Capital Mortgage Insurance

1.0 Introduction

        Negotiation was result from conflict of interest within to parties. In this case study there few conflicts that occur as every party have a strong will to fulfill they own needs and interest. In this case study o would like to play a role as Frank Kendall which is President for Capital Mortgage Insurance Company.  As president I thought it will interested how we gathered all information to know our own strength and weakness in order we can gained benefit result from the negotiation that we attend to. This always to come back to principal’s role of SWOT (strength, weakness, ability and treat), this certainly basic step we need to know to make sure we negotiations advantages.

        In this case study, I got the perspective that Kendall already takes all requirement step in order to gain negotiation advantages. He was always think ahead and got a gut to ask for what he want. Not only that he also do they homework to analyst other party need and interest also they weakness in order to get good bargaining. He also takes his god precaution time and patient to get the good offer from other parties. In order achieve organization goal he was aim high and expect the best outcome from the decision to merge with other parties even though they no guaranteed this can be great decision of investment.

        This is indicate that in order to get want we favor from negotiation that few rules and boundaries we need to aware and Kendall can be good example of how we can learn to improve our negotiation skill.

2.0 Background of the Case

        CMI was a holly owner subsidiary of Northwest Equipment Corporation  and it major in freight transporter and lessor of railed, commercial aircraft, and other industrial equipment before they created to sell mortgage guaranty insurance policies to residential mortgage lender throughout the United States. Refer to this case study there major event that occur during that time. First, after merging with Norwest Corporation, CMI was been urged to expand the company operation into larger and diversified financial services company. This is lead to second issues, which is acquisition opportunity with Metropolitan Realty Network to get capabilities broker to sell the insurance. Last but no least issues acquisition with Corporate Transfer Services Inc (CTS), this company was focusing in employee relocation Business and this capable to give mass market for them mortgage insurance.

3.0 Problem Statement

3.1 Negotiate in how to acquire brokerage services.

        Start with successful story of Merrill Lynch and company they shared almost similar background with CMI, before they put interest in real estate broker they already well known as Wall-Street securities. The successful story is they collaboration with independent real estate broker to arrange home sales and purchases for transferred employees. This is inspired Kendall, President of CMI not only to follow but to became much larger than that.

        The issues to acquire broker services there few obstacle they need to overcome, this include competitive in offering good sum of commission, commission averaged slightly over 6 percent of the sale price, Kendall has to make sure they capable to offer in par or more that to get  loyalty from broker. If not they will lose they good broker to some members of national franchise chain. Kendall also need to make sure they acquire broker with solid reputation in order to make sure customer with loyal and repeat doing business with them and will increase possibility to acquire referral from existing customer.

3.2 Negotiate to gain competitive advantages by involved in employee relocation services industry.

        Employee relocation services have become one of main sources for marketing. The key of increasing volume of real estate transaction for Merrill Lynch’s, this because they have acquire an employee relocation company several years later.  When employee it transfer they normally will tend to invest for property at the new place and this has become great opportunity that because corporate transfer of employee it still rising and will open more opportunity for marketing.

        Kendall needed to acquire of employee relocation services. Even though they already develop good relationship with the local banker, realtor, saving and loan and other company but in order to compete with Merrill Lynch’s they taking advance decision to do acquisition with The Metropolitan Realty Network. With the same interest and need it didn’t take a longer time for them to agree to perform acquisition. Together they decide to approach Corporate Transfer Service, Inc (CTS). With all of this acquisition Kendall has to make sure that other company able to meet their expectation especially as broker they played important role because they not only involved in the actual property transaction but in they almost always had local contact with corporation that could lead to signing of employee relocation contract. This would be main issues to make sure The Metropolitan Realty Network have that all quality.

3.3 Negotiate of Acquisition with CTS.

        In negotiation situation will always have one party who hold the card and most probably will gain advantages through negotiation process. The issues with this acquisition it that Kendall really put his fully interest and need to acquire CTS and most probably CTS aware regarding this as they dare to put high value for this company. Even though Kendall desperately needs this company and acquisition with CTS will provide with the immediate licensing and other legal documentation and also will gave them access to the network, but the value given it outrages for them.

        Furthermore, the financial state of CTS it not encouraging and it not in par with the price they request for acquisition. Conflict of interest it always occur and the issues it how to win this negotiation, Kendall know this would be win-win situation as CTS also really need this acquisition to solve they  financial issues. Kendall has to find solution give at least something CTS will really require it and will give them opportunity to agree with CMI proposal.

4.0 Generating Alternative

4.1 The five legitimate Negotiation Strategies

        Alternative to acquire good broker Kendall can consider negotiation strategies by Alenxender  Hiam and Roy J. Lewiki. In this strategy CMI need to verify what it important to them it is relationship with other party or outcome from negotiation it more important? To compete with Merrill Lynch’s CMI should negotiate with consider few factors and this including relationship with broker servicer is generally positive or negative, or whether a future relationship is desirable, also the level and commitment to the relationship and last but not least the amount and extent of free, open communication between the parties.         This would lead to beneficial negotiation to CMI.