1Q.

In the negotiation between Fiji government and FIJI water over the proposed
tax increase on water extraction, which party is in a stronger position? Why?
Ans: Fiji government is in a stronger position in the negotiation between Fiji
govt. and Fiji water.
Alternate Invertors- if Fiji water does not operate in Fiji, then govt. will call
for international tenders from reputed international companies which will pay
the extraction tax demanded by govt. Even some business council meetings
happened with Australia and New Zealand to invest in the Fijian economy.
2Q.
In what ways can each party leverage power to force a deal on favorable
terms? Provide examples of power based moves that each party could
employ.
ANS:
Both the parties can leverage its power in order to force a deal on negotiable
terms:
Fiji govt.

Extraction tax- Fiji water is exploiting natural resources and

contributing very little in taxes. It can easily afford to pay additional
tax as last year companies export earnings of company was F$ 150
million and it has marketing budget of F$18 million.
Transfer pricing- In order to save taxes, Fiji water has underpriced its
water exports and was selling them at higher price in other countries.
While other local competitors were exporting comparable bottles water
at higher price.
Alternate Investors- if Fiji does not pay additional taxes government
can ask them to stop their operations and many foreign international
private players will be ready to invest in the economy.

Fiji Water

Welfare of the society- Fiji water was involved in various CSR

activities in FIJI i.e.
Employment- Fiji water provided employment to nearly 400
workers in Fiji and workers earned highest salary in the
country. If plant closes all of them will get unemployed.
Environmental initiatives- Fiji water plant was certified to
ISO 14001 (committed to reducing waste from production
facility and drawing water at sustainable rate). It also
announced a plan to go carbon negative- using more
efficient transportation modes, relying on renewable sources of
energy.
FIJI WATER FOUNDATION- Fiji water supported various
healthcare programs and quality education through its
foundation in FIJI.
Discriminatory taxes- Taxes were discriminatory as it would impact
only one company while other companies will be paying $0.001 per
liter.
Alternate source- Fiji water purchased second water purifier in New
Zealand which could be used as alternate source.

3Q.
FIJI water relies on the Fijian govt. to access Fijian water. How can the
company build a trusting relationship with a government that has been
unstable and is likely to continue being unstable?
Ans. Fiji water can do one or more of the following things to build trusting
relationship with Fiji government:

4Q.

Pay the taxes as demanded by government

Invest more Fiji economy in terms of procurement from suppliers,
more employment, more educational initiatives
Encourage government investment in Fiji water and share fixed amount
of profits with them.

Was the tax increase fair/ethical? How would you describe the negotiation in
the broader negotiation context (impact on other parties who are not at the
bargaining table?)
Ans. No, it was not ethical as it was only impacting one company. Tax should
have been increased in such a way that each water purifying company in Fiji
pays some increase in their tax amount according to their revenues and
exports.
But Fiji government was accused of corruption i.e. financial
mismanagement, tax evasion, bribery and nepotism. So, there is a
possibility that Fiji water must have paid bribery to government officials in
order to evade taxes. In that case tax increase was ethical.

If Fiji water denies to pay the increased taxes, Fiji government would
ask them to stop the operations. It might help the other players to
increase their market share by tapping on those areas where Fiji
water was operating in Fiji
If Fiji water agrees to pay the taxes and is able to convince the
government to increase the taxes for other parties also, then it will
also have to pay increased taxes.