Company AConfidential Instructions

Company A
Confidential Instructions for Bpk/Ibu Dwi (Company A)
You are an officer in Planning Department of Company A, a respected Indonesian manufacturer of many products including PCB. Several months ago, you made an agreement with the Singaporean subsidiary of the Indonesian PCB maker, PT Labtech, to produce a kind of Integrated Circuit (IC) that only your company can produce at the agreed price of $15/unit for 60.000 units annually. Your superiors made it clear that, even though your unit would probably lose money at the agreed price, you should, for purposes of deepening the company A dan PT Labtech relationship, furnish the IC to PT Labtech – and try your very best to reduce your losses as much as possible.
It turns out that due to technical problems, your company could not produce the IC itself. It was acceptable, however, to find another qualified manufacturer to work out a contract production arrangement for the first year until your company would be able to produce. For a variety of reasons, only one other firm, a bitter rival of your company, would agree. After long negotiations, the price was firmly fixed at $35/unit – thus you would have to pay $2.1 million for that year’s production.
You visited PT Labtech where you admitted some problems with your production process but you gave your assurance that the ICs would be delivered as promised. The purchasing manager of PT Labtech expressed his complete confidence that company A, your company, would come through. He did, however, describe in extremely positive terms that a new company, Mapletech, just produced the same ICs as your company had been producing. He even gave you the phone number of the Marketing Director of Mapletech, Mr. Ross.
After setting up the meeting with Ross, you called your superior. He said that, even if your manufacturing record was poor, you could redeem yourself by negotiating a good deal with Mapletech. With specifications, delivery schedule, and quality already fixed by PT Labtech, you are solely concerned about price. Any price less than $35/unit would permit you to do better. The decision to proceed and the price would have to be set today given your extraordinary tight lead time left for design modification and preparing the required production line. Thus your superior stressed, you should make any such deal; you would in any case be judged by how much better you did than this price. Ideally, you could work out an agreement by which your company would even make a profit. As you wait for Ross, you are thinking through your approach.

 
Company Mapletech
Confidential Instructions for Mr. Ross (Mapletech)
You are a Marketing Director of Mapletech. Your company just built a plant in Singapore nine months ago to manufacture a specific ICs which your company was selling to major PCB maker. As a Marketing Director, you had invited purchasing managers to visit your facility and you had impressed most of them. You were satisfied with your work, however, until now, you have only one customer despite your rigorous marketing program to attract new customers.
With new spirit, the new plant of your company was ahead of its planned schedule of expansion.The president of Mapletech contacted you to attract new customers as soon as possible because your company have some spare production capacity around 60.000 units in this period. If this spare capacity was wasted, your company would lose revenue potential. With new machine and equipment, your company can produce an IC at costs of $10/unit.
Under the president’s pressure, you had to follow up your potential customers. All of sudden, Mr/Mrs Dwi called and told you that he/she was interested in your products and intended to buy in a large number. You agreed to hold a meeting with him/her. She/he also mentioned that PT Labtech had given your phone number to her/him. You just thought that finally, your marketing strategies had an impact. He/she reiterated truthfully that, even if the deal with his/her company was possible, the decision to proceed and the price would have to be set today given his/her extraordinary tight lead time left for design modification and preparing the required production line.
Before meeting with Mr/Mrs Dwi from company A, you called your superior, the president of Mapletech. He said that, it was your time to prove yourself by negotiating a good deal with company A. With specifications, delivery schedule, and quality could be fixed by your company because your company had all new machine, you are solely concerned about price. Any price more than $10/unit would permit you to do better. Thus your superior stressed, you should make any such deal; you would in any case be judged by how much better you did than this price. Ideally, you could work out an agreement by which your company would even make a profit. As you wait for Mr/Mrs Dwi, you are thinking through your approach.