth. This would be a favor. Even with this favor, we do not intend to propose a price that would be injurious to your firm’s prosperity. We only request, therefore, that you consider removing the 5 percent interest. In so doing, we both stand to benefit. By selling the pistons at 500 dollars each, you will make a substantial profit for the firm. Kindle considers this offer.
It is our sincere hope that the negotiation has been of benefit to us all. We both stand to benefit from the positive outcome of the project. In such a win-win negotiation, we only hope that you have a smile just as broad as ours and that you have a feeling of fairness from the deal. As one of the partners, we believe that there will be the best alternative to this negotiated agreement (BATNA). This would ensure that no party leaves the negotiation table feeling aggrieved.
List of References
Freeman, E 2010, Strategic Management: A Stakeholder Approach, Cambridge University Press, New York.
Isenhart, M & Spangle, M 2003, Negotiation: Communication for Diverse Settings, Sage, New York.
Warner, B 2011, Organization Change: Theory and Practice, Sage, Thousand Oaks.