Reference no: EM132171616

Alpha-Beta Introduction ln this situation you will negotiate a possible robot manufacturing and marketing agreement with another company. You will be a member of a team that represents either an electrical company in the nation of Alpha or a manufacturer of electrical machinery in the nation of Beta. Background Information Alpha Alpha Tnc. is a large, broadly diversified electrical company based in the nation of Alpha. The company is one of the leading makers of numerical control equipment and plans to become a leader in equipping the "factory of the future." lt has recently spent hundreds of milions of dollars putting together a collection of factory automation capabilities ranging from robotics to computer-aided design and manufacturing. Alpha Inc. has been acquiring companies, investing heavily in new plants, and spending considerable sums on product development. lnnovative robots, some equipped with vision, are being developed, but they have been a bit slow in making their way out of the company's R&D labs. To meet its objective of quickly becoming a major worldwide, full-service supplier of automation systems, Alpha lnc. has found it necessary to tie up, in various ways, with foreign firms that are further up the robotics learning curve. Robotics in the Nation of Alpha There are 30 robot manufacturers in Alpha, and big computer and auto firms have recently been entering the business. During i 980, use and production of robots in Alpha was only about 33 percent of what it was in the nation of Beta. One survey reported 4,370 robots in use in Alpha in 1980, mainly in the auto and foundry-type industries, and i ,269 produced. Robot sales in i 980 were estimated at $92 million, with a significant share accounted for by imports. The industrial automation market as a whole is growing at well over 20 percent a year, and the robotics portion of it is expected to become a $2 billion-a-year domestic market by 1990. Beta Beta lnc. is the leading manufacturer of integrated electrical machinery in the nation of Beta. Run by scientists since its founding, the company is Beta's most research-oriented corporation: It employs over 9,000 researchers, and its R&D spending equals 5.9 percent of corporate sales. Beta lnc. started producing robots only in 1979 but plans within a few years to become the world's largest robot producer. To do so, it must double its manufacturing capacity and strongly push exports (to date, nearly all of its output has been sold at home). The company's deep commitment to robotics is reflected in the recent formation of a 500-person technical task force to develop a universal assembly robot with both visual and tactile sensors. Beta lnc. expects to be using the new robots for some 60 percent of its in-house assembly operations within three years. Robotics in the Nation of Beta Beta Inc. is only 1 of 150 companies making or selling robots in Beta, a nation with 'robot fever" and a government that has declared automation a national goal. An estinated 12,000 to 14,000 programmable robots are already on the job in the nation, rep'esenting 59 percent of those in use worldwide. ln 1980, Betan firms churned out nearly &400 million worth of robots (approximately 3,200 units, or 50 percent of world Jroduction). The nation exported only 2.5 percent of its production and imported fewer han 5 percent of its robots. Industry analysts see robot production in Beta rising to ~2 bilion in i 985 and to $5 billion in 1990. Over the past five months, Alpha lnc. and Beta Inc. have held preliminary negotiaions over a possible robot manufacturing and marketing tie-up. The two companies iave reached the following tentative agreement: The tie-up over seven years will proceed in two phases: (a) in years 1-4, Beta will supply Alpha with fully assembled Beta Inc. robots for sale under Alpha's brand name; (h) in years 5-7, Alpha wil begin producing these robots themselves in Alpha, using Beta technology and key components. The tie-up will focus on the robots that Beta lnc. currently has on the market. The agreement will be nonexclusive; that is, Beta Inc. will be allowed to enter the Alphan market directly at any time and allowed to tie up with other Alphan firms. , ,. '. The two companies' negotiation teams are now scheduled to meet for discussion of ~maining issues. They include the following: The number of different models involved. The quantity of Beta Inc. units to be imported and/or produced under license by Alpha during each year. The unit price to be paid to Beta. Access to Alpha's vision technology. The royalty rate to be paid to Beta.