OVERVIEW
1. Overall Interests
Blue’s interests lie in achieving long-term profitability. This can be achieved through expansion
into overseas markets as our profits have been plateauing for e-commerce. Our robot industry
also aims to make profit by 2019.
We want to continue to develop our relationship with Red as this business collaboration has
been beneficial to both parties, and are amenable to Red’s suggestions that can help fulfill
both our interests.
2.
Overall strategy
We will explore and know Red’s interests, priorities and concerns, then understand how ourinterests may converge. We will also brainstorm options that will cater to both parties’ interests.
As Blue is in a comfortable financial situation, our focus is on long-term profitability, and arewilling to accept alternative options that may slow down our rate of expansion in Negoland, aslong as we receive stable returns. Furthermore, between the two issues, Blue sees recouping
the costs from the robots’ development as being more crucial than securing a highly lucrative
deal for the E-commerce business.
INDIVIDUAL APPROACHES

E-COMMERCE
3.
Interestsa. Long-term Profitability
The need for long-term profitability is important in our e-commerce business in Blue Village.
Our profits within Arbitria are plateauing, so we are seeking other ways to establish ourpresence in overseas markets. Long-term profitability can also be achieved through offering
long-term on-going service.
b. Growth and expansion
As a public-listed company, Blue also wants to safeguard the interests of its shareholders.
This can be achieved through stable growth. Blue is not known in Negoland yet, and entering
the Negoland market with Red, a reputable firm, would help Blue establish a stronger footing
in a new market.
c. Reputation
Blue values its reputation in Arbitria. Hence one of the goals which is to keep Red as a vendor
on Blue Village is also to avoid bad publicity if Red no longer renews the Main Vendor’sContract.
4.

BATNA for E-commerce
If this contract with Red does not materialize, Blue will work with Green, a lesser known
apparel company in Negoland. It is similar to Red in terms of the customer base and thetype of merchandise sold. However, even though Green is willing to accept a higher
commission rate and also wants to stay as a consignment customer on Blue Village, the1projection of Green’s sales pales in comparison to that of Red. Yet, we can bring in theBATNA as a bargaining chip to either justify our price or the period of time for the on-goingsupport service.
5.

Agenda of the Negotiationa. Issue 1: Red’s plan for the website
Strategy
We will ask Red what they have in mind for the website. Customising the website tomeet their needs can help us justify the higher cost of building it (Issue 2).
We will also divide the introduction of these plans into phases spanning a year. This
will allow us to lengthen the duration of the support service (Issue 3) by lengthening
the period for this entire E-commerce plan to be executed.
GoalThis is to convince Red the viability of working with Blue for the e-commerce project.
By customising the omni-channel strategies, we are giving Red reassurance that wehave their best interests at heart. They are not just buying a product off the shelf but
gaining something specially catered to their needs.
b. Issue 2: Upfront payment for the e-commerce site
Strategy
The cost can be justified based on what Red wants from the discussion in Issue 1. We
will emphasise that the standard rate we charge for customising a website is $30
million, and we are already giving them a discount by offering $20 million.
Bottom line
We need to secure an upfront payment of 15 million at least.
c. Issue 3: Terms of the on-going support service
Strategy
We will highlight the benefits of adopting a longer period of time for the on-goingsupport service, as Red is not merely providing a basic operational maintenance which
can be done by Red’s staff. Instead, Blue is constantly updating and revamping thesite in response to customer feedback. However, if Red insists on shorter period, wewill have to increase the commission rate to 30%, in order to profit from the agreement.
If one of Red’s interests in keeping the on-going support service short is to be selfsufficient, we will first understand their reasons, and then seek alternatives to cater totheir interests. For instance, we can provide staff-training for the transfer of technicalknow-how, so that they will still find the ongoing support service useful to achieve theireventual goal of self-sufficiency. We will then benefit from stable income fromcontinued service support.
If Red still refuses to accept the ongoing support service, we can ask for other benefits
from Red in exchange for helping them to become self-sufficient such as theirendorsement of us in Negoland, as one of our interests is to expand and gaininternational recognition to secure long-term profitability.

