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An Extreme Counter-Offer
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Copyright© Rob Day 2008. Note that this is a fictional case study. The full case is free and will be emailed to you by request via the "Feedback and Requests" page.

Dr. Ling, SingCast Cable’s V.P. of Products, was in full control of the meeting. He sensed it was time to push for more concessions from CyberWave's negotiating team. CyberWave, the four year incumbent e-mail platform provider, had been very uncooperative in renegotiating the current contract. But with eWeb’s (a Singapore start-up company) competitive offer on the table, Dr. Ling had a real opportunity to significantly cut his growing e-mail operational costs.

Dr. Ling looked directly at Mr. Hua, CyberWave’s Sales Director, and stated in a quiet, gentle tone “Mr. Hua, we cannot afford any longer to supplement CyberWave’s licensing fees for subscribers who sign up for free accounts. As you will see in the counter-proposal in front of you, we expect your company to charge nothing for these subscribers going forward, but of course we will pay for those subscribers who opt for a 'for fee' package."

Trying to mask his displeasure, Mr. Hua interjected "Dr. Ling, this is most difficult to comprehend."

Barely pausing, Dr. Ling did not respond and continued, "We are also leaning towards outsourcing the entire e-mail hosting operations to the selected vendor. We expect 'all' operational and technical costs to be included: hardware and software, telecommunications bandwidth, and any direct or indirect costs associated with the migration of the subscribers to the selected vendor's facility. Furthermore, we we will go through a formal RFP process if we cannot reach a mutual agreement that meets our satisfaction.”

Dr. Ling glanced at the only American in the room. He was surprised that Mr. Hua's manager had not reacted. He knew he was asking for a lot, but it was his job to ask for as much as possible. Dr. Ling knew that incumbent vendors detested formal RFP's. He really did not have the time to orchestrate the RFP process, but he would do so if he thought he could put more pressure on CyberWave to lower their prices. For all he knew, CyberWave might just be desperate enough to agree. 

Dr. Ling continued, “Mr. Hua, I am sure you are aware that a new vendor has emerged -- eWeb. They have crafted a very creative business proposition that many within our company view as a long-term business commitment. Obviously I am not at liberty to provide you with the details of their proposal, but I would encourage you to be very creative and aggressive with your business model. We are looking to award this contract for a three year term."

Dr.Ling was not sure how is subtle threat would be received. He liked CyberWave's technology and their ingenuity, but he thought that they were starting to take his business for granted.

He continued, "CyberWave and SingCast have had a good business relationship over the last four years. But as discussed in our last meeting, SingCast feels that your company has not been proactive enough in finding a business model to lower our total cost of ownership. If you value our business, now is the time to demonstrate your commitment.”

Patrick Wilson, the American  and Mr. Hua’s manager, could not believe what he was hearing. Patrick could not remember the last time he heard such an “extreme” opening position for a contract re-negotiation with a customer. Threats, massive price concessions, and a competitive RFP was a lot to digest. It took all of his mental strength to refrain from interrupting, but today he was going to take his cues from Mr. Hua. Since Mr. Hua remained stone faced, he did the same. This was Patrick’s second trip to Singapore. After twelve years of selling globally, he knew better than to let his “American emotion” take control of his tongue.  Instead of talking, he decided to write Dr. Ling’s points down on his note pad. He wrote:


SingCast was Singapore’s number two market share broadband vendor...

Note: The full case is free and will be emailed to you by requesting it via the "Feedback and Requests" page.