Negotiation - NTL and Angela Cheetham

Sam Pearson, Brandon Soutter, Chutikarn Suppatvech

Thursday 3rd December 2015

The NippiTransport Ltd Contract

Excellent service from NTL for the past 18 monthsUrgent delivery of documents:

-New work tenders-Design Drawings-Confidential Contracts

No current contractDesire to negotiate in a positive mannerThree key issues with NTL’s proposed contract

Clauses to Negotiate

Clause 8 – Liability :Our liability shall be limited to the cost of delivery and we shall bear no responsibility for direct or indirect losses incurred by the customer as a result of our failure to meet our obligations

Clause 11 - Cost:We reserve the right, at any time, to increase our price without prior notification to the customer

Clause 14 – Sub-contracting:We reserve the right to sub-contract any or all of the courier services without seeking customer’s approval

Conducting Successful Negotiations

1. Fact finding2. The Recess3. Narrowing the differences4. Hard bargaining

Previous AgreementsReview NTL Delivery PerformanceResearch Competitors and Establish a BATNA

Approaches to NegotiationAdversarial:

No ongoing relationshipStrategy based on secrecy‘Us against them’ mentality

Collaborate:Long term focusOpenness over secrecy‘In this together’ mentality

Initial Response to Proposed ContractClarify contract detailConsider each companies negotiation rangePropose clause changes

Avoid negatives for early stage of negotiation

Behaviour Likely response

Proposing – shall we ….? Development in form of support or reasoned negative identifying difficulty

Development – building on or supporting other’s proposals

Further development or seeking further information

Reasoned negative – explaining areas of difficulty

Can invoke similar negative behaviour, try to remain reasonable, seek more information

Emotional negative – attacking or defensive, critical, ‘rubbish’

Tends to evoke similar response, hard to return to constructive behaviour

Clarifying – checking for understanding, summarising

Supportive development or can lead to disagreement if situation misunderstood

Seeking information – facts opinions, ideas, what if?

Usually results in information being given

Giving information – open disclosure

Can be in response to seeking information or could break the ice

Clause 8 - Liability

Original Clause:Our liability shall be limited to the cost of delivery and we shall bear no responsibility for direct or indirect losses incurred by the customer as a result of our failure to meet our obligations

Modified Clause:Our liability shall be limited to both the cost of delivery and a fixed, pre-established fine for direct or indirect losses incurred by the customer as a result of our failure to meet our obligations

Clause 11 - Price

Original Clause:We reserve the right, at any time, to increase our price without prior notification to the customer

Modified Clause:We reserve the right, at any time, to increase our price with prior notification of one month to the customer

Clause 14 – Sub-contracting

Original Clause:We reserve the right to sub-contract any or all of the courier services without seeking customer’s approval

Modified Clause:We reserve the right to sub-contract any or all of the courier services with the customer’s approval

Ultimatum – Take it or Leave it

Adversarial approach taken by NTLAttempt to negotiate around the ultimatumIf NTL will no longer negotiate, resort to BATNA

Any Questions Regarding NTL?

Angela Cheetham – Dealing with Consultants

Hiring consultants for a building services organisationTwo preferred consultancies to provide organisational change

-Thomasen-Fox and Standwell

Four focus issues to be negotiated-Cost-Insurance-Start Date-Key Personnel

Cost – Consultancy Fees

Thomasen quote £350,000, in addition to undefined hotel and travel costs

FS quote £450,000 all inclusive

Attempt to lower cost of eachEstablish fixed limit on Thomasen feeMostly accommodate, but compromise to define Thomasen fee

Insurance

Thomasen limit at 50 percent of fees (£175,000)FS professional indemnity insurance of 5 million pounds

Compromise Thomasen to a flat sum closer to that of FSAccommodate FS offer to further build relationship

-Thomasen-Fox and Standwell

Start Date

Thomasen request 8 week lead time

FS can begin in 2 weeks

Compromise both to 1 week if possibleAppreciate that immediate start is unlikely

-Collaborate for creative solution-Perhaps guidance from consultancy on work to be performed ‘in house’ prior to consultant arrival

Key Personnel

Thomasen have not named which consultants will be hired

FS have named the lead consultant and five supporting consultants

Compromise Thomasen to naming lead consultantAccommodate FS unless known issue with named consultants

TFS

TFS TFS

FS

T T - ThomasenFS - Fox and Standwell

CostInsuranceStart DateKey Personnel

Any Questions Regarding Angela Cheetham?

Thank You

References:-QS Advisor. (2014). Top Tips for Contract Survival. Available at: http://qsadvisor.com/wp-content/uploads/2014/04/contract.jpg (Accessed 2nd December 2015)-Fawcett, Ellram and Ogden, “Supply Chain Management”, 2007, p 367 -Kirkaldy, A.M. (2015) ‘Supply Chain Management Lecture 12- Negotiation.’ ES4C9 Supply Chain Management. Available at: http://www2.warwick.ac.uk/fac/sci/eng/eso/modules/year4/es4c9/resources/lecture_resources (Accessed 2nd December 2015)-Lysons & Farrington Purchasing and Supply Chain Management, Pearson, 2006, p.563-Rohlfing, D. (2012) Take it or leave it. Available at: https://davidrohlfingblog.files.wordpress.com/2012/08/take-it-or-leave-it1.jpg (Accessed 2nd December 2015)