International Business in the Middle East: Case Studies by Ashok Kapoor

Author:Ashok Kapoor [Kapoor, Ashok]
Language: eng
Format: epub
Tags: International Relations, Middle Eastern, Social Science, Political Science, World, Regional Studies, General
ISBN: 9780429726682
Google: IXikDwAAQBAJ
Goodreads: 52962915
Publisher: Routledge
Published: 2019-04-11T10:14:30+00:00

Project Development: Phase 2

Three months after the discussions in the United States, the American, the Indian, and the Iranian met again in Tehran. Farhad did not participate in the discussions but appointed Ahmedi, one of his trusted junior executives, as negotiator. Olden came with the company's legal counsel. Singh was accompanied by the technical director of the Indian joint venture company. The Indians arrived two days ahead of the Americans and held preliminary discussions with Farhad, who maintained the position he had outlined in the United States. He further stressed that he would not be interested in the project if it took more than a month for the Indian and American to reach agreement. The Iranian noted that one of his cousins was then in Japan and had been approached by a Japanese company for a joint venture in Iran. He did not wish to withdraw from the negotiations but he wanted his terms of continued involvement to be clearly understood.

Olden and the counsel arrived in Tehran from New York late in the evening and met with the Indians and Ahmedi over cocktails in the lounge. He gave the draft agreement to the Indians and a copy to Ahmedi, and a meeting was scheduled for the following morning at 9 a.m. to discuss the draft and negotiate the specific points.

The draft contained the following general provisions: (1) Project size was raised to $3 million and each party was asked to contribute up to 25 percent of its equity interest in cash. (2) Two additional products would be included in the project. (3) The chairman of the board would be a nominee of the Iranian partner. (4) The Indian partner was expected to vote along with the American partner.

At the meeting in the morning, the Indian reacted adversely to the proposed agreement. He objected that he could not put up any cash in foreign exchange because of the restrictions of the Indian government; that, given the increase in size of the project, he could not secure the ownership percentage agreed to originally; that the much larger scope of the project was a mistake because a smaller venture would better reveal the teething problem of establishing a project in Iran; and that he would not agree to the requirement of voting along with the American partner.

While the Iranian representative voiced no objections to the proposed terms, he stressed that the Indian and American partners must reach a clear understanding if they were to launch an effective three-party project in Iran. The Iranian did not want the Indians and the Americans to use the Iranian project as a battleground for settling their differences over their project in India. He reiterated that his principals would continue to be interested in the project if it could be finally resolved within thirty days.

Olden reacted sharply to Singh's protestations, and suggested that the Indian should not attempt to "swim in waters which were too deep for him." If Singh could not participate as an equal partner in

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