Question

In: Economics

The coronavirus pandemic is a human tragedy, affecting hundreds of thousands of people globally. It is...

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.

Solutions

Expert Solution

(1) They should rely in which on written contracts to avoid verbal agreements which are likely to be mis-understood

(2) They should comunicate in language understood by both the parties for example english

(3) They should use respectful language for greetings and keep eday

(4) They should keep documentation and contract terms simple and easily understandable

(5) They should nt make assumptions and seek clarity wherever-required

(B)

(1)CURRENCY RISK:

It raises due to the volatility in exchange rate

(2)CREDIT-RISK:

It credit given to the foreign buyer of technology

(3) COUNTERPARTY RISK:

This rises due to either party violating the terms of the contract

(C)

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

2.Higher revenue due to increse -in sales

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

4.possibility of entry to other european markrt once established germany

5.Availability of high skilled-workers

(D)

1.Regulatory requirements in might require stringent technical norms like emission's norms

3. Extremly high competition due to exiting players in these market

4.Risk arising like currency,creditcter

%.political riskdue to changing policies of governments


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