International Business Case Study - How Would You Handle This Customer Counter Offer?

International Business Case: An Extreme Counter Supply
Dr. Ling, SingCast Cable's V.P. of Products, was in full management of the meeting. He sensed it had been time to push for more concessions from CyberWave's negotiating team. CyberWave, the four year incumbent e-mail platform supplier, had been terribly uncooperative in renegotiating this contract. But with eWeb's (a Singapore start-up company) competitive provide on the table, Dr. Ling had a true opportunity to significantly cut his growing e-mail operational costs.
Dr. Ling looked directly at Mr. Hua, CyberWave's Sales Director, and stated in an exceedingly quiet, mild tone "Mr. Hua, we tend to cannot afford from now on to supplement CyberWave's licensing fees for subscribers who sign on for free accounts. As you will see within the counter-proposal in front of you, we have a tendency to expect your company to charge nothing for these subscribers going forward, but of course we will acquire those subscribers who opt for a 'for fee' package."
Trying to mask his displeasure, Mr. Hua interjected "Dr. Ling, this can be most troublesome to comprehend."
Barely pausing, Dr. Ling failed to respond and continued, "We also are leaning towards outsourcing the whole e-mail hosting operations to the selected vendor. We have a tendency to expect 'all' operational and technical prices to be included: hardware and software, telecommunications bandwidth, and any direct or indirect prices associated with the migration of the subscribers to the selected vendor's facility. Furthermore, we have a tendency to we tend to 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 inquiring for a ton, however it absolutely was his job to ask for as much as possible. Dr. Ling knew that incumbent vendors detested formal RFP's. He really didn't have the time to orchestrate the RFP process, but he would do so if he thought he might place a lot of pressure on CyberWave to lower their prices. For all he knew, CyberWave would possibly simply be desperate enough to agree.
Dr. Ling continued, "Mr. Hua, I am sure you're aware that a new vendor has emerged -- eWeb. They have crafted a terribly inventive business proposition that a lot of at intervals our company view as a long-term business commitment. Clearly I am not at liberty to provide you with the details of their proposal, but I might encourage you to be very creative and aggressive with your business model. We tend to are trying to award this contract for a three year term."
Dr.Ling was not positive how is subtle threat would be received. He liked CyberWave's technology and their ingenuity, but he thought that they were beginning to take his business for granted.
He continued, "CyberWave and SingCast have had a good business relationship over the past 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, currently is that 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" gap position for a contract re-negotiation with a customer. Threats, huge price concessions, and a competitive RFP was a heap 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 "Yank emotion" take management of his tongue. Rather than talking, he decided to write down Dr. Ling's points down on his note pad. He wrote:
SingCast Counter:
1. Charge nothing for any new subscriber that doesn't sign up for a "for fee" account
* Reaction - Ridiculous! We tend to have no control of "how" SingCast charges for his or her packages. Whether they charge or not, a subscriber is using our software, we have a tendency to need to urge paid.
2. Outsource entire e-mail operations
*Reaction - Could be a nice chance to come up with new fees and leverage services from a 3rd party outsourced sub-contractor
3. Outsourcing prices would need to embody: hardware and software prices, monthly telecommunications bandwidth prices, and every one costs associated with the migration of the consumer accounts
* Reaction - Want more reality finding. A model like this has revenue potential, but many risks (we have a tendency to may financially lose our shirts). Not certain how we would account for and management bandwidth prices
4. eWeb is the competitive vendor - Is Dr. Ling threatening us?
* Reaction - Very scary! The CEO, James Li, is an ex-CyberWave VP of Engineering. James was with the company for 3 years and was responsible for the e-mail solution product development. He took three of the simplest developers with him to start out the company in Singapore.
* James knows our product inside and out and if he has designed a brand new product - it's in all probability terribly good.
5. 3 year term for the contract. Wanting for a replacement business model that lowers total cost of ownership
* Reaction - Since he said new, most likely safe to assume that we have to change all of our pricing terms and therefore the model.
SingCast was Singapore's range 2 market share broadband vendor. Once solely 2 years from receiving its government license to supply client services, SingCast was on pace to surpass MediaOne, the market share leader for broadband connectivity and consumer e-mail subscribers. SingCast's multi-million dollar bet of wiring fiber-optic cable directly to customers' homes was paying off. Customers in droves were cutting the twine with MediaOne, primarily due to its poor client service, high costs, and aging technology infrastructure. SingCast's stock was hot, up 42% in nine months. The shareholders were pleased with SingCast's new strategic stress on customers versus its previous strategy of primarily targeting enterprises.

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