A planning document helps you assess the key issues of importance in a negotiation, your preferences regarding
Question:
A planning document helps you assess the key issues of importance in a negotiation, your preferences regarding these issues, and your overall negotiation strategy as well as that of your negotiation partner. 1 page
Guide: Provided a sample to show the answer expectation from a different case at the very end!
Planning Quality - Self(covers key planning points, aware of own interests, priorities, batna, RP, target, etc.)
Planning Quality - Partner(covers key planning points, from partner's perspective)
Insightful and critical thinking(Integrates course material, readings, or lectures when formulating a negotiation strategy & anticipating a partner’s strategy)
Writing quality & format(Adheres to 1 page limit, Main points easily accessible, proper grammar, spelling & sentence structure, use of references/cites sources where appropriate)
You are a buyer for Auditory Technologies, Inc. (ATI), a medical device firm. You will soon be meeting with the sales representative from your battery supplier Hi-Tech Batteries (HTB) to negotiate a new contract for this important part for your implantable medical devices. This supplier has been a regular supplier for your firm. You would like to continue to do business with HTB; however, eight issues still need to be resolved: • Quality Development fees • Contract term • Electronic integration Inventory Volume flexibility Price • Lotsize To facilitate the negotiation process, points have been assigned to your preferences for each of the options associated with each issue. Your goal in this negotiation is to reach an agreement with HTB on all eight contract issues that will maximize your points in the final contract. Quality Conformance quality is extremely important to your firm. In fact your firm prides itself on its high quality standards. Product defects can result in serious medical harm (and even death) for your patients and very damaging and costly legal problems for ATI. Historically, you have experienced an unacceptably high failure rate for batteries from HTB, about 1000 ppm (parts per million). Development fees - HTB will need new designs and tooling for this contract. They have estimated that these will cost about $400,000. In the past, ATI has paid anywhere from 0% to 100% of these fees. Of course, ATI would prefer to pay no development fees for this contract. Contract term - It is in your firm s best interest to have a short-term contract so that you can change suppliers and production rates to meet your business requirements. Historically, your firm has only been willing to commit to the next order. Electronic integration - Your firm is interested in reducing its transaction and coordination costs with HTB. A tightly integrated information system can help reduce these costs. Therefore, ATI wants to have a high degree of electronic integration. Defect rate 1000 ppm 500 ppm 200 ppm 100 ppm 10 ppm Development fees $0 Points 3600 $50,000 2700 $100,000 1800 900 $200,000 $400,000 0 Contract term 2 years 1 year Inventory - Your firm prefers that its suppliers hold about three weeks of finished goods inventory. Holding less than three weeks of inventory creates frequent shortage situations and costly expediting. More than three weeks of inventory tends to bury quality problems and makes it difficult for ATI to manage the phase-out stage for products. 6 months 3 months Next order Electronic integration 0% 25% 50% 75% 100% Points 0 1000 2000 3000 4000 Inventory 1 week 2 weeks 3 weeks 4 weeks 5 weeks Points 0 400 800 1200 1600 Points 0 300 600 900 1200 Points 0 600 1200 600 0 Volume flexibility Medical device demand is very difficult to predict due to an uncertain FDA approval date, unpredictable competitive actions, and highly variable market demand. Volume flexibility is the capability of the supplier to increase production when needed by the customer and is measured in terms of percent increase in production rate within a quarter. Given the unpredictable nature of ATI s business, you need to have high volume flexibility from your suppliers. Volume flexibility 0% 15% 25% 35% 45% Price - Of course your firm prefers the price to be as low as possible. This is a very important issue in your negotiations. Lotsize - Lot size is the minimum order size required by the supplier. You would like this to be as small as possible in order to minimize your cycle inventory. Points 0 800 1600 2400 3200 Price Points $350/part 0 $340/part 1500 $335/part 3000 4500 $330/part $325/part 6000 Lot size 2000 parts 1000 parts 500 parts 250 parts 100 parts Points 0 200 400 600 800 Conclusions Based on your assessment of the above issues, you believe quite strongly that you must achieve at least 6000 points for this deal to be profitable for your firm. In fact, you are quite confident that you can reach a deal for 6000 points with another supplier (LTB Low-Tech Batteries), which also supplies batteries for implantable medical devices. If you are unable to reach a deal with HTB resulting in greater than 6000 points you would prefer to work with LTB. The Supplier Negotiation Game Buyer Payoff Matrix Options Issue Quality Development fees Contract term Electronic integration Inventory Volume flexibility Price Lot size 1000 ppm 500 ppm 200 ppm 100 ppm 10 ppm $0 $50,000 $100,000 $200,000 $400,000 2 years 1 year 6 months 3 months next order 0% 25% 50% 75% 100% 1 week 2 weeks 3 weeks 