Description
read the case, answer questions on template negotiating from the point of view of joseph russo, President and CEO of Cache Creek. Please plan negotiation strategy accordingly as you will be negotiating with Patrick Lo from the Canaan Group.
Some additional information to give you more context for the negotiation:
• Joseph was a 73-year-old entrepreneur who had been successful at investing in residential and commercial real estate in the Lower Mainland. He did not have any experience in logistics; but could see the potential for Cache Creek as a container trans-loading operation.
• Cache Creek currently had contracts for rail-car storage and bulk commodity storage. Its biggest customer was Lafarge, which signed a 10-year contract for the storage of red shale of its cement operations in 2009. These revenue streams covered the overhead expenses and Cache Creek was operation at a break-even point.
• In addition to the multi-million-dollar initial investment in the purchase of Cache Creek in 2004, Joseph had recently invested $3 Million in infrastructure to improve the capacity and capabilities of the terminal for container trans-loading. Canada’s federal government had matched this investment for a total of $6 Million.
• Joseph had a long-term perspective. He felt that it was just a matter of time before congestion at the port would force shippers to start using his terminal for container trans-loading.
• While Joseph liked Patrick and appreciated his enthusiasm, Joseph felt that he had assumed most of the risks thought his investments in Cache Creek, and so he should benefit more, Joseph felt that the benefit sharing should be 80/20 or 75/25 in favor of Cache Creek. He would consider a 20-year lease on this basis.
• Joseph was familiar with the results of the pilot project conducted by Patrick.
Sample Solution