Gvru Andreea

Mihil Ioana
REI, III, seria A, grupa 939

1

Negociation

~ Kuwait Trading Company Royce Litton Foods ~

1. Relationship building

RLF: - Hello, my name is Gvru Andreea and I am the CEO of Royce- Lytton Foods.
KTC: - Good morning! My name is Mihil Ioana. I represent Kuwait Trading Company.

RLF: - I hope that the flight was pleasant and it was not very hard to find us, given that we
recently changed the company's headquarters.
KTC: - Oh, thank you. I have once again experienced the professionalism and the kindness of
the British Airlines flight attendants. But I have to mention, your office have a breathtaking
view.


RLF: Indeed it is very beautiful. I hope you do not mind, but, I took the liberty of researching
your curriculum vitae, and I found out that you are a true fan of the band X. Coincidentally it
came into my possession two VIP tickets to their next concert which will be held in France
next month.
KTC: Your goodwill overwhelms me. I find your present perfectly suited for the next
beginning of the month.

RLF: I am glad that to like it. Let me ask you something. It is your first time in England?
KTC: Not at all. Actually my visits here only concern business related issues. They are time
consuming and I didnt have the occasion to visit your country too much.

RLF: Given that you have had a fair long flight, how about if we let businesses on another
meeting, and we go to my favorite restaurant, where they make the most delicious wellington
beef?
KTC: I have faith that we will spend an interesting evening!

The next conversation takes place at the restaurant.

KTC: Have you been doing business with Arabian partners before?
RLF: In the last five years I have closed several contracts, but they were more collaboration,
which ended with beautiful friendships. For example, I have friends in Dubai, in Turkey,
Azerbaijan.
KTC: I understand. I have the hope well be doing also great business together.


2. Agreeing procedure

RLF: - Now that we completely enjoyed our meal, how about setting up the agenda for the
next three days?
KTC: Definitely. I shall suggest we start knowing each ourselves a bit and then we shall put
forward our objectives that we want to reach. Do you agree with that?
Gvru Andreea
Mihil Ioana
REI, III, seria A, grupa 939

2

RLF: Yes, it is a good idea, for start. Given the fact that we are part of different cultures and
also different laws we shall discuss the main common points and then try to minimize the
eventual differences about our countrys systems.
KTC: Good point. Another important item on our agenda would be the payment method.
Would you like to talk about something else?
RLF: It is ok from my point of view, you are free to bring up to discussion any point you find
important. We will agree on aspects like airfreight or price as we move forward into the
discussion.

3. Exchanging information

RLF: I've gathered a lot of material on the issues of our settlement from various sources, some
of which may interest you. Please read them and let me know.
KTC: Briefly, given the fact we predict a doubling in demand for frozen poultry products over
the next five years, our company intends to achieve that by purchasing and distributing your
products in all the Gulf States and Saudi Arabia.
RLF: We had in plan for many years to extend our business and establish production and
deep-freeze facilities in the region. Thats why the news from the British Embassy that you
are looking for a new partner pleased us enormously.

4. Questioning

RLF: Roughly which are your projections for our products by product?
KTC: We estimated a total amount of 6235 tons of chickens, 3415 tons for turkeys. You can
find the exact numbers on the top of the paper in front of you.
RLF: can I just move on to another question?
KTC: sure
RLF: when you refer to exclusive distribution in all the Gulf States and Saudi Arabia, which
countrys do you have in mind exactly?
KTC: we considered to export in Abu Dhabi, Bahrein, Kuwait, Omman, Saudi Arabia and
Quatar.
RLF: Does that mean the figure for Saudi Arabia represents roughly half of the market under
consideration?
KTC: yes, indeed. we fully trust that our market studies are extremely accurate.

5. Options
RLF: Given the facts considered, I think the idea has got a lot of potential. It seems to me that
there are a number of ways we could work together. Shall I suggest we list the options first
and then examine them in detail one by one?
KTC: yes, thats fine by me.
RLF: I like to start by suggesting a total command of 3 000 000 products as listed above. On
future commands that pass over 4 000 000 products, we will offer you a discount of 7%. Also,
the price of the merchandise includes transportation, warehousing, insurance, financial costs
and gross profit. That would be our first offer. Does that seem ok to you?
KTC: I think for the beginning, we should start with a smaller quantity. we are very keen on
the idea of penetrating gradually the market. We would like to minimize the risk in the initial
phase.
RLF: I truly understand your point. We wouldnt like to behave like a bunch of amateurs. Our
suggestion would still be starting with the same quantity, because due to larger quantities, you
Gvru Andreea
Mihil Ioana
REI, III, seria A, grupa 939

3

could realize economies of scale. The discount shall be applied to this exactly quantity of
3000000 products, not to the earlier specified. Another important specification is that we well
cover the whole insurance costs and warehousing. These are our main options we want you to
take into consideration.

6. Bidding
KTC: your propositions are very attractive for us so far. After a short deliberation we have
decided on the second proposition you made us. Still the prices suggested by Royce Lytton
make it very difficult to retain an acceptable profit margin. Even in the situation youre
offering us that discount.
RLF: I think we have made enough concessions so far. It is on your duty to find alternative
ways of reducing your costs.
KTC: we are fully on your sight. Thats why we had found a valuable method to reduce our
costs by taking delivery at a UK port: Kuwaiti shipping lines could arrange forwarding to
Kuwait for 48 lire per ton including insurance.
RLF: this implies that the insurance and transportation costs will be on your charge.
KTC: I think that fits in with the way we look at the situation too.
RLF: at this stage I think we should look at the payment method aspect as well. what do you
have in mind?
KTC: given the quantities involved, we propose payment terms of 90 to 120 days and we
accept bank drafts. How does this sound for you?
RLF: I would rank this as a fairly unattractive option. In general our policy is to use an
irrevocable letter of credit payable at sight. We also grant 30 days of credit. There terms are
negotiable, so in time, after we will strengthen our relations ship, well go after further
negotiation.

7. Bargaining
KTC: I see what are you telling me, but this implies a lot of paperwork for us. For this first
contract we will do as you say, but for the future, we have to negotiate another payment
method.
RLF : Indeed, I believe you are right.

8. Closing the deal
KTC: Thank you for making business with us and we hope that our buyers will be satisfies
and they will be pleased with your goods.
RLF: I'm sure they will be more than delighted. Now, let`s celebrate our partnership with a
cup of tea.