The Negotiation Strategy in Bank Loans for Small & Medium Enterprises

• Main Authors: Shan-Shan Chen, 陳姍姍
• Other Authors: Chia-Hsin Huang
• Format: Others
• Language: zh-TW
• Published: 2002
• Online Access: http://ndltd.ncl.edu.tw/handle/00287776354997779664

碩士 === 國立高雄第一科技大學 === 金融營運所 === 90 === In Taiwan, the total number of Small and Medium Enterprises (SMEs) account for 98.08% of all kinds of industries providing 78.06% of job opportunities in the labor market. Drawing on 36% of national assets in the economic terms, the SMEs are estimated to produce approximately 52% of nation’s GDP. The SMEs are not only the driving force of Taiwan’s economic development, but also the major component for social stability. However, due to the common problems of less economy of scale and the loose organizational structure amongst the SMEs, they are relatively incapable of competing with local syndicates or other multinationals in the region. As a result of the lack of sufficient running capital, many promising SMEs with profitable products are not able to expand their market or even survive from the competition. Owing to the insufficient understanding on or inaccurate information about bank loan and loan conditions, inappropriate financing decisions might be made. And to make matters worse, inexperienced negotiation skills toward loan conditions and untrained staff in accounting department aggravate the company’s financial situation. This research first explains the characteristics of SMEs which explore from the previous studies; discusses all sorts of problems in negotiation strategies; and develops the model of increasing scale and capital for SMEs. The model shows the relationship between SMEs and Bank Loan, that the development of SMEs requires the supporting from the outside resource especially the benefits gain from the third part (such as government) supporting in Negotiation with Bank. The main purpose of this study is to develop a model of the negotiation strategies in bank loans for SMEs which includes:(1)Analyzing the current predicament of enterprises in Taiwan;(2)Exploring the possible solution to the business development;(3)Identifying the position of banks;(4)Generating and choosing the favorable negotiation strategies; (5)Negotiation agenda。The execution of negotiation strategies are generally compose of the following elements(1)The aim of negotiation;(2)The members participating in the negotiation; (3)The theme of discussion;(4)The negotiation timing;(5)The ideal location for holding the negotiation;(6)Negotiation skills. After widely analyzing the cases of SMEs’ bank loan presented in the paper, it is possible to conclude that the majority of bank loan problems derive mainly from the poor interior and/or financial management. Besides, the understanding gap between a SME and its collaborating bank can even worsen the existing predicament the company is facing. For these reasons, many financial institutes or banks either are less willing to offer loans of any kind or, very often, refuse to give warm hands to SMEs in Taiwan. These tight credit-check policies seriously turn many SMEs into the unfavorable position in the financial market. The SMEs are suggested that the needs and current situations of organizations should be clearly identified. And accordingly, the SMEs can make a good use of negotiation strategies and the better relationship with banks together the assistance from the third party. Pulling these three forces into a single effort, it is in hope that the financial difficult can be efficiently eased. Viewing the all cases as a whole, it is clear that “cooperate strategy” is on the top of the best negotiation strategies. It is a win-win strategy, which can provide mutual benefits to both the SME and its bank. The second best negotiation strategy found by this research is “compromise strategy”.