Download THE TANK CASE

THE TANK CASE
Presented by: Sherif Abu El Gheit
Presented to: Dr. Shawki El- Ghitany
1. How should Santiago prepare for the negotiation?
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Santiago should gather information about the three American suppliers, For example, Their
sales records, their commitment to the delivery date & their financial stability.
Santiago has to compare the Chinese specifications with the three USA suppliers and try to
understand from them the reason for this huge price difference.
Santiago should investigate the delivery periods presented from the three USA companies and
to check their consequences on prices
Santiago has to check the received offers, It’s obvious that the offers presented from the 3 USA
‘s companies are consistence relevant to their prices
2. Which Companies should Santiago negotiate with? What’s the first step in the process?
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Santiago should negotiate with the three American suppliers in order to lower the price. The
first step is to break down the cost and to negotiate for the lower price
3. How should he respond to Hsu & Hsu?
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Santiago should exclude the offer presented from Hsu & Hsu as they are not qualified by the
USA’s government at the same time Santiago must put high priority in order to let the Chinese
company qualified by the government to use them in the future projects however this step
willn’t be easy as the USA companies expected to make a lobby against this step supported by
the point of view that the client is the USA Government and due to confidentiality it’s not
accepted to let foreign companies deal with them.
4. What additional factors should be taken into account beyond those discussed in the case?
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The delivery time presented by the three American suppliers must be taken in consideration.
The delivery place also must be considered. On this aspect it has to be noted that the price
presented from Hsu & Hsu isn’t 50% less than those presented by Goodyear as this price is FOB
i.e the freight cost, Insurance & custom clearance costs are not considered.
5. What decision should Santiago make? Provide the rational for your response.
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Santiago should break down the cost of specific categories and can perform cherry picking or
can perform reverse auction to guarantee taking the lowest price.
6. Calculate the cost saving of various proposals and which one will you select?
Price/ Pound
Total cost
Reduction
New Total Cost
Cost Saving
Goodyear
Dunlop
Bridgestone
Hsu & Hsu
$ 0.43
$ 146,737,50
$ 0.04
133,087,50
13,650,00
$ 0.49
$ 167,212,50
$ 0.08
141,618,75
25,593,75
$ 0.45
$ 153,562,50
$ 0.05
136,500,50
17,062,50
$ 0.22
$ 75,075,075
I’ll select the proposal submitted by Goodyear as it is the lowest price (133,087,50)