- Examine the main differences between leadership and management.
- Critically analyse the strengths and weaknesses of a variety of leadership theories.
- Evaluate the role of leadership process of creativity in its formulation and delivery.
- Identify alternative models of change and the role of leadership within them.
- Critically analyse barriers to change and evaluate effective ways to overcome such challenges.
- Explain a variety of strategies and methods to ensure that change is successfully implemented and durable.
- Identify suitable tools and techniques to aid the planning, implementing and analysing of change.
- Examine the process of innovation and its management.
- Critically examine the successful innovation strategy.
- Explain the impact of gender and culture on leadership and organizational change.
WinWinD is a Chinese company that manufactures and supplies wind turbines for offshore wind power installations. WinWinD plans to sell a set of 20 wind turbines to E-Power (Scotland), a currently privatized company, and E-Power aims to buy a set of 20 wind turbines from WinWinD. E-Power is excited for this transaction to go ahead.
E-Power is planned to pay up to $1.2 million for such wind turbines provided it achieves satisfaction on certain points. Otherwise, the amount of these wind turbines falls to as little as $500 000. It is significant that E-Power gets full warranty protection and it would like liquidated damages if WinWinD does not install the wind turbine within 3 months of ordering. WinWinD could insure this as one of their business risks, but they want to charge the premiums for this to E-Power. E-Power would like WinWinD to consider a repairing necessity for the next 3 years.
It is important to E-Power that the wind turbines are up and running in its offshore Scotia Field within the next 3 months and it would like there to be important (20%) liquidated damages if this does not occur, but it would settle for as low as 10%.
WinWinD would like the make a contract in exchange of Euro, while E-Power wants it denominated in US dollars, but E-Power can be fairly relaxed on this point. Price is a thorny one for WinWinD. Any payment below $750 000 and it would make no profits. This really is the fundamental point as far as WinWinD is concerned, especially as E-Power wants the wind turbine delivered to its newly proven development bloc, situated in the North Sea, and insists that it is installed in an extremely narrow weather window.
WinWinD also offered to provide effective working condition of the wind turbine for the next year on a full repair or replacement basis, but it is very important to go beyond that because of the expense and the technical risks that are always associated with new fields.
WinWinD has indicated that it is willing to have the wind turbine operational within the next 3 months. It has also indicated its willingness to consider liquidated damages if the wind turbines are not installed within the 3 months following E-Power’s order, and it has suggested a figure of 3%.
It says it wants a strong force majeure clause to prevent it against unforeseen delays beyond its control, like weather and unforeseen difficulties situated in North Sea.
- Critically demonstrate E-power’s interests in this case?
- Discuss WinWinD’s Interests in this case?
- Examine negotiable issues in the case and their related priorities for each party? Provide a table for each party’s priorities and critically analyse each one?
- How might E-Power fix its entry and exit points in this negotiation?
- What kind of justification would you give for a proposal that E-Power might offer to WinWinD
- As is the case in many negotiations, BATNA is a very effective mechanism in conducting negotiations, examine this concept in more detail pertaining to this case.
Leadership is the quality in the person who can influence other to follow his words. Leader encourages their followers to perform at peak every time and it helps to drive the organisational success. Leadership focuses on the objectives and motivates the employees to achieve the common goal. Management focus on tasks, assign and approve the task, they monitor that rules and work policies are followed or not, they have control on all the activities and instruct the people in the organisation. WinWinD Chinese company, which is the supplier of wind turbines, and E- A power company located in Scotland, their interest case or related priorities in context to business deal are discussed in this report.
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1. E-power’s interests in this case.
On this basis of the case, the E-Power company which is privatised recently. WinWinD want to sell a set of 20 wind turbines to them. As per the case the E-Power company is ready to buy it, and they are keen interest in this deal. As company established newly, so they want to crack this deal in terms to maintain their brand value and needs the consideration of the public. It enhances the market share of the company in stock market. As they are ready to pay $1.2 million for this deal to WinWinD. It provides satisfaction to E-Power at some points that they will have their own motives for this deal like they need the structure to be installed soon which benefits them. E-Power company seek their profit interest as WinWinD install the wind turbines by giving them full protection in terms of warranty and damage in any case. They influenced the WinWinD to accept this clause in which they will provide full maintenance of the wind turbines for 3 years after installation.
