2OVERALL APPRO ACH
Overall Interests
Blue is seeking to bridge the markets of both Negoland and Arbitria to enhance profitability, bolster Blue’s
reputation as a socially-responsible corporate partner, and to secure a long-term partnership with Red.
Overall Strategy
Blue sees this as an opportunity for a collaborative negotiation, concluding with a mutually-beneficial
solution with our negotiating partner. To this end, Blue will respect the interests, priorities and concerns Red
may raise throughout the course of the negotiations and seek to build common ground with Red.
INDIVIDUAL APPRO ACHE S
Project 1: Negonium MiningInterests
1. Enabling Long-Term Profitability
The key to making Blue’s technology current and state-of-the-art lies in securing long-term profitability. Bluehas spent a considerable sum investing in research and development, having borne the higher risk ofinvesting in resource development.
2. Minimising Risks
Blue aims to achieve consistent returns and reap maximum profits. Therefore, Blue seeks to balance its
cash investment in this mining project, with the risks in its investment in its technology.
3. Sustaining Long-Term Partnership
Past business dealings have always been premised on mutual trust and confidence. Blue envisions amutually beneficial partnership, in terms of future profit-making opportunities. Blue hopes to achieve thisthrough a collaborative venture into the Negonium market. Blue also hopes to establish the Negonium
mining project as the new core of our resource business, since Negonium shows great promise inapplication versatility and thus, potential value.
Issue 1: Valuation Of Technology
Strategy
1. We will first state that our technology is valued at US$20 million, as stated in the Statement of Factsand request for it to be an investment-in-kind.
2. Blue will explain and promote the uniqueness of our Negonium mining technology as we expect Red toinquire about this figure. Next, Blue will elaborate on the technicalities of the technology and its ability
to produce benefits in terms of quality (e.g. fewer impurities) and quantity (higher output within a shorter
period of time). Blue will promote its technology as the most cost-effective, producing top quality results
while minimising environmental damage in its mining operations.
3. However, if Red objects to the figure of US$20 million, we will offer to reduce our valuation to US$10
million. If Red further objects, Blue will offer to arrange for an independent assessor to value thetechnology objectively, provided that Red treats Blue’s technology as investment-in-kind.
4. If Red refuses to value Blue’s technology as investment-in-kind, we will propose a licensing deal valued
at US$5 million per year for 2 years, which is the duration of Red’s feasibility study (at [40]). Blue will
explain that the operating costs of using the Negonium refining technology amount to US$5 million.

3Should Red express concerns that it does not have sufficient cash-flow in the short-term, Blue will offer
the US$10 million to be paid on completion of the feasibility study.
Goal
Ensure that Red guarantees that our technology will be taken as an investment-in-kind and ideally valued
at US$20 million. Alternatively, Blue will aim to get at least US$10 million in licensing fees for the durationof the feasibility study.
Issue 2: Breakdown Of Cash Investment
Strategy
1. We will be upfront about our baseline cash investment of US$30 million and explain that the risky natureof the Negonium project results in tight budgeting from Blue’s shareholders. Our ideal case is for all
Negonium output to be retained by Blue. However, we will not budge from the figure of US$30 million,
since the statement of facts reveal that Red is willing to pay up to US$70 million for the project.
GoalBlue aims to contribute to the project through a US$30 million cash investment.
Issue 3: Distribution Of Output
Strategy
1. If Red agrees for our technology to be an investment-in-kind, Blue is willing to include the buy-backoption, contingent on a premium proportionate to the percentage of output bought back by Red.
2. Blue will justify the premium by explaining that Blue intends to explore new markets which will multiply
our profits (e.g. solar-powered batteries). Blue will also stress the potential value and versatile
applications of Negonium and present research on estimated costs and potential profits in this newmarket to address uncertainties Red may have regarding ventures beyond our current contract.
3. We will hold Red to the in-principle agreement that the output of Negonium will be distributed inproportion to the parties’ investment (at [42]). If Red wishes to detract from this agreement, Blue will
make clear that we will have to renegotiate the valuation and cash investment agreements as theseagreements were concluded on the assumption that the Negonium output will be distributed
proportionally to each parties’ investment.
4. If Red does not agree to valuing our technology as an investment-in-kind, we will not consider the buyback option, unless both parties re-evaluate the valuation. It is necessary for Blue to ensure apercentage of output that is at least proportionate to the cash that we are investing (30% of output for
30 million in cash).
GoalBlue aims to peg the percentage of buy-back to percentage of premium and ensure that the output is atleast proportionate to Blue’s cash investment.
Project 2: GeoparkInterests
1. Enabling Long-Term Profitability
Blue affirms the potential of the Geopark project as a worthy investment in developing our tourism business.
