WINNING THE CONTRACT

Confidential instructions for MacroTough Project Director

You are Project Director at MacroTough, a leading information technology company based in Eastern
Asia. You report to the Vice-President for Marketing, Europe. You are in charge of organising a
European convention during which your company will introduce an important breakthrough in the
design of microprocessor (computer chip) manufacturing.

This convention will be the hallmark of the year for MacroTough Europe. It is expected to take place
in about 6 months. You hope to gather around 600 people — engineers from partner companies and
subcontractors, key accounts in the information and communications technology (ICT) industry,
influential specialized journalists, and all sorts of ICT thought leaders.

MacroTough Europe could more or less handle the organization of such an event, through its Public
Relations department. However the VP for Marketing reviewed the market, and sent a short brief to
a few companies in the event industry. He appreciated the answer he got from FabEvents — a well-
established firm in the event and meeting industry, headquartered in Brussels (Belgium) and New
York (USA).

Your team had preliminary contacts with the FabEvents people to design the overall features of your
European convention. At this stage, you’re in charge: you will handle the negotiations with FabEvents
on behalf of your VP for Marketing.

Your boss reminded you that MacroTough’s priorities are the following.
 FabEvents is to take care of everything. You do not want to handle subcontractors, venue, etc.
 There is one exception: you will use your own PR company, as all marketing and communications
aspects are sensitive and must be handled directly. You do not even want FabEvents logo or
whatever to appear during the convention.
 Of course it must be a spotless event, with an executive feeling – the “happy few” in a select
environment. You are not interested in having outsiders: it is MacroTough Europe conference,
not a launch pad for external folks.
 FabEvents must commit an exclusive team to take care of your event.
 You have in mind a rather short event, with plenary sessions mainly showcasing your products.
 Your boss told you to delay the signature of the deal for the time being, as he is waiting for other
companies’ offers. A couple of weeks should do.

You are now entering the final stage of the discussion. In the upcoming meeting, the following items
remain to be negotiated.
 Choice of venue: your boss would like the conference to take place in Milano (northern Italy), but
is not adamant about it. In previous exchanges, FabEvents people pushed in favour of Munich
(southern Germany). You are OK with that – but you have just learned by chance key
information. A friend of yours has just spent a weekend in the very hotel where your conference
will take place, and has told you that the “romantic side of the weekend was totally devastated
by heavy noise of renovation works going on in the convention area”. Apparently the hotel has
© Professor Aurélien Colson. All rights reserved.
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 started renovation works, with dust everywhere; this could not happen at the worst moment.
You are very upset that nobody at FabEvents told you about this before. You expect some sort of
explanation for this lack of transparency. Not good for trust building. At any rate, it is up to
FabEvents to resolve the issue. In order to protect MacroTough’s interests, your boss has
instructed you to include into the deal a penalty clause: if there is any sign of construction during
the conference, FabEvents will pay a penalty representing 10% of the total budget.
 Total budget: in the latest exchange with FabEvents, you mentioned € 250,000 with standard
payment instalments, while your boss instructed you to reject anything higher than € 310,000 (as
this would be roughly the cost of an in-house solution, as estimated by your PR Department). On
their side, FabEvents people mentioned € 340,000 — so there is quite a gap.
 Open book: although it is not strictly expected by your boss, you will also try and get open book
with FabEvents, to ensure maximum transparency on their cost ad profit structure. This standard
practice means that you will have access to invoices of FabEvent’s subcontractors. As part of your
agreement, at any time you could ask to audit their accounts and they would have to provide
copies of all third-party invoices.
 Visibility for FabEvents: you know that these event companies like showcasing their own brand
during others’ events. You are not very keen that FabEvents’s brand appears throughout your
conference. Another option would be that the conference becomes one of the business stories
showcased on FabEvents’s website.
 Date of signature: due to on-going internal discussion at HQ level on whether such an event
should take place, your boss wants you to secure the deal while delaying the signature for a
couple of weeks.

Of course you expect tough bargaining on the abovementioned variables. Overleaf, a score card will
help you evaluate the costs and benefits of any concession.

***

The results you achieve in this negotiation exercise will be scored the following way.
 Choice of venue: Munich WITH the penalty clause earns you 10 points. Milano earns you 3 points.
Any other venue earns you 0 points. If you accept Munich without the penalty clause, you lose 10
points.
 On budget: € 310,000 = 0 point. For each € 1,000 below € 310,000, add 1 point to your score. For
each € 1,000 above € 310,000, deduct 1 point from your score.
 Open book: if you secure that policy, you earn 5 points. If you do not, you lose 2 points.
 On date of signature:
1. Signing within 1 week = 0 point to your score.
2. Signing between 1 and 2 weeks = add 1 point to your score.
3. Signing later than 2 weeks = add 3 points to your score.
 On visibility for FabEvents, 3 options (options 2 & 3 can be combined):
1. No visibility at all = add 4 point to your score
2. Visibility throughout the conference = deduct 1 point of your score.
3. Business story + praising quote of your CEO on their website after the conference: deduct 1
point of your score.

© Professor Aurélien Colson. All rights reserved.

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At the end of your negotiation, if there is a deal, you must do the following:
1. Put the deal in writing with your opposite negotiator: this document should summarize all the
features of your agreement.
2. Fill in the following table.

Items to be negotiated Negotiation result Your score

Choice of venue

Budget

Open book policy

Date of signature

Visibility

Total Score

Get prepared for your upcoming meeting – and good luck!

© Professor Aurélien Colson. All rights reserved.

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