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Excalibur Negotiations With Knight Engines Inc.
This particular communication is aimed at confirming that, Excalibur Engine Parts Company is fully aware of the requirement for a rush order, presented by Knight Engine Parts
Inc. Furthermore, Excalibur has approved the application for the rush order of over 8000 pistons within the next two weeks. Similarly, all other concerns have been given utmost attention, and are consequently addressed in this mail. In the same manner, all the necessary arrangements for the commencement of the contract have been put in place; hence the process begins as soon as this negotiation is concluded.
Accordingly, Excalibur Engine Parts Company wishes to propose a number of possible compromises for both sides. The main purpose of this negotiation process is to enable both parties reach an amicable agreement. Finding the middle ground proves necessary considering the time constraints involved in this particular order. According to Anderson (2016), these requirements ought not to be viewed as restrictive caveats. Otherwise, such a perception would cripple the progress of the much needed working relationship. Each party ought to treat these suggestions as an indication of commitment to the above contract. Their effectiveness not only creates a friendly atmosphere for this particular contract, but it also translates into a broader business partnership for many years to come (p.69)
Considering the indisputability aspect of Intensaflux pistons based on the details above, the Sales Department negotiated for a marked price of $570 per piston. This price is fairly reasonable based on a number of factors. First, this being a rush order, high cost of production is deemed inevitable. Similarly, pistons with nearly similar features are currently selling at this price rate in common market. Again, Intensaflux pistons prove to be of high quality compared to all the other pistons in the market.
However, for the purposes of anticipated future partnership with Knight Engines Inc., Excalibur considers this current order as a promotional exercise hence offers a further discounted price. In this new arrangement, Knight is required to purchase one piston at a reduced price of $515 for 8500 pistons plus the 5% rush fee. Accordingly, the price above is bound to reduce further in the event that more pistons are purchased as part of this current consignment. Therefore, the company pledges to dispose all pistons at a further reduced price for every piston purchased above the initial order of 8,000 pistons. This deal gets better where more pistons are purchased as part of this single consignment. In the words of Steelman (2012), higher production of goods reduces the cost of production and this factor necessitates proportional decrease in market price (p.117).
Having deliberated on the above issues, the sales team of Excalibur Engine Parts has established some impractical approaches to a number of Knight’s earlier proposals. Enix (2016) advises that it is necessary to consider an eventuality rather than assuming inevitability in business ventures. Definitely, business is sometimes unpredictable as Enix explains further. Sometimes losses are inevitable just as profits are merely anticipated. Nonetheless, it is considered imprudent to leave any chance that can jeopardize one’s fortunes, especially for a consignment like this, which is worth millions of dollars (Enix, 2016, p. 94).
Effectually, the Sales Team finds difficulties following earlier negotiations. These difficulties are impeding commencement of the contract and if they continue, certainly it might be impossible to achieve a successful contract. For this reason, Excalibur wishes to give its professional observation to Knight’s sales representatives in respect to the following points of concern.
Question of Insurance Cover
Excalibur wishes to insist on the need for an insurance cover. In the last mail, Knight indicated that it do not prefer insuring this consignment. However, Excalibur sincerely considers this opinion as a risky move. Notably, Excalibur recognizes the need for quality-assured products. The company also treats after-sales services with utmost attention. This is because there is need to satisfy clients so that the company may remain relevant in a fast-changing engines market. For this reason Knight is requested to reconsider Excalibur’s earlier proposal regarding the insurance programme. This is because inferior pistons are presently flocking the market and they too do not have insurance cover. This insurance covers a number of areas which are considered most susceptible. Thus, the credibility of the products will be compromised in the absence of indemnification.
Excalibur not only aims at making profit but also at providing the best product to the consumer’s satisfaction. For this reason, the company has the most outstanding quality-control insurance cover whose aim is to ensure that the products reaching customer base meet the standard. Details of this cover also include an overhaul exercise where all pistons are tested one by one before delivery. Weiser (2014) explains that by doing this, the manufacturers ascertain that their products are free from unwarranted faultiness and that there would be no after-sale complaints (p.28).
In this regard, therefore, paying a 10% extra charge over the selling price becomes necessary so that all the goods purchased in this rush order get insured. It is worth noting that in the event that the goods purchased under this order are not covered, any malfunctions discovered after the sale are considered to be a sole responsibility of the purchaser. Accordingly, the company cannot be legally bound to replace any batch that is uninsured.
Excalibur’s advertising Sticker on Knight Engines
Excalibur Engine Parts Company proposes that Knight Engines Inc. considers indicating on all their chassis that their engines are fitted with series 2.1Intensaflux (Class A) pistons manufactured by Excalibur Engine Parts Company. This labeling works not only to promote Excalibur’s product, but it is also aimed at creating credibility that Knight Engines Inc. use the best class of pistons in the market. According to Richards (2015), customers have a tendency of believing that, corporate companies only associate where they are certain that the association does not jeopardize the fortunes of each other.Therefore, Knight Engines Inc. becomes the major beneficiary when associating with a globally-accredited company like Excalibur Engine Parts Company. Furthermore, Excalibur has considered the fact that Knight Engines is actually marketing its products when they indicate this on their engines. Hence, Excalibur shall give a 5% discount over the selling price of all pistons under this particular order (p.121).
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