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CASE STUDY ON

ELECTRICAL EQUIPMENT LTD


INTRODUCTION
 Topic of the Case Study - Negotiations between Electrical
Equipment Ltd. and Voltas Ltd.

 Electrical Equipment Ltd (EEL) - Manufacturers of Flame-Proof
Motors.

 Voltas Ltd - Renowned Original Equipment Manufacturer(OEM).
Makers of Centrifugal Pumps.

 The flame-proof motors coupled to the pumps - removes water
accumulated in underground mines.
PRODUCTS INVOLVED

1) Flame-proof motor- Maker - EEL, Cost - Rs. 50,000

Specifications - 40HP, 1400rpm

Used in - Underground Mining

 - Designed to avoid explosions when inflammable


 gases come in contact with a spark.

 2) Centrifugal Pump - Maker - Voltas Ltd



Used in - Underground Mining

PEOPLE INVOLVED
 - FROM EEL -


(1) Suresh Kumar - Regional Marketing Manager - Eastern Region
 (RMM-E) of EEL.


(2) Pradeep Dasgupta - Sales Engineer , EEL - Kolkata.


- FROM VOLTAS -

 (1) Murli Bhasin - General Manager ( Materials ) of Voltas Ltd.


THE SITUATION SO FAR…
 Voltas acquired order for 10 pump sets from Eastern Coalfields at a
competitive price.

 EEL - already sent quotation for supply of 10 flame-proof motors.

 Competitors for EEL - Siemens, ABB and Kirloskar.



 Volume Discount - 20% on basic price

Maximum Discretionary Discount offered - 12%

 Supplier-buyer relationship would play a key role in bagging the order for
EEL.
THE SITUATION SO FAR…

AT THE MEETING

 Mr. Bhasin comes straight to the point - The Price.



 Demands for weekly delivery of 2-3 pumps from 4th week, completion
in 8 weeks. Mr. Kumar disagrees.

 12-18 months warranty, free after sales service for the same period
offered by EEL. Mr. Bhasin agrees.

 Mr. Bhasin demands for additional 15% discount instead of 12% being
offered.

THE SITUATION SO FAR…
 The EEL Team discuss and decline offer - thinking Mr. Bhasin might be
lying.

 Meeting ends with Bhasin informing that they will negotiate with
competitors, result in 3-4 days.

 Order important for EEL. The EEL team wonders if any other
strategy could have worked.

 QUESTIONS
Q1) What are your comments on the strategy adopted
by Mr. Suresh Kumar during the negotiations?

 Negotiation is a process that tries to maximize the benefit to both


buyer and seller

 Mr. Kumar adopted a passive-balanced strategy.

 Business with Voltas important for EEL. Hence, allowed them some
concessions.

 Provided discretionary 12% discount too.

 Although, could have taken a more dominant position.

Q2) What alternative strategy Mr. Suresh Kumar
could have adopted?
 Mr. Kumar gave in too much too soon.

 Rather, he could have been compromised with freight charges.

 Could have explained the services they were offering as a compromise
on price.

 Could have explained the benefits of dealing with EEL to Mr. Bhasin.

 Competitors might not offer even this much discount.

Q3) What style of negotiation was adopted by
Mr. Murli Bhasin and Why?
 Style of negotiation - “I WIN - YOU LOSE”

 Straight away took control of the meeting - Dominant stance.

 Manipulated terms and conditions under pretext of stiff price
competition.

 Put forth only their conditions. Did not consider EEL’s.

 Voltas - Reputed Company. EEL might need their business. Hence,
could demand.

Q4) Do you think Mr. Suresh Kumar was right in allowing
only 12% additional discount while Voltas was
demanding 15% ?
 Yes, Mr. Kumar was right in allowing only 12% added discount.

 Demand from Voltas was unrealistic.

 12% discount - Win-Win situation for both parties.

 Both companies working on thin margins. Hence the 12% was

appropriate.
 Although business with Voltas desirable - 15% would be stretching too

much. Hence, correct impression provided.


THANK YOU !!