4 weeks 5 weeks 0% 15% 25% 35% 45% $350/part $340/part $335/part $330/part $325/part 2000 parts 1000 parts 500 parts 250 parts 100 parts Buyer 0 points 1000 points 2000 points 3000 points 4000 points 3600 points 2700 points 1800 points 900 points 0 points 0 points 400 points 800 points 1200 points 1600 points 0 points 300 points 600 points 900 points 1200 points 0 points 600 points 1200 points 600 points 0 points 0 points 800 points 1600 points 2400 points 3200 points 0 points 1500 points 3000 points 4500 points 6000 points 0 points 200 points 400 points 600 points 800 points The Supplier Negotiation Game Final Contract Buyer/supplier pair number: Names of negotiators: Supplier Buyer We reached (circle one): Agreement No agreement If you reached agreement, please circle the terms of the agreement. Issue Defect rate Development fees Contract term Electronic integration Inventory Volume flexibility Price Lot Size Terms 1000 ppm 500 ppm 200 ppm 100 ppm 10 ppm $0 $50,000 $100,000 $200,000 $400,000 2 years 1 year 6 months 3 months Next order 0% 25% 50% 75% 100% 1 week 2 weeks 3 weeks 4 weeks 5 weeks 0% 15% 25% 35% 45% $350/part $340/part $335/part $330/part $325/part 2000 parts 1000 parts 500 parts 250 parts 100 parts Terry Schiller for Hollyville - Seller BATNA: Alternative Deal with WWIN Seller Priority: 1 2 3 4 Seller RP: $35k per episode Not beyond three years. This will depend a lot on what we agree upon per episode. 8 runs per episode Selling Juniors for $10k per episode $3,000 Seller Target: $70k per episode 50% in yr 1 25% in yrs 2 & 3 4 runs per episode Selling in Juniors for $20k per episode $8,969 Issue Kim Taylor WCHI -Buyer BATNA: Deals with alternative content providers Program Revenue Financing Cost Runs per Episode Other Net Revenue Buyer RP: $60k per episode Extend financing according to normal terms (50% in yr 1, and 25% in yrs 2 & 3) 4 runs per episode Don t need to purchase another show that doesn t fit our audience demographic $2,000 Buyer Target: $25K per episode To extend payment terms out enough to reduce risk 6-7 runs per episode If this gives me leverage in other facets, I ll consider it $4,000 Buyer Priority: 2 1 4 3 Seller Negotiation strategy and tactics for Contingent Negotiation: • Seek to understand WCHI s position on the value of the programming to them, as well as what their concerns are. It will be important to get alignment on what kind of advertising revenues we both think will come to WCHI as a result of having Moms.com play on their station. I feel there is a strong likelihood of achieving ratings in the 5-6 range. Base range for 2-3 pts = $6-$8M, with each pt increasing $.5M-$1.5M. What level does Kim feel they are likely to achieve? Since advertising revenues are related to the ratings points a program receives, there will be a high level of transparency to actual results that contingent portions of the contract could be predicated on. (Bazerman & Gillespie, 1999) • Because I know that WCHI has gone through some tough cost cutting times, I m fairly certain that they will want to extend financing terms and look for a lower cost per episode. Is there a way to structure the deal in way that makes WCHI pay more based upon achievement of higher ratings points? This is an example of enabling each side to bet on its biases. (Bazerman & Gillespie, 1999) I will offer that we can use the achievement of certain rating targets as a basis for a contingent clause with the contract relative to certain parameters. This is a way for both Hollyville and WCHI to share the risk. (Bazerman & Gillespie, 1999) Buyer Strategy and Tactics: • They will be concerned about Moms.com ability to bring in enough advertising revenues into WCHI. Based upon the fact that none of the networks have taken Moms.com into syndication, They will state that they believe that Hollyville is overly optimistic about what can be generated as a result of showing Moms.com. They will want to mitigate risk of over-paying if the show doesn t generate the amount of ad revenues that they are hoping for. You are a buyer for Auditory Technologies, Inc. (ATI), a medical device firm. You will soon be meeting with the sales representative from your battery supplier Hi-Tech Batteries (HTB) to negotiate a new contract for this important part for your implantable medical devices. This supplier has been a regular supplier for your firm. You would like to continue to do business with HTB; however, eight issues still need to be resolved: • Quality Development fees • Contract term • Electronic integration Inventory Volume flexibility Price • Lotsize To facilitate the negotiation process, points have been assigned to your preferences for each of the options associated with each issue. Your goal in this negotiation is to reach an agreement with HTB on all eight contract issues that will maximize your points in the final contract. Quality Conformance quality is extremely important to your firm. In fact your firm prides itself on its high quality standards. Product defects can result in serious medical harm (and even death) for your patients and very damaging and costly legal problems for ATI. Historically, you have experienced an unacceptably high failure rate for batteries from HTB, about 1000 ppm (parts per million). Development fees - HTB will need new designs and tooling for this contract. They have estimated that these will cost about $400,000. In the past, ATI has paid anywhere from 0% to 100% of these fees. Of course, ATI would