E-power implies the liquidation damage charge on WinWinD if they would be fail to install the set up of wind turbine in 3 months of ordering. As they give order before 3 months, they should get the set up ready otherwise WinWinD have to pay the liquidation damage costs up to 20% while they are ready to settle down at 10% charge. So that, they can decrease the cost of the set up at the location. As WinWinD is ready to install the set up at the location, but if it would be delayed then they only pay 3% of liquidation damage to E-Power.
E-power want the transaction to be done in the U.S. Dollars so that it may cost minimum to them. E-Power wants to set up the wind turbines at their new location which is situated at North Sea (Conger, 2015). So WinWinD have to deliver it and installed the wind turbines at the preferred location in extremely narrow weather window. It may decrease the risks of technical damage for the WinWinD and it saves the time for E-Power to establish properly. Again they follow the weather condition as they are near to North sea it may have damage after installation. So WinWinD have to bear all the damage cost. Wind turbines are huge in sizes so it may be damaged during the transportation, so the supplier have to bear this cost.
E-Power mainly implies that they are new in private sector, hey only seek their profit motives and low cost investment so that they can make profitability very soon after starting the plant.
WinWinD has a huge interest in the project because of its order size. This order comprises with 20 set of wind turbine that will cost around 1.2 million dollars to E-Power. This transaction of 1.2 million dollar will give the drastic boost in the market share of the WinWinD company. Big orders always create the positive impact in the brand image of the selling company and that even create the possibility to have more such customer's for the WinWinD. Big order deals also create the faith in all the stake holders of the company about company's working and its growth. This project is challenging because the wind turbine is going to install in the difficult windy conditions of North Sea that will analyse the technical capabilities of WinWin D and also the time for the completion of the whole project is three months only that will also impact positively on the production capabilities of the company. Success of such challenging project gives the drive to the goodwill of the company and that create more such growth opportunities in the market. Growth is one aspect at which every company likes to move forward and this project will bring multiple new opportunities for WinWinD to achieve more success in the market. The deal between WinWinD and E-Power is very profitable in term of the value and it will uplift the profitability of the company. Profitability is very crucial aspect in the growth and development of the organisation and it also sustain the faith of all the stakeholders in the company. High profits also generate high and positive market image for the company that result into favourable market in the favour of the company (Bolman and Deal, 2017). This deal between WinWinD and E-Power carry the warranty period of only a year that is also very profitable aspect for the selling company in this big project.
Warranty is always a crucial aspects and purchasing company always look for the maximum warranty period and many times the selling company bear looses in the transaction because of the warranty period because it carry the risk factor in the transaction and the selling company needs to bear all the repairing related aspects in case of damages but in this particular deal where the transaction amount is such huge warranty period is also very much beneficial for the WinWinD. One clause in the deal that speaks about the installation tenure if the WinWinD could not install the wind turbine operational within three months is definitely the very positive aspect for the company. In such a huge project like this this risk is not that much to take specially if the profits are appreciable in this project. Risk is always a part of the project for the selling company but the risk in this project specifically of bearing a 3 percent cost in case of non installation is a very positive aspect for the WinWinD in this deal.
3. Negotiable issues of both parties
Basis of issues
Installation and quality issue
E-Power said in their statement that they want to install that turbine in the next 3 months of time period, otherwise they will face big risk factor in their business environment. It is a necessary aspect by the E-Power because they already prepare full plan of the turbine installation. They may deal with respective other businesses which relate with the project of turbines installation. In that case this is fair thing from the side of this company (Komives, 2016). Company also said in their statement if WinWinD company not complete their installation process within the next 3 months, then the WinWinD have to liquidate the about minimum 10% of the damage cost.
