Nestle Sales Forecast

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Topic: Harborco

Executive Summary: I have debriefed the Harborco negotiation as it touched upon a number of important concepts covered in class. I represented the Environmental League in this exercise, which is one of the six actors negotiating over the construction of a deep-water port off the coast of Seaborne. The result of the negotiations was that Harborco was able to forge a deal by securing five votes out of six, with Other Ports being the only party voting against the proposal. From the standpoint of the Environmental League, we were able to get a positive result by getting agreement on the options to “improve” Ecological Impact and “maintain a clean / dirty” Industry mix. The group overall scored 308 points, with the Environmental League scoring 77 points. The Situation: Harborco (henceforth referred to as “The Buyer”), a newly formed national consortium is interested in building and operating a deep-water port off the cost of Seaborne. The Buyer is excited about the project, and believes that such a port could generate substantial profits within ten years after operations begin, which in turn would happen in about 5 years after construction began. However, five other actors have a stake in the decision to build the port. That includes The Unions, The Federal Department of Coastal Resources (henceforth referred to as “The DCR”), Other Ports in the Region (henceforth referred to as “Other Ports”, The Governor of Seaborne (henceforth referred to as “The Governor” and me, representing The Environmental League (henceforth referred to as “The League”). Now let’s consider the interests of each party based on the information available to me. The Unions are generally pleased about the new development and the potential for jobs both short term and long term, as long as the jobs are reserved for union members. The DCR has a dual mandate: to help realize economic development and to preserve the environmental integrity of the coastal areas. It also is the only party other than The Buyer with veto power on the proposal. Other Ports in the region are not pleased with The Buyer’s proposal, and expect to lose a substantial amount of business to the new port if it is constructed, and want to be duly compensated by The Buyer. The Governor wants to see development in her state, but at the same time wants to ensure that The Union, a powerful political constituency, benefits from the port. The League is generally opposed to any “development” of coastal areas, especially those threatening the ecological balance, and in this case the impact to the basic Banksedge River ecology could be devastating. There are five issues being negotiated: Industry Mix, Ecological Impact, Employment Rules, Federal Loan and Compensation to Other Ports. As evident, each party has an interest in some of these issues, with The League being the most interested in Ecological Impact and Industry Mix, in order of importance. The mechanics of the negotiation include three formal voting rounds, and all actors are face to face at the negotiating table. The voting is done by secret ballots. General Observations before the Negotiations: This is a multi-party negotiation, with each party having its own constituents to please making them non-monolithic. While at first glance this may seem like a case of distributive bargaining for a one time negotiation, this is in fact a case of integrative bargaining, with the need to maintain the relationships over the construction and development period of next twenty years. Also, while The DCR and The Buyer are the only party with veto rights and might seem to have the most power in the negotiations, it is critical the each party understands the interests of the others, and this exercise be treated as a reconciliation of interests within the context of rights and powers. The best approach will be low cost while accounting for transaction cost, satisfaction with outcomes, strain on the relationship, and...
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