Nucleon's Licensing Options and Lessons on Negotiating with Powerful Suppliers

Implications of licensing for Nucleon's organization, identity, and objectives

1 Among The Various Options Available To Nucleon, The Possibility Of Licensing The Product To Another Company Right Away Is Definitely On The Table. What Would This Choice Imply For Nucleon’s Organization, Identity And Objectives In The Long-Run?

2 What Lessons Might Nucleon Learn From Reading How To Negotiate With Powerful Suppliers ?

Nucleon has the opportunity to license the product in place of fixed payments for future royalties. The expenditures are considered to be made by the licensed partner and such are required for the clinical development, regulatory fillings, clinical manufacturing and commercial manufacturing along with marketing. This particular licensing option would also help in generating the cash on an immediate basis and in addition to such spare Nucleon from making large capital investments, which would assist them in manufacturing and for clinical development, which would permit the company to use all the resources which has been concentrated on R&D. If the product turned out to be a success then Nucleon would obtain lower revenues than the investments made by them. Due to such reason it was also considered to be viewed as ‘mortgaging away’ of the company’s future. Such a view relied upon the exact terms of the agreement, which would be negotiated by Nucleon. The nature of such negotiation would remain uncertain but the management of Nucleon had conducted several preliminary discussions with various firms, which would help them to reach an agreement that would be beneficial for the organization. Therefore, based on the negotiation skills the objectives would be determined for Nucleon’s organization identity in the long run.

Balance of Power is considered to play a pivotal role in many industries and such has shifted from the buyers to the suppliers. The shift has come due to various reasons. In certain cases, the suppliers in order to eliminate their competitors develop several disruptive technologies or drive down the costs of products. Due to such reasons, the companies have acquired weak positions with the suppliers and therefore, they need to take care of the situation strategically. The companies in order to reach an agreement can try to bring new value to their respective suppliers or be a gateway to new markets. They can also consolidate the purchase orders and decrease the purchase volume. They can bring in new suppliers and vertically integrate which would assist them through investing in assets for a joint venture in some kind of a strategic partnership. They can also play hardball if all the other things fail like the suppliers get eliminated or the orders get cancelled or if there is a threat of litigation. Therefore, this would act as a last resort. Therefore, these initiatives and strategies might assist the company to negotiate with the suppliers as such would help in reducing the risks of the suppliers and redefine the relationship with the supplier by rebalancing the power equation and turning the commercial transaction into a strategic partnership.

References

Ezez. 2020. "How to Negotiate with Powerful Suppliers". Harvard Business Review. https://hbr.org/2015/07/how-to-negotiate-with-powerful-suppliers.

Ezez. 2020. "Nucleon, Inc.". Hbs.edu. https://www.hbs.edu/faculty/pages/item.aspx?num=22108.