Aero Marine logistics (AML) is a company that deals in a variety of businesses chief among them being import consolidation, offering door to door services, export trade and offering consultancy on customs and logistics. Mr. S. Singh, one of the shareholders of the AML Company, is approached by the chairman of Freshfoods Mr. Maan for a potential business deal in importing frozen mushrooms from Europe on the condition that AML built up its Indian infrastructure to accommodate such heavy goods. Venturing into this business would require heavy investment on the part of Mr. Singh and therefore higher risks would also be incurred in the deal. Focus on this paper will be how Mr. Singh will approach these negotiations for sharing the costs, the risks and the potential profits and losses from the business deal.
The cost of leasing refrigerated containers proved to be an expensive venture for Mr. Singh due to the exorbitant rates quoted due to the isolated nature of some of the areas in North India which would prove costly when sending experts to repair and maintain the refrigerators. Since the nature of the business was a partnership deal where both parties were going to benefit, it was imperative for Mr. Singh to negotiate with Mr. Maan to share the cost of purchasing the equipment. Mr. Singh would, later on, pay back the amount of money in installments until he acquires full ownership of the equipment as asserted by Kaplan and Atkinson (2015).
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After much deliberation, Mr. Singh settled for buying the already used refrigeration containers at a fair price and was assured that they would serve him well in the transportation of the mushrooms. The risk that comes with buying second-hand equipment is much higher than buying new ones. (Lam, 2014). In any case, the equipment flops due to reasons such as malfunctions as a result of mechanical or technical problems; it would be upon Mr. Singh alone to incur all the risks on his own. In the negotiation table, it would be wise for him to strike a viable deal with Mr. Maan to jointly acquire the equipment so as to reduce the burden of risks whenever it occurs (Haimes, 2015).
Mr. Vee-jay felt that to maximize the profits, it would be better to purchase five new 40-foot containers which would require frequent maintenance with an estimated life of ten years. This was in opposition to a more affordable 20-feet container which would have required more trips to carry as much as what a 40-feet container would have carried. The heavy investment would hence be required to purchase the containers and to maintain them because they would only come with a one year guarantee. When negotiating, Mr. Singh should also ask for a potential partnership in this deal to subsidize the cost he would incur if he were to do the purchasing alone (McNeil, 2015). Secondly, he can also advocate for an approach where they buy the containers and allow the general public to buy shares which would help them boost their financial positions after such a heavy investment (Turner, 2014).
The ordeal above is not a customer service problem but only a burdening business deal. For a business deal to be regarded as causing a customer service problem, certain conditions must be fully met. There should be a lack of trust between the two parties engaging in the business. According Glendon (2016), there should also be an involuntary form of inefficiency arising from the deal. In the deal between Mr. Singh and Mr. Maan, although there are inefficiencies that arise from costs and risks that come with the business, it was a voluntary process that Mr. Singh had the liberty of rejecting. According to how the business is transacted and negotiated with the inclusion of third parties, there is a creation of an atmosphere of trust there it is not a customer service problem (Drury, 2013). The only place where a customer service problem tends to occur is when the company offering refrigeration commodities quote very high prices for cooling devices for reasons that are not genuinely enough.
On the assertions that the factory distributors were the ones behind the one year warranty and not Handy Andy is not a problem to him because he is excluded from all the possible liability that may come with compensation. During the one year period stipulated for the warranty, major problems could occur with the equipment some which could have possibly not have been insured. Such problems could lead to serious legal battles which the company is better placed in dealing with than the individual (Eckles et al., 2014). All the costs after that incurred would be taken care of by the company.
If such a problem occurs, it is the responsibility of the marketing vice president to take firm action to avoid tinting the image of the company. He or she should first ensure that the credibility of the problem is within their defined rules and if not, then he should seek arbitration from the court of law (Philips, 2014).
In conclusion, Mr. Singh is presented with a tricky situation that would strengthen his financial position if it succeeds and financially impairs him he fails. It is to the company at large to brainstorm and come up with good fiscal ideals that will not jeopardize their business. Therefore, Mr. Singh as the sole representative of the business to the negotiations should take care of the situation by being wise in the discussions and ensure all cost and risks are managed well.
References
Drury, C. M. (2013). Management and cost accounting . Springer.
Eckles, D. L., Hoyt, R. E., & Miller, S. M. (2014). Reprint of: The impact of enterprise risk management on the marginal cost of reducing risk: Evidence from the insurance industry. Journal of Banking & Finance , 49 , 409-423.
Glendon, A. I., Clarke, S., & McKenna, E. (2016). Human safety and risk management . Crc Press.
Haimes, Y. Y. (2015). Risk modeling, assessment, and management . John Wiley & Sons.
Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting . PHI Learning.
Lam, J. (2014). Enterprise risk management: from incentives to controls . John Wiley & Sons.
McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools . Princeton university press.
Phillips, J. (2013). PMP, Project Management Professional (Certification Study Guides) . McGraw-Hill Osborne Media.
Turner, J. R. (2014). The handbook of project-based management (Vol. 92). New York, NY: McGraw-hill.
