Table of Contents
It is very important for the two companies InsectTech and Pest Control Ltd. To formulate a strategic negotiation which supports the distribution agreement founded on the principle of equality between the two companies. The relationship between the two companies as distributor and supplier has to be charted based on partnership which is fair and egalitarian in approach. It is necessary that the terms, conditions and clauses are not tricky and devised on cunning cut from the bargain. The negotiation between InsectTech and Pest Control, should be simple, clear, balanced and fair. The terms should be clearly stated and any disagreement should be open to healthy and amicable promise of cooperation between the two companies. There should be effective steps taken to avoid any legal conflict between the two parties. This necessitates integration and understanding which can nurture long lasting partnership between InsecTech and Pest Control.
The unique product with sophisticated yet simple design which is specialized in technical expertise using high energy electricity and vibration control to keep the mosquitoes and insects away is remarkable. The consideration taken into account that these vibrations do cause any health hazard to human being is also commendable. The business plan which has taken effective steps to engage in cross boundary business and distributorship agreement is comprehensive. The trendy name" the mozzie shaker' is charming and effective.
The negotiation strategy should engage the key people at InsectTech and Pest control with team of lawyers, managing directors, and the R&D people helping evolve a sound draft of distribution Agreement based on fair negotiation parameters.
The negotiation strategy should be based on partnership which allows for an agreement which is based on detailed consideration of the terms, expiration criteria, balanced revenue, effective advertising and protection of the intellectual property rights. The case study should be determined based on the pricing and the product specifications. The litigation aspect of the partnership must be taken into account. The structural details should also be integrated into the business framework. The territorial specifications need to be addressed taking into account the competitors, with emphasis on quota limit and articulate agreement with regard to termination. The technical expertise should be promoted and encapsulated in the distribution draft or agreement. Consideration should be made to identify the dealers and remarketers within the specified territory. A formal Distribution Agreement should be drafted in the light of the unique product targeting a niche market. The clauses should be specified and terms and conditions clearly stated with right expectations and targets. The role of competition law along with business law should be integrated into the framework.
The Distributors Agreement provides the partners in business relationship with and agreement which is tailored to serve the interest of both the parties in fair and compatible manner within the legal framework. The interest and gains of both the parities is secured through specific terms and conditions. It can serve as the head start for the future professional relationship of the interacting companies. It is platform which gets the deal moving in the right direction with a sense of commitment. The agreement should be drafted clearly and professionally under legal guidance, even thoguth it is not a legal advice. The requirements should be specified and reviewed under approval of a certified attorney. The draft should then be considered an effective documentation for the business relationship which will thrive under the contract. The distribution rights which specify the exclusive right of the distributor to sell to customers is identified and initiated. The specifications of the geographic territory are also indicated. The details of the company offices along with pricing are included in the contract. The inclusion of transportation costs is also taken into consideration. The taxation and invoice obligations are fully authorized under valid tax collecting authority. InsectTech should clearly define its legal outline based on the diverse criteria as discussed below as central to the negotiation initiative with Pest Control.
Terms: The terms are defined under specific information pertaining to the commencement and expiration or termination of the agreement. It is based on mutual consent which describes the nature of distributorship. It is renewable. The specifics about date, month and time is precisely indicated. The particular provisions of the agreement are detailed with precision. It also specifies the mode of payment which can be cash or credit. The Company has the specific right to permit or revoke any credit dealings with any customers or partners. The invoices and scheduled deliveries are specified in terms of mode of payment. According to Cueto (2010) terms must be specified within the clauses which are set for "the duration of the agreement and is automatically renewable"(Cueto, 2010). There is provision for re-negotiation after the duration expires. This period is determined by the rules of the business and the industry.
