Question

A few days ago, the sales manager of SecureIT excitedly reported that ACORE, a well-known multinational corporation (MNC) with global operations and a market leader for more than 40 years, finally agreed to another meeting. It would like to discuss details about the project scope as it was considering a purchase of Enhanced Efficiency Solution but has emphasised that it has a limited budget and no concessions to offer. It is proposing that SecureIT meets with some of its IT executives and assistant project managers, as a start.

ACORE is a large MNC with established standard operating procedures and different levels of approvals required for a project. As a listed company, it was also particularly sensitive to investors’ perceptions of its business performance, including improved operating margins, as these impact on its stock price.

Some of your team members were sceptical about meeting with ACORE. They felt that it could be a waste of time as they heard about ACORE’s tough reputation as a negotiator and the lengthy amount of time that it typically took to make decisions. In addition, the industry in which ACORE operates is fairly unfamiliar to your team, although they are experts in software development.

On the other hand, you feel that pursuing this customer relationship with ACORE will bring about longer-term benefits, including boosting SecureIT’s track record and increasing the learning opportunities for SecureIT’s team. However, time is running out. SecureIT needs to secure a deal soon with ACORE; otherwise, the former will suffer cashflow problems. Your product engineering team is already working on upgrades to the software solution, and the technical support department is unsure about whether to continue ramping up its team in anticipation of sales.

Question:

Describe and evaluate two (2) important tactical tasks that ACORE may undertake, as part of a distributive bargaining approach, for the purposes of managing SecureIT’s impression of the latter’s target, resistance point and cost of terminating the negotiations, and manipulating the actual costs of delaying or terminating negotiations.

Answer 1

Solution: -

SecureIT: Seeking opportunity to working with ACORE, an MNC for its IT services.

ACORE: An MNC with global operations in more than 40 countries. Having a strong software development team, focusing on the bottom line to maximize the opportunity in the stock market. It has very strong reputation as a negotiator.

Challenges for SecureIT

• SecureIT need urgent cash flows for sustainability
• ACORE reputation as a tough negotiator
• ACORE is working in unfamiliar business
• SecureIT has to deliver the world class service in order to make ACORE a long-term client.

Tactical Task: Perform day to day task like operations, finance, Marketing, Production etc.

Following are the two disruptive bargaining approach.

1. Wining the deal with lowered price (Competitive): - A negotiations happen when both parties are on win-win situations but a disruptive bargaining starts where one party wins only when other loses. ACORE will focus on the following in this Situation: -

• They are looking for the IT software company which has strong IT team than their own: - They will ask SecureIT to demonstrate their previous work and expertise.
• The pricing they are looking for is the lowest as they want to manage the margin to increase the operating profit. They make SecureIT to realize they don’t have experience in this industry so they must quote the lower prices. Also, they would ask them to give money into the trenches (20:30:50).
• Try to delay the process in order to make SecureIT lowered down the quoted price. Also, it helps to check SecureIT confidence in them as a prospective client. IT may bring the resistant point where the SecureIT can think to abandoned the discussion.
• It is a going to be strategic decision because IT vendor does not change frequently and hiring another will cost even more with the unseen issues of signing up, So they would asking them question about how many successful projects they have done and what is the retention ratio right now the company has.

2. Wining the deal with Competitive Price (Cooperative): -

• Bargaining to the point where customer can adjust themselves with the terms and condition of the project.
• Referencing other or previous vendors to make them lower down the quote.
• This may be possible they want to give a sample task to them to judge their capability and make them realize they are charging more for this service.
• This is going to be a negotiation and all the targets, situations and costs are opened. SecureIT has to deal with all the delay in the process and also losing the negotiation and the opportunity costs.

Based on the reputation of ACORE it can be said the SecureIT going to lose in this case in spite of winning the deal because ACORE will try to close the deal in which they are benefited not the SecureIT.