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Posted: December 15th, 2023

Your firm’s client is a car manufacturer E-Cars Limited (EC) that has produced
two new models. A saloon model, the Electra 1 and an SUV model the Electra 2.
EC instals new lithium batteries in their vehicles which are supplied by Lico
Batteries Inc., (Lico) in Singapore. Lico manufacture the batteries which are
guaranteed for a 10-year life span with lithium mined in Afghanistan by
Talisman Mining Pty (Talisman).
Lithium is in short supply and heavy demand due to the rarity of the mineral
resources available and the high cost of extraction. Delays in obtaining this are
compounded by supply problems partly caused by the global pandemic and by
a shortage of container vessels many of which are delayed by loading and
unloading difficulties in ports worldwide.
Owing to these delays Talisman came under intense commercial pressure from
Lico to increase production following demands from EC and other
manufacturers. Compounding this governments encouraged cleaner energy
sources by the promise of tax incentives to electric car manufacturers so that
demand outstripped production but EC are keen to take advantage of the tax
benefit.
One of EC’s contracts was with Courier Instant Deliveries (CID) who leased 100
e-cars last November.
Last week the Chief Executive of CID complained that drivers reported a series
of problems in both types of vehicle; some vehicles had run out of charge on the
motorway, and some in the city had been involved in accidents by running out
of charge and stopping without warning colliding with following traffic. As a
result, CID decided to suspend all operation of the vehicles in order to mitigate
further losses to the business. This has meant the suspension of various
delivery contracts in the sum of £20,000 but other losses are expected. In
addition, CID has decided to suspend all payments of rental to EC. The rent due
to EC under the car leases amounts to £40,000.
EC are concerned about having any adverse publicity that might affect their
reputation and future sales. Recent sales have been sluggish and EC cannot
afford litigation and heavy legal costs. They suggest a meeting to discuss the
problem and see if they can come to an amicable resolution with CID.
You are instructed to advise upon that meeting dealing with the following
aspects:
1. Who would be the appropriate person in the company to negotiate on its
behalf? What authority would he/she require?
2. What approach do you think is appropriate in such a case: would you use
hard power or soft power or a combination of both, and if so, for what
purpose.
3. In relation to soft power skills what inducements would you table in the
course of a negotiation with CID to improve the commercial relationship
and outcome?

4. What action might you expect EC to take against Lico? By what means
could this action be taken and to what extent would it depend on the outcome of your negotiation with CID? Should this be commenced or
concluded before the negotiations with CID??