NegotiationDetails of task:
Read the case below and answer the following question:
Assess the potential for the creation of value in the negotiation between Top Class and Swift.
Please read the question carefully. In your answer you should draw upon relevant theories, the readings, and the information about the case to support your arguments.
Please design your answer carefully as the structure of your response will affect the grading.
Negotiating Fashion:
Top Class Fashions, based in Hong Kong, are due to meet with Swift Holdings, a European client, with whom their current turnover is $US15 million. When Swift and Top Class first established a business relationship, Top Class produced clothes to Swifts designs and the turnover was $US5 million. The relationship has worked well and been highly profitable for both parties. Top Class has intimated by email that they will look for a 9.5 per cent increase in price, effective next month. Recent productivity improvements at Top Class dampened down costs increases to only 5.5 per cent during the past year, and they also gained from a 3.5 per cent windfall foreign exchange movement. This year, Top Class invest heavily in a new plant in mainland China and need to expand sales by volume and revenue to pay for the borrowing costs and to justify the growth in capacity. Swift Holdings have already expressed doubts about price rises while there is uncertainty about exchange rate movements in Europe and the short term prospects for the Euro. While the recession is over in the UK, it is still a problem in other European countries, where consumer confidence remains soft. The most Swift is prepared to consider is a price rise of 3 per cent. Swift have informed Top Class that they have a new range of clothing designs ready for release, worth initially about $1US million a year and growing thereafter, in addition to their current ranges, and they intend to place this order with following the meeting, either with Top Class or another manufacturer in Thailand. They also have a problem to bring to the meeting concerning a shipment of 10,000 pairs of jeans which Swift has rejected because of poor stitching. These jeans cost Swift $US20 a pair (production cost, insurance and freight from Hong Kong plus UK inspection and packaging) and they normally retail in Europe for $60 a pair. Shipping them back to Hong Kong would cost $30,000, or they could decide to dispose of them at below cost in the secondary imperfect market. Either way, Swift is asking for a rebate on any future orders from Top Class as compensation for the loss they are likely to incur.
Assessment task 1
2015
Word limit:
1500 words
Weighting/Value:
20%
Estimated return date:
17 April, 2015
Criteria for marking:
An assessment rubric is available on Moodle
Learning objectives assessed:
The task assesses learning objectives 1, 2 & 3.
Submission details:
Assessment task 1 should be submitted by the due date via Moodle, which you can access via links in the portal. You must use the following format to name your file.
Penalties for late lodgement:
Students seeking an extension of time for submitting an assignment must obtain permission from the chief examiner prior to the due date. A maximum penalty of 10% of the total mark allocated to this assessment will be deducted for each day that it is late. Students should note that a weekend is 2 days and will be treated as such when penalties are calculated. After 10 days late assignments will be accepted but will not be given a mark. Late assignments will not be accepted without severe penalty. Excuses such as those relating to computer breakdowns are not acceptable. Students are advised to save to your hard drive as you work through your assignments and to keep a soft copy on USB/CD etc for safekeeping.