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2 ()Dan SmithRobert LiuRobert LiuDDD: Id like to get the ball rollingby talking about prices.R: Shoot.Id be happy to answer any questions you may have.D: Your products are very good. But Im a little worried about the prices youre asking.R: You think we about be asking for more?(laughs)D: (chuckles) Thats not exactly what I had in mind. I know your research costs are high, but what Id like is a 25% discount.R: That seems to be a little high, Mr. Smith. I dont know how we can make a profit with those numbers.D: Please, Robert, call me Dan. (pause) Well, if we promise future businessDDvolume salesDDthat will slash your costsfor making the Exec-U-ciser, right?R: Yes, but its hard to see how you can place such large orders. How could you turn overso many? (pause) Wed need a guarantee of future business, not just a promise.D: We said we wanted 1000 pieces over a six-month period. What if we place orders for twelve months, with a guarantee?R: If you can guarantee that on paper, I think we can discuss this further.()RobertDan;Robert:R: Even with volume sales, our coats for the Exec-U-Ciser wont go down much.D: Just what are you proposing?R: We could take a cuton the price. But 25% would slash our profit margin.We suggest a compromiseDD10%.D: Thats a big change from 25! 10 is beyond my negotiating limit. (pause) Any other ideas?R: I dont think I can change it right now. Why dont we talk again tomorrow?D: Sure. I must talk to my office anyway. I hope we can find some common groundon this.NEXT DAYD: Robert, Ive been instructed to reject the numbers you proposed; but we can try to come up with some thing else.R: I hope so, Dan. My instructions are to negotiate hard on this dealDDbut Im try very hard to reach some middle ground.D: I understand. We propose a structured deal. For the first six months, we get a discount of 20%, and the next six months we get 15%.R: Dan, I cant bring those numbers back to my officeDDtheyll turn it down flat.D: Then youll have to think of something better, Robert.()DanRobertDanRobertR: How about 15% the first six months, and the second six months at 12%, with a guarantee of 3000 units?D: Thats a lot to sell, with very low profit margins.R: Its about the best we can do, Dan. (pause) We need to hammer something out today. If I go back empty-handed, I may be coming back to you soon to ask for a job. (smiles)D: (smiles) O.K., 17% the first six months, 14% for the second?!R: Good. Lets iron outthe remaining details. When do you want to take delivery?D: Wed like you to execute the first order by the 31st.R: Let me run through this again: the first shipment for 1500 units, to be delivered in 27 days, by the 31st.D: Right. We couldnt handle much larger shipments.R: Fine. But Id prefer the first shipment to be 1000 units, the next 2000. The 31st is quite soon - I cant guarantee 1500.D: I can agree to that. Well, if theres nothing else, I think weve settled everything.R: Dan, this deal promises big returnsfor both sides. Lets hope its the beginning of a long and prosperous relationship.()RobertDDKevin HughesR: We found your proposal quite interesting, Mr. Hughes. Wed like to weigh the pros and conswith you.K: Mr. Robert Liu, weve looked all over Asia for a manufacturer; your company is one of the most suitable.R: If we can settle a number of basic questions, Im confident in saying that we are the most suitable for your needs.K: I hope so. And what might be the basic questions you have?R: First, do you intend to take a position inour company?K: No, we dont, Mr. Liu. This is just OEM.R: I see. Then, the most important thing is the size of your orders. Well have to invest a great deal of money in the new production process.K: If you can guarantee continuing quality, we can sign a commitment for 75,000 pieces a year, for five years.R: At U.S. $1000 a piece, well make an average return of just 4%. Thats too great a financial burden for us.K: Ill check the number later, but what do you propose?R: Heres how you can demonstrate commitment to this deal. Make it ten years, increase the unit price, and provide technology transfer.()RobertKevinRobertK: We cant sign any commitment for ten years. But if your production quality is good after the first year, we could extend the contract and increase our yearly purchase.R: That sounds reasonable. But could you shed some light onthe size of your orders?K: If we are happy with your quality, we might increase our purchase to 100,000 a year, for a two-year period.R: Excuse me, Mr. Hughes, but it seems to me were giving up too much in this case. Wed be giving up the five-year guarantee for increased yearly sales.K: Mr. Liu, youve got to give up something to get something.R: If youre asking us to take such a large gamblefor just two years sales, Im sorry, but youre not in our ballpark.K: What would it take to keep Pacer interested?R: A three-year guarantee, not two. And a qualilty inspectiontour after one year is fine, but wed like some of our personnel on the team.K: Acceptable. Anything else?R: Wed be making huge capital outlayfor the production process, so wed like to set up a technology transfer agreement, to help us get off the ground.()RobertKevinRobertK: We cant sign any commitment for ten years. But if your production quality is good after the first year, we could extend the contract and increase our yearly purchase.R: That sounds reasonable. But could you shed some light onthe size of your orders?K: If we are happy with your quality, we might increase our purchase to 100,000 a year, for a two-year period.R: Excuse me, Mr. Hughes, but it seems to me were giving up too much in this case. Wed be giving up the five-year guarantee for increased yearly sales.K: Mr. Liu, youve got to give up something to get something.R: If youre asking us to take such a large gamblefor just two years sales, Im sorry, but youre not in our ballpark.K: What would it take to keep Pacer interested?R: A three-year guarantee, not two. And a qualilty inspectiontour after one year is fine, but wed like some of our personnel on the team.K: Acceptable. Anything else?R: Wed be making huge capital outlayfor the production process, so wed like to set up a technology transfer agreement, to help us get off the ground.20011119 115726 RobertKevinK: If we transferred our technical and research expertise, what would stop you from making th esame product?R: Wed be willing to sign a commitment. Well put it in writing that we wont copycatthe Sports Cast within five years after ending our contract.K: Sounds O.K., if its for any similar product. That would give us better protection. But wed have to interest on a ten year limit.R: Fine. We have no intention of becoming your competitor.K: Great. Then lets settle the details of the transfer agreement.R: Well need you to send over some key personnel to help us purchase the equipment and train our technical people. How long do you anticipate that will take?K: A week to put the team together, three weeks to train your people. If so, when do you estimate starting production?R: Our first production runshould be one week after our team finishes its training. But Id like your team to stay a full week after that, to handle any kitches that pop up.K: Can do. Everything seems to be set, Robert. Ill bring in a sample contract tomorrow. If you like, we can sign it then.()Botany BayPacerRobertBotany BayMark DavisM: Mr. Liu, total sales onthe Medic-Disk were U.S.$ 100,000 last year, through our agent in Hong Kong.R: Our research shows most of your sales, are made in the Taipei area. Your agent has only been able to target the Taipei market.M: True, but we are happy with the sales. Its a new product. How could you do better?R: Were already well-established in the medical products business. The Medic-Disk would be a good addition to our product range.M: Can you tell me what your sales have been like in past years?R: In the past three years, our unit sales have gone up by 350 percent; profits have gone up almost 400 percent.M: What kind of distribution capabilitiesdo you have?R: We have salespeople in four major areas around the island, selling directly to customers.M: What about your sales?R: In terms of unit sales, 55 percent are still from the Taipei area. The rest comes from the Kaohsiung, Taichung, and Tainan areas. Thats a great deal of untapped market potential, Mr. Davis.()2001124 115024 RobertPacerMark, RobertBotany BayRobertMarkPacerRobertM: Mr. Liu, what kinds of sales do you think you could
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