WinwidD responded on the installation of turbine for the E-Power, WinWidD ready to install that turbine but this company is not fully agree with the statement of the E-Power company. Company said one the 3 months installation period, company try install that turbine within the next 3 months, but in case if company will not complete installation process within next 3 months, then WinWinD will not take 20% or 10% part in the damages. Company only take 3% charges of the damages. This is big issue between both the parties. This negotiation is not favourable for both.
2. Currency Issue
There are one another issue is the WinWidD company wants their respective fund towards turbines in the Euro currency, but the E-Power is not agree with this statement of the WinWinD. Company is ready to pay but only in US Dollars, not in the Euro. May WinWinD has their own issue with US dollars, but E-Power only wants to pay in their suitable currency.
The E-Power not ready to pay in the Euro which WinWinD company actually want. That company pay only in the US dollars. This currency issue is also both parties need solve by effective negotiation techniques. There are E-Power is one customer also of the WinWinD. In that case company need to give some currency comfort to the E-Power.
3. Repairing Issue
E-Power wants the WinWinD give them facility of repairing these turbines for the next thee years. That case company need high satisfaction from the Chinese company. In this situation company need to understand the conditions of the WinWidD, because this three years of repairing period put in loss to the WinWinD. Company already ready to give one year of repairing facility. In this situation both companies need to deeply understand conditions of each other and then try to remake the deal negotiation.
In the E-Power's repairing condition the WinWinD company said, company not give facility to repair or maintenance for three years. Company only ready to give this facility for the only one year (Heifetz and Linsky, 2017). In this situation it is fair statement given by the WinWinD company, because the company already give that turbines on the no profit and loss price. It is very fair decision of the company where company ready to give one year repairing services, and the E-Power need to understand this.
4. E-Power set its entry and exit points in this negotiation.
E-Power made deal with WinWinD to earn profit by purchasing thee set of 20 wind turbine at their block which is settle at north sea location. As E-Power is privatised company in private sector so its entry might suffer from barrier which are already exist in the market like its competitors and public limited companies. Also they have to face the government regulations are to be followed by the company. So it has to close the deal with WinWinD at very low cost, which is beneficial for the company E-Power. If they set their production unit at minimum investment so they can set their entry in low cost. So they may get profit when they start production and sell it at good prices, it possess profitability for the E-Power (Pinkley and et.al., 2017). As WinWinD made the deal at good time, as E-power recently get privatisation so they negotiate with supplier easily as the cost of the set up may fall up to 50% margin so this will be beneficial for WinWinD as well. E-power applies different tactics for negotiation like they strategies like problem solving like both companies made clause about the liquidation cost like if WinwinD fails to install the set in 3 months they have to pay up to 10% of the cost, while WinwinD wants to set it at cost of 3%. So this may benefits to E-power. Next Win strategy they use to negotiate with supplier like they pay the amount in US Dollars which may loss the supplier in currency difference. Over the purchasing E-power wants that supplier company will impose all thee maintenance cost for three years of purchasing and they have to bear all the transportation cost. So this may profit the company at minimum invested amount they will pay to WinWinD. As Entry points easier for them, but it might face some barriers in exit points like they must get return of their investment which is asset for them, these asset should not exceed in terms of liquidation, so E-power bargain with WinWinD by analysing the exit barriers. Also the have employees, they have to all, to bear the purchasing cost of the set up, they have to pay for the location. As they have invested in more infrastructure they have need time to collect their invested amount and again buyers of their products may have credits (Sebenius, 2017). So they to cross these barriers to exit from the market. Otherwise it may loss to the company. All these factors are analysed by the E-power then only they do prefer the negotiation strategies for their deal with WinWinD.
