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.