Question
Case study: Two suppliers X and Y provide your company with critical supplies of starting materials for the manufacturing of a product Z. Last year,
Case study:
Two suppliers X and Y
provide your company with critical supplies of starting materials for the
manufacturing of a product Z. Last year, you managed through the tender system
to procure an engine from supplier X with a dream price equal to 400,000 USD.
While you recognize that this price was significantly discounted, you cast
doubt over the possibility to replicate that this year as you recently have
announced another bid for both suppliers about the need for another similar
engine. You discover that you can easily build from scratch that same engineer
with a cost equal to 450,000 USD. At the same you managed to know informally
that the both suppliers are willing to submit separately an offer with at least
50%, increase the price you had last year due to materials prices mark up in
the market. You also know that suppliers X is in great need of this deal this
year as it was a stagnant market with no other buyers since 7 months. Supplier
Y and X also prefer cash as they had cash flow issues which you can provide for
this tender.
Answer all the following:
1- What would be your
negotiations strategy? Why?
2- What are your
expectations about the negotiation's styles from supplier X and Y?
3- What is BATNA for
suppliers X and Y
4- What is BATNA for your
company?
Textbook - The Negotiation Book. Second Edition by Steve Gates.
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