2Bottom line:
The term of the contract must be at least 2 years. The commission rate can be lowered
to 20% if Red is willing to contract for a longer term. Otherwise the commission rate
must be 30% at least.
6.
Continuation of the Vendor Contract
Strategy
We will raise this issue after the e-commerce plans have been agreed on to get Red’scommitment to stay on Blue Village.
We will emphasize to Red that continuing to sell their goods on Blue Village would be moreadvantageous than re-establishing themselves in Arbitria. The crowd that visits Blue Village
is diverse and large. Being a prioritized shop on Blue Village would give Red’s goods greater
exposure.
If Red still wishes to terminate the Vendor Contract, we can renegotiate the terms instead.
Our main concern with Red’s termination of the Vendor Contract would be its impact on ourreputation. We can therefore lower the 30% that Red pays us in the Vendor Contract if needbe, to retain their business and protect our reputation.

ROBOTS
7.

Interestsa. Profitability
Blue’s interest is to achieve profitability to recoup its costs of $120 million spent on Researchand Development. This is done through tapping on Red’s demand from Negoland, and fromother consumers outside of Arbitria.
b. Development of Robots
Blue is interested in developing the robots business, as it is a new branch of Blue’s business.
It has not established its footing in the robotics business and hopes to do so through productdevelopment and ownership of its rights over creative inventions.
8.
BATNA for Robots
If this contract with Red does not materialise, Blue will work with Purple, a company who canprovide us with onsite-testing of our Robots at their nursing homes. While Blue will not be
guaranteed of its profits through the lease of Robots as there are no facts on the amountPurple is willing to pay, Blue’s comfortable financial position from its other businesses canwithstand the costs of the research and development, while Purple aids Blue in productdevelopment. We can use Purple as a bargaining chip to Red to justify the low-risk nature ofallowing our robots trial at the nursing homes.
9.

Agenda for the Negotiationa. Issue 1: Type of Robots
Strategy
We will separate the discussions for the enhancement of the care support robot andthe development of a new robot to suit Red’s nursing home needs. We will begin by3

asking Red how they would like the current care support robots to be enhanced so that
we may propose an estimated lease figure based on their requirement forenhancement.
We can enhance the care support robots within half a year. If Red requests for it to bedone in less time, we may use that as a bargaining chip to negotiate with Red for moredevelopments of the communication and security-type robots in crafting the new robot.
This is to support all-round product development in the three branches of robots Bluehas. The remaining 1.5 years of the joint development period will be used to develop
the new robot.
Lastly, we hope to start R&D for care-support robots first as it would help us profit more
based on the increasing market share of care-support robots. Since our goal is makeprofit by 2019, we should aim for a 1-year or 2-year exclusive lease agreement, so thatthe agreement would end in mid-2019, giving us time to sell our robots to othercompanies in Negoland before the end of 2019.
If Red wants an immediate solution to labour shortage, their interest in using caresupport robots may align with ours.
b. Issue 2: Issue 1: IP Rights
Strategy
We will begin by asking and establishing Red’s interest in the IP rights. If they have aninterest in the IP rights because the robots are tested in their nursing homes, we will
point out that the prototypes for the robots are already done. Moreover, if their interestin the IP rights stems from the need to remain competitive as the forerunner of nursing
care in Negoland, we can always offer a suitable period for exclusive lease agreement.
Bottomline
IP rights to the robots are non-negotiable.
c. Issue 3: Exclusivity Agreement
Strategy
If Red’s priority is to stay competitive in the elder care industry, Blue can offer an
exclusive lease agreement. If Red wants it to be longer than 2 years, we will
understand their rationale and point out that since they are investing in the company
that produces robots, a long-term exclusive agreement will be to their detriment. We
will justify the shorter term by saying that the robots industry evolves rapidly. One year
can give them a head start over all their competitors. The Research & Developmentcost is also
Bottom line
We can only give maximum 2 years for the lease agreement.

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