Your negotiation team, consisting of members of the top management group of the Twin Lakes Mining Company, has the autho

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Your negotiation team, consisting of members of the top
management group of the Twin Lakes Mining Company, has the
authority to enter into any agreement that it deems to be in the
best interest of the company. Twin Lakes has several mines in
northern Minnesota and Canada; the Tamarack operation is second in
both "productivity" and contribution to corporate profit. Your
negotiating team includes the top person from the Tamarack
operation, along with others from corporate headquarters in Duluth,
Minnesota
Most of the problems that were described in the "Background
Information" have existed for a long time. Officials of the company
have met with city officials several times to discuss these
problems. Although you agree with community concerns, you frankly
think that the city has overstated the problems in order to get you
to pay for public improvements. Hence you have agreed to remedy
several of the most obvious concerns in the past, but have not had
to incur major costs up to this point. Now that the state and
federal agencies have mandated a cleanup, things have changed
considerably. Some major improvements will have to be made in order
to keep the Tamarack operations running.
You are committed to keep the Tamarack mine and plant open
if possible, but not at all costs. You do not want to spend large
sums of money to keep this operation running. Some of the newer
mining operations in other areas have revealed rich deposits, but
will require large investments to gain access. If the costs of
continuing the Tamarack operations are too high, you could close
this mine and plant and invest in other operations. You want the
city to help with the improvements, especially because they will
benefit the city as well as the company. In addition, everyone
involved knows that keeping the Tamarack area operations running is
very important for the Tamarack economy. Naturally, you would like
to settle as cheaply as possible.
Several options for each of the issues have been discussed in
the last few meetings between the city of Tamarack and the Twin
Lakes Mining Company. Both parties have agreed on which options for
each issue are the most feasible. A detailed explanation of each
issue, including the available options, is provided in this
confidential memorandum. In addition, a point system has been
devised so that all of the issues can be rated on a common metric,
to assist you in negotiating. The point system allows you to
combine several interests - minimizing expenses and maximizing
current and future revenues, while incorporating opportunity costs
and legal considerations - into a single "currency." Each option
has been assigned a point value to indicate the quality of that
option to you. Within each issue, an option with a high point value
is a better outcome for you than options with lower point values.
Across the five issues, more important issues are assigned a higher
maximum level of points than less important issues. The more total
points you gain, the better the outcome is for you. Your
task is to try to earn as many points as possible in this
negotiation.
Tax Rate on Company Land. You have been arguing with the city
constantly about the tax rate for company-owned land, and feel that
their rates are ridiculous. You believe the basic problem is that
the rate on the company land is very similar to rates on private
residential land, when in fact you argue that it should be
considerably less. The city wants to increase your tax rate, as the
taxes you pay represent a major portion of their revenue base. You
know that the city wants to expand its tourism industry, and you
suspect that they will use your tax dollars to fund this growth.
This scenario is clearly unacceptable. You would ideally like to
see the city reduce your tax rate by 4%, putting it in line with
rates on company property in similar cities. The options on the
table and their point values are:
• Reduce tax 4% 40
• Reduce tax 2% 28 • Maintain current tax 18
• Increase tax 2% 10
• Increase tax 4% 0