Multisumma

A little over six weeks ago, the Presidents of four of the world's largest aircraft engine companies drafted a joint memorandum announcing an "agreement in principle" on a 30-year joint partnership in the design, manufacture and sales of a new generation engine, the A-2000. The memorandum requested that company representatives convene to negotiate the details of this agreement.

Airborne, a U.S. company, has for 50 years been the world leader in engine technology. Airborne will be the "lead" partner in this venture, with primary responsibility for coordinating with the other three partners: SERSI (France), Novo (Italy), and Kiatsu (Japan). Each of these partners has agreed to pay a fee to Airborne, in exchange for which Airborne will provide the majority of the technical information needed to build the new A-2000.

The negotiators at the table include:

K. Hutchinson - Project Manager, A-2000:    has overall responsibility for the A-2000 project for Airborne; will lead the opening negotiating session

H. Walleck - Finance Manager, A-2000:    reports to Airborne's Financial VP; specialises in keeping track of financial options and opportunities

T. Grant - Manager, International Sales and Marketing:    responsible for int'l sales and marketing of all Airborne products, to now include the A-2000

G. Delnay - Representative for SERSI (France):    represents SERSI in all int'l negotiations, and will work to ensure SERSI's interests

S. Iannella - Representative for Novo (Italy):    VP of Int'l Affairs at Novo; will represent Novo now and throughout the venture

H. Takami - Representative for Kiatsu (Japan):    specialist in int'l ventures, and will work to ensure agreement is satisfactory for Kiatsu

There are four key issues for these representatives to negotiate:

  1. When will the program fees be paid?
  2. How will the partners share technical information?
  3. How will the partners coordinate orders with airframers? (i.e. builders of a plane's body)
  4. How will the partners market the venture to potential customers? (e.g. airlines)
The terms negotiated must apply to all three partners. Airborne does not have the opportunity to negotiate each contract separately. Agreement is reached when at least five of the six representatives can accept the proposed options on all four issues. Unanimity would be best; failure to agree would put the venture in jeopardy. (N.B. Confidential instructions will be provided each representative or team before the negotiations begin.)