"Cleverly crafted words and phrases in a distributor agreement rarely extend the life of a partnership between a distributor and a manufacturer. A partnership lives only so long as both partners believe that there is a benefit to a continuing relationship. Once perceived value erodes, the partnership is finished, followed closely by the expiration of the agreement."(Blazer, 2003).The signatories need to understand the clauses within the framework of the distribution agreement before it is launched. This will provide an optimistic partnership which will determine long term relationship ion business partnership. It will also save the company from any legal dispute or early termination. The financial resource allocation should also be skillfully handled. Blazer (2010) further observes that "unbalanced agreements more frequently result in a legal scuffle, striving to craft a well-balanced distributor agreement is worth the effort. An ounce of preventive energy striving to draft a balanced agreement is worth a pound of legal energy struggling to avoid a costly award of damages in either court or arbitration."(Blazer, 2010).
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Products: The product needs to be developed confidently and realistically. In this case the company has designed a product which consists of a small box which gives off ultrasonic vibrations. It is powered by electricity. The vibrations have been found to be highly effective in keeping mosquitoes and other insects away and they work over an area of 500 square meters. Their tests show that the vibrations cause no damage to human health. InsectTec believes that the product would be highly successful in the Anyland market. It does not yet have a marketing name - the R & D (research and development) people at Pest Control Ltd refer it as "the mozzie shaker". InsectTec respects Pest Controls intellectual property rights in their methods and know-how in respect of the product. However, they want the right to market the product under a name suitable to the Anyland market. InsectTec also want complete freedom as to the method of marketing. Cueto(2010) further affirms that it is important to "specifically describe and identify the product developed or owned by a company along with all options to the products; all future versions of the products; and all enhancements, revisions, or modifications made to the products by company."(Cueto, 2010).
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Territory: "Be sure to always indicate the specific geographic areas where the product(s) will be distributed. Also be sure to include terms of exclusivity to keep your channel clear of competitors."(Cueto, 2010).
End-User: The role of the end user is significant; one needs to identify all people or entities that will obtain the product(s). The role of the distributor is significant in providing precise instruction to the customer with regard to the use and implementation and health hazards related to the product.
Intellectual Property Rights: It is very important to identify the subtle legal rights which specifically address the " idea, concept, technique, invention, discovery or improvement"(Cueto, 2010). It is also applicable to the authorship and future posts pertaining the product.
Continuation or survival clauses: The clauses pertaining termination should also be clearly mentioned so that the distributor is in agreement of the future prospects of the company in partnership.
Title to equipment: The Company should structure the reserves in such a manner that the securities related to per unit sale of the product are precisely defined by the agreement. It should meet the interest of all parties and be executed under the financial statement which is verifiable by the selected instruments which measures the securities of the company. This ensures that the title to equipment is transferred to the Distributor form the Company under full payment contract defined per unit of sale.
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Competitive Equipment: There is an implied restriction imposed on the Distributor in terms of selling the product ore representing the knowledge to any of the competitors unless approved by the Company.
Duration of Agreement: The duration of the distribution agreement will last as long as expiration or termination is not implemented. It requires careful articulation of the deadline. The more detailed and outlined it is , better it is for both the parties.
Marketing and Support
It is very important to identify the structural support for marketing which will significantly impact the sales and the distribution of the equipment in the process of implementation of the distribution agreement.
1. Sales. It is important that distributor aggress to use the best technique to promote sales and the distribution process which ensures:
a. making sure that it has well established and appropriate premises which re attractive, accessible and fully equipped.;
b. There is adequate provision of well trained staff and technical support for the equipment;
c. The promotional campaigns are used effectively to effectively campaign the product;
d. The company provides with product information and forecasts which introduce any modification or changes in the equipment. The forms need to be signed by the distributor and the Company. In this case InsectTech and the Pest Control ltd.
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2. Advertising. The role of advertising is very powerful and should be encouraged by the distributor to promote campaigns and advertising for sales and promotion. It should be professionally manage and controlled. The documentation should be conducted according to the nature of the product in harmony with the specifications of the equipment. The technical and structural information should be managed and implemented with professionalism. There will be provision for assistance for implementation purposes.
3. Training. The Company is responsible for training and employment of training representatives at various sites and locations based on the territorial and geographic factors. There should be encouragement for enrollment of sufficiently qualified personnel who should be salaried employees. The expense should be managed within the framework of the distribution agreement.