Your company really wants to buy an excavator. An excavator would be instrumental in growing your General Construction company and would allow you to do digging you are now paying someone else to do. You have been researching buying a used one for your company for the last three or four months, but the excavators you have seen either have very high usage or they are not well maintained.  It is not a pretty picture.

Recently, you found an excavator and it is exactly what you want. You know through your research this model has a value range of $40,000 to $100,000, depending on a number of possible variables. This is your second time to see the excavator.

Your best friend, Gerrard, also knows Seller, although Seller does not know that he is your friend. Seller told Gerrard that he, the seller, has to have $50,000 within a few days and really must sell this excavator. At the time that Gerrard mentioned something to you about the excavator and Seller's need to sell it in order to make a mortgage payment on the company's building, he did not know that you were looking for an excavator. However, because of his comments, you know that Seller's BATNA is $50,000, and you also know that there are a few days until this mortgage deadline. You anticipate that the seller will try to get more money than $50,000. But remember, you know his BATNA!

However, the BATNA may not be Seller's reservation point. If you disclose that you know anything about the $50,000, it is probable you will make Seller mad and blow a good deal. You want this excavator and you want to make a good impression to your boss that you can negotiate a good deal.

If Seller throws out the first price, talk about how high the price is, how you don't really need the excavator, and say you have to think about it. Pretend you are ready to leave. However, remember that this is the best excavator you have seen, and you really want this excavator!!!

Seller's Facts:

You need to sell your excavator. Your company has a mortgage payment due within a few days and this sale of the used equipment will help meet these financial commitments. At a minimum, you need $50,000 for the excavator to make the mortgage payment. This is your BATNA (Best Alternative To a Negotiated Agreement), but your company certainly could use more. Through your research you know the salvage value of the excavator is between $40,000 and $100,000, depending on a lot of things.

You are not sure how much you can get for the excavator, but whatever the price, your present reservation point (Seller's RP), below which you do not want to go, is $75,000. You will gladly accept anything above your RP, but you are not willing to go below the RP at this time. If you have not made a deal by the last day before the mortgage payment due date, and if someone comes up with cash on or near the last day, you will reconsider.

Your company is not in a desperate situation yet, but you know that you have just a few days left before you have to turn in the money for the mortgage payment. Keep in mind that you have been trying with no luck to sell this excavator for the last nine weeks. You have had a few nibbles, but nothing sure, and time is running out. You know an excellent excavator might fetch up to $90,000. You are pretty sure that amount is not reasonable to expect for your company's excavator, but you certainly would take it if you could get it from this buyer.

You are hoping for something around $80,000, but because of the time issue, you will go lower. You just want to sell it and pay the mortgage payment. If Buyer makes the first offer and it is lower than you like, work with him to get the price up to what you want. Remember, you MUST work with Buyer and you want to make a good impression to your boss that you are good a sales man.

This is the second time Buyer has been by. He has asked all the right questions, has inspected and tested the excavator, and you think that Buyer is very interested. Be careful though. If you are too stubborn, you could lose the sale. If you are too quick to accept an offer, you might get less than you would than if you held out for a bit.

Questions:

a. What are the issues to be negotiated?

b. What are the priorities among the issues in the bargaining mix?

c. What are the primary underlying interests?

d. What are my limits on each issue - walkaway points and BATNAs? Show how you arrived at these points.

e. What are my target points and opening requests on these issues? Show how you arrived at these points.

f. Who are the important constituencies to whom I accountable?

g. What do I know about the other negotiator's interests, negotiating style and personal reputation?

h. What overall strategy do I want to pursue?

i. What do I need to assemble - research, documents, charts, and graphs to make the most effective presentation I want to achieve? What tactics will I use to present my arguments or defend against the other negotiator's arguments?