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THE TANK CASE Presented by: Sherif Abu El Gheit Presented to: Dr. Shawki El- Ghitany 1. How should Santiago prepare for the negotiation? - 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? - 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? - 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? - 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. - 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)
