Question

A renowned organization is in negotiations with a bank for a loan to complete its on-going construction project. The bank has some reservations about the project’s resources. After phase 1 of negotiations, the bank decides that it is not satisfied with the details provided by the organization and requires further clarification. Establish which stage of negotiations are they both in? What steps would you propose to the organization that would help them in convincing the bank to grant them the loan.

(write a brief answer)

Answer 1

• In phase 1 of negotiation, the customer has to explain about the project details to the bank. This is where the bank gets to know about the project. In this scenario since the bank has some reservations regarding the project resources, it can also be the reason for the bank to reject the loan. So, the customer has to give the full details about the project and clarify all the doubts to gain their favour.
• In phase 2, explain about morals and ethical values along with the work culture of the organisation to convince bank about the reservation of resources used. Showing earlier track records of the company with success and the royalty and customer confidence, the organisation has acquired which reflects the efficiency of the organisation.
• Negotiate about the cost-cutting strategy to the bank. The project if stopped, would make earlier extended loans into bad loans and results in loss to both the bank and the organisation as work is half done.
• Regarding the bank's reservation on resources used for the project, can be reviewed with field-level inspection by the bank officials and contract making with them to cancel the loan at any time if not convinced about the resources can also help in expressing the sincerity. Since, the company is renowned and has a good public image which can be used by organization to convince the bank.