Dialogue

This dialogue takes the form of a program on Victorian local television. A correspondent is talking to Armen Augonesyan, the Armenian Economics Minister, about RSA’s plans to build a factory.

C: Good evening, ladies and gentlemen. Tonight we have with us in the newsroom Mr. Armen Augonesyan, the Armenian Economics Minister, who has been involved recently in the proposal by the giant printer firm, RSA, to build a new factory in Victoria. Good evening, Minister.

AA: Good evening.

C: Mr. Augonesyan, we’ve been hearing a lot recently about RSA’s plans to build a new factory in Victoria. Do you think this factory would really benefit the Victorian people?

AA: My answer to that question would be a definite yes. A factory of the kind proposed by RSA would provide jobs in an area of high unemployment; would provide money – income that is badly needed – at a time when the Victorian economy is at its lowest point; would give…

C: Excuse me for interrupting you, Minister, but isn’t there another side to this question? I mean, we’ve been hearing about the pollution this factory would cause and the huge profits that RSA would make, that would go into their main plant in the Capital City…

AA: Excuse me, but that really isn’t quite right. There is no question of huge profits. RSA is a normal firm making normal profits. Now… er… it’ll probably be twenty years before the project shows any extra profit at all. After that time, we’ll see whether the profits stay in Victoria to develop the plant even further, or go to the main plant in Capital City. We’ve gone into this very carefully with the State Bank, and we’re satisfied that RSA will only be making reasonable profits in Euro. Profits that are normal for any business of this size.

C: on the subject of business, Minister, is it true that RSA are being provided with public money for their factory?

AA: Ah, no, I’m sorry, but this really is nonsense. There is no public money at all going into RSA. None whatsoever.

C: But they are getting a loan from the State Bank?

AA: They are getting a loan from the State Bank. Again this is quite normal – all companies that wish to develop can apply to the State Bank for a loan.

C: At the normal rate of interest?

AA: I’m afraid I can’t say that at the moment.

C: But are they getting favourable interest rates?

AA: I really can’t give the answer to that ay the moment. The conditions for a loan are the responsibility of the Director of the State Bank. He will have to consider all the factors connected with this loan. The important point for Victoria Department is not that RSA is building factories on public money, but that they are providing jobs at a time when they are badly needed. This is the main point to consider now.

C: Mr. Augonesyan, thank you very much.

AA: Thank you.

Brief for Negotiating

You are: Tigran Timonyan. You have estimated that it will take over 20 years for the plant to pay for itself if you accept the interest rates offered by the State Bank. The Managing Director doesn’t think that this is good enough, and he wants to negotiate with the Bank to get a cheaper loan. He is also very angry with you because you did not tell him about the high interest rates when he proposed the project in the first place. It is therefore very important that you get a good deal for RSA or you may lose your job. Your basic points are the following, but you can decide with your group whether to raise or lower the limits.

As Finance Manager you have to negotiate the following points:

1. You want a long-term loan over 15 years at a rate of 6% interest.

2. You want the loan interest-free for the first three years. Don’t forget to point out that you are doing a great service to the people of Victoria Department by providing jobs in an area of high unemployment. Also, you feel that the State Bank should be helping Armenian industry.

3. You want the Bank to provide $1.5m out of the $2m needed for the plant. RSA can then provide the other $500,000.

4. You want to make the first repayment after 5 years. You would then pay back the loan in 10 annual installments.

You will have to negotiate on all these points. First, get together with all the other Finance Managers, and decide what your upper and lower limits are. Then meet with the Bank Manager and try to make a deal.