Role of Okoye Investments

You are Bucky Barnes, an associate at Okoye Investments, a BFSI company focused on
providing credit to small and medium enterprises (SMEs). Okoye Investments is interested in
entering Wakanda’s sugar industry, which has grown massively in the last few years and
accounted for roughly 69% of the country’s total sugar consumption. The industry is poised to
grow at a very fast pace over the next few years and you believe that making a successful
investment in this will be very good for your career and get you your next promotion.

You were contacted by T’Chala from Black Panther Sugar Mill, who is an aspiring entrepreneur
and wants to grow his sugar manufacturing facility. You are about to meet him soon to
negotiate.

Each aspect of the negotiation will have points ascribed to it and points will be given on the
basis of the outcome. For example, if you and T’Chala agree to a loan amount of Rs. 2,00,000,
you will get 10 points. Your goal is to score as many points as you can. For an investment to be
worth it, you need to be able to score more than 40 points in the negotiation.

Size of loan

You understand that higher loan amounts come with greater risks. In your experience, you’ve
seen that the risks of defaults that come with very high loan amounts tend to offset the returns
from higher loan amounts. That said, you would want to optimize the loan amount while still
offering enough to T’Chala so that he can make the required investments to optimize his plant.
Sanctioning a larger loan amount will require more guarantees and will require you to manage
risks properly.

Loan 0 50,000 100,000 200,000 300,000 5,00,000 10,00,000

(INR)

Points 0 3 5 10 20 10 5

Loan Payback Time

Considering the risks of the sugar industry being cyclical in nature, you would want to reduce
the loan tenure as much as possible. But you also understand that a very short loan duration
would put a lot of pressure on SMEs and they will end up defaulting on the loan, which is not
good for anybody. It is therefore critical to choose a payback period which is neither too long,
nor too short.

Time 5 years 4 years 3 years 2 years 1 year

Points 4 6 8 2 1
Partner Support

In your past experience, you have seen that when SMEs partner with each other, they are less
likely to default on the loans. You would want T’Chala to partner with another SME to share the
loan distribution and repayments. You realise that partnering with a friend or a close relative is
not preferred and that tends to reduce objectivity and can also lead to unwanted disputes. The
CEO of Vibranium Associates is a close relative of T’Chala and you would not want them to
partner ideally. Your best option is for T’Chala to partner with Sokovia Associates as they have
the best credit score and repayment history. You are also fine if T’Chala partners with Shuri Inc
but he’s not the first preference as he does not have any prior repayment history.

Partner Nobody Vibranium Shuri Inc Sokovia

Associates Enterprises

Points 0 1 9 15

Production Capacity

As someone experienced with the sugar manufacturing industry, over the years, you have
developed best practices and have realised that having a production capacity of 2.5MT / day is
ideal. However, you have noticed that this leads to several downtimes in the machines and also
reduces the life of the machines if not taken care of properly. Some of the other players in
neighbouring countries tried achieving this and failed. The plant supervisors need specialised
training and need to be regularly trained to operate the machines at such high capacity. The
neighbouring countries did not have structured and regular training schedules, nor did they have
access to specialised trainers. As you were the person you authorised those loans in
neighbouring countries and they defaulted, you consider this as a personal failure and would not
want to repeat the same mistake. Following this, Okoye Investments has set a maximum
standard of 2MT / day.

Production 0.25 MT/ day 0.5 MT/ day 1 MT / day 1.5 MT / day 2 MT / day
Capacity

Points 10 8 6 4 2

Inspection Frequency

Since these are riskier SME loans, it is very important for you to have regular and clear
oversight over the operations of the companies you lend to. There have been instances in the
past where people defaulted due to negligence. You would want to have regular inspections at
T’Chala’s plant where you will bring industry experts with you who can provide guidance and
proper advice in maintaining the quality and efficiency of the sugar plants. You have also seen
that after each inspection, the productivity grows for some time and then normalises again. So
having frequent inspections will be in both yours and T’Chala’s best interest.

Inspections 1 inspection 2 inspections 3 inspections 4 inspections 8 inspections

per year

Points -4 2 8 14 20

The goal of the negotiation is to achieve as many points as possible for yourself. You need to
reach an agreement on all 5 points with T’Chala in order for the negotiation to be successful. It
would be better to have a good long term relationship with T’Chala.

Rule: You are not allowed to share your point system with T’Chala. Options not available in your
point structure are non-negotiable and have to stick to your point system.

Prepare for your negotiation with Black Panther Sugar Mill.