Question

QUESTION 1 CASE

The coronavirus pandemic is a human tragedy, affecting hundreds of thousands of people globally. It is also having a growing impact on the global value chain, hence the global economy. All serious companies around the world have therefore found innovative ways of keeping business going nonetheless. One of such notable companies is Ghana’s Kantanka Inc. The company has established a dedicated team to ensure a simple but well- managed set of processes that maximize the health and safety of colleagues and customers. This team is led by the CEO of the company. The focus of the team has been broken down into five distinct work streams:  Employee management and wellbeing  Financial stress-testing and contingency planning  Supply chain monitoring  Marketing and sales  Any other business Kantanka Inc. is a car manufacturing company originating from Ghana which produces low-end vehicles. The company’s competitive advantage stems from its unconventional but effective and energy efficient technology which is not found in most vehicles around the world. The dashboard and other interior parts of the vehicles are made from wood, and the vehicles are powered by car batteries and solar energy. Recently, they have added on aircrafts and mechanized farming technologies. The company is set to take the African market by storm. The company decided in 2015 to enter Nigeria and Germany. With the backing of the government of Ghana, negotiations with both countries succeeded as negotiators from Nigeria and Germany were in natural sync with the Ghanaian lobbyist contracted. Once the company has gone international, it was only natural that value chain activities of the company would have to be rationalized to deal with the expansion, as well as all forms of risk with respect to exchange rate fluctuations. Speaking of financials, in this coronavirus pandemic period, companies such as Kantanka Inc. that entered into future contracts and used currency options as hedging instruments would have less to worry about since excuses from business partners would almost be non-existent. Recently in 2017, a company from Sậo Tome and Principé, called PreZi contacted Kantanka Inc. to obtain permission to use its technology. As to whether to agree or not to the agreement is still under scrutiny by Kantanka’s international expansion team.

a) Discuss five (5) ways the two negotiators can get along in order for their cultural backgrounds not to affect the outcome of their bargaining process.

b) Explain three (3) financial risks Kantanka Inc would definitely encounter.

c) What five (5) benefits is Kantanka Inc likely to gain from entering the German market?

d) Explain five (5) problems Kantanka Inc’s international expansion team should anticipate before entering the German market.

e) Explain the contractual strategy that would best characterize the Kantanka-PreZi agreement once agreed to.

Answer 1

Answer:-

a} Five ways in which the two negotiators from different countires will not allow their cultural background to affect the outcome are:

1. They should rely on written contracts to avoid verbal agreements which are likely to be misunderstood.

2. They should communicate in language understood by both the parties for example English.

3. They should use respectful language for greetings and keep emotions at bay.

4. They should keep documentation and contract terms simple and easily understandable.

5. They should not make assumptions and seek clarity wherever required.

b} Three financial risks kantaka inc would encounter in international expansion are:

1. Credit risk: If credit is given to the foreign buyer of technology

2. Currency risk: It arises due to the volatility in exchange rate

3. Counterparty risk: This arises due to either party violating the terms of the contract.

c} Five benefits of entering the German market for kantak inc are:

1. Higher margins as this is more lucrative market and demand for clean energy is high.

2. Higher revenue due to increase in sales

3. Increase in knowledge base as german market is more developed

4. Possibility of entry to other European markets once established in Germany

5. Availability of highly skilled workers.

d} Five problems kantaka Inc international expansion team should anticipate are:

1. Regulatory requirements in many developed economies might require local partner

2. Statutory requirements might require stringent technical norms like emissions norms

3. Extremely high competition due to existing players in these markets

4. Risks arising like currency, credit etc

5. Political risk due to changing policies of governments

Hope you understand the explanation

Thank you