Diversified Production Corp. is a large manufacturer of high-quality plastic parts. A major automobile company is one of Diversified’s oldest and largest customers. Annette, one of Diversified’s sales representatives, has recently received a call from Patrick, the purchasing agent for the automobile manufacturer. Patrick told Annette that the price she quoted for the renewal of their contract for front-seat console supports was too high. Her price was $1.52 million. A competitor from Japan had offered to provide these supports for $1.20 million, and a domestic competitor has submitted a proposal for a price only a little higher than that. Patrick tells Annette that he will be unable to renew Diversified’s contract unless she offers a “substantial” price reduction. Annette has scheduled a meeting with Patrick to try to work out an agreement on this.
(a) What information should Annette gather in preparation for the meeting with Patrick?
(b) Give and justify your view as to what price Annette should start with when she meets with Patrick.
(c) How should Annette decide what concessions to make? Give some examples of negotiating rationales she could use to support her positions during the negotiation process.
(d) How might this situation be restructured into a win-win negotiation?