Harborco

Analysis

Situation Summary

We are representing Harborco, a newly formed consortium who has submitted an application to the Federal Licensing Agency to build and operate a deepwater port off the coast of Seaborne. The consortium is made up of a variety of enterprises, which are diversified among a number of commercial activities. Harborco will participate in financing, construction, and operation of the port. The port will be the first of it's kind on the East Coast, located in Seaborne on the Estuary of Banksedge River. It will bring in large cargo ships and supertankers that are cost efficient in transporting raw materials and goods, just like the European Seaport, Rotterdam.

The port will be based on an artificial island created from dredging the access channel. The island will be connected to the shore by highways, railroads, and pipelines. An Air-Sea-Cargo-Centre would be developed onshore with major connections to highways, railways, and pipeline networks. Substantial infrastructure will be needed to accommodate an intermodal freight terminal of this sort. Most of the industrial plants and ancillary facilities will be located on the island. Components of the port could be operational in five years from the start of construction, but the port's full development may not be finished for 20 years. The proposed cost of this port is estimated at 4 billion dollars.

The port has tremendous profit potential, particularly if we can secure our license in its present form. This project also has potential to generate significant economic benefits for Seaborne, and the entire nation. Unfortunately the FLA has been hedging on our application. Members of congress have criticized the FLA for not considering the "broader public interests", so it is now very sensitive to the level of political support surrounding each application it reviews. Because of politics, they have forced us to negotiate with parties that really have no business interfering in our business. This means that in order for our application to be accepted, we have to gain support of at least four of the five parties that have an interest in our project. They are: Federal DCR, Governor Sherwood, Environmental, Other Ports, and Unions.

Each of these five parties has particular interests pertaining to certain issues affecting their viability in our project. The issues to be negotiated on are: Industry mix, Ecological impact, Employment rules, Federal loans, and Compensation to other ports in the region.

Structure of Negotiation

The negotiation has been set up so that each area of concern (issue) has been rated on a point scale. The different issues hold different importance to us, so they are graded on different point ranges. Ex. Funding is more important to us than ecological impact so it is rated from 0-35, while ecological is rated from 0-11. There is a different point scale for each negotiating party depending on how important each individual issue is to them. We are assuming that each negotiating party has a minimum bottom line number (as do we) that will help determine if they should accept our proposed deal. The point scoring system helps us determine our trip wire. Our challenge is to evaluate how important each issue is to the other five negotiating parties and try to propose a deal that will be beneficial to everyone and easily accepted by at least four of those five parties. Otherwise we will not get the backing of the Federal DRC or the licensing from the FLA.

We have looked at the parties and tried to determine who has similar interests and who has opposing interests. We have compared the parties to see which ones have the same interests as we do. By doing this we can try to interpret where each issue is ranked by each party. This gives us leverage to concede certain concessions that are not terribly damaging to our project.

When all parties are at the table there will be three formal voting opportunities during the negotiation to accept or reject the proposed deals made by Harborco. If five out of the six parties at the table accept the deal, the Federal DCR will accept the application of the Harborco project. Two participants have been granted the power of veto (1) Harborco because it is the only party capable of initiating the project. (2) The Federal DCR because the proposal requires a federal loan or a loan guarantee. Either of these two parties can veto an offer made by the other remaining parties.

The Players

Harborco -- A minimum of 55 points is needed for us to accept any deal. Obviously we are aiming for much higher. Our biggest allies are Federal DCR, Governor Sherwood, and possibly Unions. Strongly opposed to our deal are Environmental and Other Ports.

Harborco interests:

Ш Securing financial funding from the Federal DCR

Ш Obtaining approval from the Federal Licensing Agency on our application to build the deepwater port.

Ш Persuading four parties to vote for the deal

Ш Introducing new modern technology

Ш Saving money on production and construction costs

Ш Tremendous profit potential

Ш Limiting union presence

Ш Avoiding costs of environmental improvements

Ш Avoiding costs of paying compensation to competitors - setting unwanted precedents.

Ш Maintaining political relationships

Ш Not losing

market share of potential business generated by the port.

Ш Having freedom to choose the most profitable mix.

Ш Nurturing relationships

The Environmental League -- A coalition of environmental interest groups who are opposed to any "development" of coastal areas. They are worried that our proposed port would seriously damage the environment of Seaborne and destroy the ecology of Banksedge River. Losing the environmental issue could potentially cost us $280 million dollars because of the need to alter our dredging and construction plants as well as the environmental improvements they want us to make. Realistically they want us to foot the bill for improvements that should be the responsibility of the government not business. Interests:

Ш Protecting