Additionally, we envision capitalising on our geographical landscape to lay the groundwork for a4
collaborative resort project in conjunction with Negoland’s new National Park, and generate massive, longterm economic benefits.
2. Improving Company Reputation
Blue prioritises its corporate social responsibility, particularly environmental friendliness. Blue seeks tobolster and enhance its environmentally conscious image.
3. Sustaining Long-Term Partnership
We aim to enhance collaborative efforts between Red and Blue beyond the existing Geopark project. We
see the potential for long term partnership given the close proximity between the two countries and seek toconcretise this through connecting Negoland and Arbitria. Additionally, this will boost the tourism sector inboth countries.
Issue 1: Generating Ideas For Luring Tourists
Strategy
1. Blue will suggest prioritising this issue during agenda setting, since Red proposed exploring it during
our last correspondence. Blue will share ideas on luring tourists, such as advertising campaigns in
Arbitria and share the results of our market research to establish the demand for the Geopark before
commencing negotiations on the infrastructure.
2. Blue will stress the neighbourly relations between Negoland and Arbitria. Firstly, they share a border;
secondly, no visa is required to cross the border and thirdly, many Arbitrians have expressed an interest
to visit Negoland. Therefore, it will be in both parties’ interests to attract more tourists to the region,
especially since Red is planning to build a Geopark.
3. With this in mind, we will ask Red if they have other suggestions or concerns. Blue will follow up by
proposing to improve connectivity between Negoland and Arbitria. If prompted, Blue may suggest thatthat may be achieved by building roads or railways.
GoalConvince Red to be open to the idea of connecting Negoland and Arbitria without necessarily arriving at aformal agreement.
Issue 2: Cooperation For Geopark
Strategy
1. Blue will inquire about the donations Red mentioned in our past correspondence. Blue’s questions will
centre around the amount of donations required and what they will be used for. However, we will stickto our baseline of US$10,000 per annum. Instead, Blue will propose helping them with theirinfrastructure in terms of cash investments rather than donations. This evinces Blue’s intention to workwith Red on future projects, beyond the Geopark project.
2. Blue will ask Red for more information on the infrastructure required for the Geopark. Blue will
incorporate Red’s suggestions into the plan for the Geopark, and propose bus routes between Negoria
and the Negoland Geopark as well as hotels within the Geopark.
3. Blue will propose that the costs of building the infrastructure in the Geopark be borne equally since bothparties stand to benefit from the project. However, we anticipate that Red will be reluctant towards
accepting this proposal since they should be short on cash. Thus, Blue will agree to vary the cost5distribution as long as we keep it under US$200 million. If Red requests that Blue invest more than
US$200 million, Blue will stand our ground and insist that this figure represents our entire budget for
the Geopark project. We will also reveal that we are willing to contribute a further US$200 million,
contingent on connectivity being established between Negoland and Arbitria to further bolster Blue’sposition. However, Blue will highlight that both parties will contribute equally in the construction of roador railway between the two countries.
4. Should Red be open to our proposal on connecting the two countries (“Proposal”), Blue will suggest twotypes of transportation infrastructure: (a) road or (b) railway. Additionally, Blue will highlight that therailway will incur substantially higher costs but come with its own benefits, such as satisfying publicinterest, enabling greater passenger capacity and adding to the grandeur of the Geopark project. Bluesuggests packaging the costs of the Geopark infrastructure with the costs incurred for building either
the road or railway connecting Arbitria and Negoland.
5. Blue is likely to be required to pay a greater proportion of the costs, bearing in mind the costconsiderations on Red’s part under this package deal. In return, Blue hopes to use this as a bargaining
tool for intangible benefits such as advertising for Blue throughout the Geopark, and naming rights forlandmarks in the Geopark.
6. On the other hand, if Red refuses to continue with our Proposal, we will inform Red that the Geopark
project will be downsized to work within the existing budget. However, we will highlight that profitabilityof the project will necessarily decrease as a result.
GoalsPersuade Red to take on the connectivity project and Geopark construction project as a package deal.
Issue 3: Funding
Strategy
1. Blue will propose that its budget fall within US$400 million when Red is agreeable to the proposal of thepackage deal aforementioned.
2. Blue aims to work out a cost-sharing arrangement where Blue’s contributions fall within US$400 million.
Blue will then propose that the cost-sharing ratio be proportionate to the profit distribution.
3. If Red requires Blue to build more expensive or additional infrastructure under this package, the final
arrangement may require Blue to contribute more than US$400 million. In this case, Blue will convince
Red that building a road between Negoland and Arbitria (instead of a railway) might be morecommercially viable.
Goal
Limit Blue’s contribution to the package deal to US$400 million and persuade Red to agree to a distributionof profits in proportion to costs.