5. Justification about proposal that E-Powe offer to WinWinD.
E-Power set their goal to achieve a big amount of profitability from setting the wind- turbine plant at their location. As North Sea is the best location for their plant to set up it will produce more electricity, they may not suffer from any kind of damage. As E-power wants to install the plat in next three months as this will be considered as narrow window due to affect of the season, it will not possess any loss to the set up at this time. Also it would take less time for installation at this period while they have mentioned their clause about the set up installation, if WinWinD would be failed to install the set of 20 wind turbines in three months from the order date then they have to pay the liquidation damage maximum 20% charge and for more convenience they will settle down at 10%. This is appropriate decision by the E-power as they are recently privatised they want to save their money and will motivate to lower the capital investment because they want to earn profitability in less time (Megahed and Goetschalckx, 2018). Next they also give the clause to the WinWinD that they have to bear all the maintenance cost for next three years after installation, like if any damage in the set u is found they have to repair the infrastructure. Technical maintenance costs high, so company need that they would get the warranty for replacement of parts, or maintenance, repair in cost of purchasing for three years. It is right as wind turbines cost may fall up to $500000 in coming six months, so WinWinD would also face losses, so it might be good for them to agree on E-Power clauses.
E-Power has researched about the climate so they choose the appropriate time to install the plant of wind turbines at location. As E-power order to WinWinD t install /it in three months , it is beneficial for both parties because at that time it would be narrow weather window which indicates that it is the most suitable time for installation. As the flow of wind increases during the installation, it may damage the parts f the wind turbines. So they proposed the clause of liquidation damage. Further they proposed to close this deal in US Dollars which is suitable for them but it may loss the WinWinD to do it in this currency. Further E-Power is ready to convince on their point.
6. BATNA- effective tool in conducting negotiations,
BATNA is the term used for Best Alternative to a Negotiated Agreement, it is the negotiation strategy which is best suit for both parties involved in a deal. This concept is given by Roger Fisher, William Ury and Bruce Patton. As BATNA includes the negotiation skill which is possessed by the negotiator in terms to achieves the best deal on the table. Negotiation at the table may be not giving the client perfect deal (Hagspiel, 2018). So the negotiator have to evaluate all the possible ways to save the money, like they can look for other dealers to make feasible deal. As they evaluate other sources for the deal who might give the good deal is considered as best. So the bargainers can go for it. It may fill fear of losing the deal in the supplier who quotes the big amount for the deal or from his perspective only, it may face the barriers in other deals as it would not be considered in the market. So BATNA is very effective tool for the negotiation. As it is considered in the case of the deal of the wind turbine, which is selling by the WinWinD to E-Power at good prices. While E-Power is considering the deal is to be closed at minimum cost of purchase with exclusive benefits for them. They made the liquidation damage cost clause, installation in 3 months from order, warranty for 3 years and many other things which are the points of negotiation are mentioned by the E-Power. It possesses several benefits to them (Haakonsson and Slepniov, 2018). As they are purchasing the goods at negotiable prices. So BATNA may perfectly suits the EE-power in terms of negotiation.
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According to the case, E-power is purchasing the set of 20 wind turbines at good price with extra facilities. It uses its management skills to quote the best price with negotiation. They also possess the best negotiation skills. They lead the deal with their own settled clause. WinWinD is taking the responsibility to install the wind turbines at the location but if they may fail to install they have to pay the liquidation damage cost. This report gives the knowledge about how to lead a deal and how to convince the supplier to make the deal feasible in terms of their own sake. It leads to profitability for the buyer.
Books and Journal
Conger, J., 2015. Charismatic leadership. Wiley encyclopedia of management, pp.1-2.
Bolman, L. G. and Deal, T. E., 2017. Reframing organizations: Artistry, choice, and leadership. John Wiley & Sons.
Komives, S. R., 2016. Leadership for a better world: Understanding the social change model of leadership development. John Wiley & Sons.
Heifetz, R. and Linsky, M., 2017. Leadership on the line, with a new preface: Staying alive through the dangers of change. Harvard Business Press.
Pinkley, R. L., and et.al., 2017. Unpacking BATNA Availability: How Probability Can Impact Power in Negotiation. In Academy of Management Proceedings. (Vol. 2017, No. 1, p. 16888). Briarcliff Manor, NY 10510: Academy of Management.