Blog Post

Observation

November 03, 2011 in General by Dr. Clare Murphy

The completion of any deal between two parties requires a high level of skill in the art of negotiation and mediation.  BBMC Global can proudly boast that it has the asset of a team with internationally recognised qualifications in both of these areas.  Below are some of the obstacles to a successful outcome when bringing buyers and sellers together.

Poles apart

A commodity is only worth what a buyer is willing to pay.  A seller wants to achieve the best price for his commodity, a buyer the lowest price achievable.  What are the pitfalls and stumbling blocks to bringing these two parties together?

• Unrealistic expectations regarding the price of a commodity.  

It is easy to be seduced by information, false or accurate, regarding the prices that have been achieved by sellers of a similar commodity to yours.  When the commodity involves differences in quality, in the costs of extraction and in the logistics of distribution including upgrading the infrastructure of an area and establishing suitable ports, then the prices obtained by others can almost be disregarded.  It is the information that is applicable to your commodity that is vital.  This is no truer that in the instance of minerals and mining, and particularly in emerging economies where the infrastructure is poor and the port facilities are limited.

• An unwillingness to spend the time and resources researching the correct information regarding the realistic price for your commodity.  

All the costs involved in production and distribution must be factored into pricing.  The correct expertise in, for example geological surveying, is essential and the reports provided should be of high quality for the correct evaluation to be made.

• An inability to take advice.

Intransigence is the enemy of good negotiation and parties must be willing and able to listen to those whose advice they seek in order to make informed decisions.

• Suspicion

This can be fuelled by cultural differences and stereotypes but  can also be quashed by a professional approach with concise information which is understandable to all.

Costs of delayed, postponed or abandoned negotiations

• Any outlay of money, such as legal costs, which has been spent in preparation for a deal may be lost.
• Prices for commodities rise and fall.  For instance the price of iron ore has currently fallen.   The loss to a seller of not closing a deal can be huge.

At BBMC Global we have a culturally and ethnically diverse team based in different continents of the world, whose vision is clear, and who are committed, through meticulous hard work on behalf of their clients, to delivering the best achievable outcome for all parties.