prefer to pay no development fees for this contract. Contract term - It is in your firm s best interest to have a short-term contract so that you can change suppliers and production rates to meet your business requirements. Historically, your firm has only been willing to commit to the next order. Electronic integration - Your firm is interested in reducing its transaction and coordination costs with HTB. A tightly integrated information system can help reduce these costs. Therefore, ATI wants to have a high degree of electronic integration. Defect rate 1000 ppm 500 ppm 200 ppm 100 ppm 10 ppm Development fees $0 Points 3600 $50,000 2700 $100,000 1800 900 $200,000 $400,000 0 Contract term 2 years 1 year Inventory - Your firm prefers that its suppliers hold about three weeks of finished goods inventory. Holding less than three weeks of inventory creates frequent shortage situations and costly expediting. More than three weeks of inventory tends to bury quality problems and makes it difficult for ATI to manage the phase-out stage for products. 6 months 3 months Next order Electronic integration 0% 25% 50% 75% 100% Points 0 1000 2000 3000 4000 Inventory 1 week 2 weeks 3 weeks 4 weeks 5 weeks Points 0 400 800 1200 1600 Points 0 300 600 900 1200 Points 0 600 1200 600 0 Volume flexibility Medical device demand is very difficult to predict due to an uncertain FDA approval date, unpredictable competitive actions, and highly variable market demand. Volume flexibility is the capability of the supplier to increase production when needed by the customer and is measured in terms of percent increase in production rate within a quarter. Given the unpredictable nature of ATI s business, you need to have high volume flexibility from your suppliers. Volume flexibility 0% 15% 25% 35% 45% Price - Of course your firm prefers the price to be as low as possible. This is a very important issue in your negotiations. Lotsize - Lot size is the minimum order size required by the supplier. You would like this to be as small as possible in order to minimize your cycle inventory. Points 0 800 1600 2400 3200 Price Points $350/part 0 $340/part 1500 $335/part 3000 4500 $330/part $325/part 6000 Lot size 2000 parts 1000 parts 500 parts 250 parts 100 parts Points 0 200 400 600 800 Conclusions Based on your assessment of the above issues, you believe quite strongly that you must achieve at least 6000 points for this deal to be profitable for your firm. In fact, you are quite confident that you can reach a deal for 6000 points with another supplier (LTB Low-Tech Batteries), which also supplies batteries for implantable medical devices. If you are unable to reach a deal with HTB resulting in greater than 6000 points you would prefer to work with LTB. The Supplier Negotiation Game Buyer Payoff Matrix Options Issue Quality Development fees Contract term Electronic integration Inventory Volume flexibility Price Lot size 1000 ppm 500 ppm 200 ppm 100 ppm 10 ppm $0 $50,000 $100,000 $200,000 $400,000 2 years 1 year 6 months 3 months next order 0% 25% 50% 75% 100% 1 week 2 weeks 3 weeks 4 weeks 5 weeks 0% 15% 25% 35% 45% $350/part $340/part $335/part $330/part $325/part 2000 parts 1000 parts 500 parts 250 parts 100 parts Buyer 0 points 1000 points 2000 points 3000 points 4000 points 3600 points 2700 points 1800 points 900 points 0 points 0 points 400 points 800 points 1200 points 1600 points 0 points 300 points 600 points 900 points 1200 points 0 points 600 points 1200 points 600 points 0 points 0 points 800 points 1600 points 2400 points 3200 points 0 points 1500 points 3000 points 4500 points 6000 points 0 points 200 points 400 points 600 points 800 points The Supplier Negotiation Game Final Contract Buyer/supplier pair number: Names of negotiators: Supplier Buyer We reached (circle one): Agreement No agreement If you reached agreement, please circle the terms of the agreement. Issue Defect rate Development fees Contract term Electronic integration Inventory Volume flexibility Price Lot Size Terms 1000 ppm 500 ppm 200 ppm 100 ppm 10 ppm $0 $50,000 $100,000 $200,000 $400,000 2 years 1 year 6 months 3 months Next order 0% 25% 50% 75% 100% 1 week 2 weeks 3 weeks 4 weeks 5 weeks 0% 15% 25% 35% 45% $350/part $340/part $335/part $330/part $325/part 2000 parts 1000 parts 500 parts 250 parts 100 parts Terry Schiller for Hollyville - Seller BATNA: Alternative Deal with WWIN Seller Priority: 1 2 3 4 Seller RP: $35k per episode Not beyond three years. This will depend a lot on what we agree upon per episode. 8 runs per episode Selling Juniors for $10k per episode $3,000 Seller Target: $70k per episode 50% in yr 1 25% in yrs 2 & 3 4 runs per episode Selling in Juniors for $20k per episode $8,969 Issue Kim Taylor WCHI -Buyer BATNA: Deals with alternative content providers Program Revenue Financing Cost Runs per Episode Other Net Revenue Buyer RP: $60k per episode Extend financing according to normal terms (50% in yr 1, and 25% in yrs 2 & 3) 4 runs per episode Don t need to purchase another show that doesn t fit our audience demographic $2,000 Buyer Target: $25K per episode To extend payment terms out enough to reduce risk 6-7 runs per episode If this gives me leverage in other facets, I ll consider it $4,000 Buyer Priority: 2 1 4 3 Seller Negotiation strategy and tactics for Contingent Negotiation: • Seek to understand WCHI s position on the value of the programming to them, as well as what their concerns are. It will be important to get alignment on what kind of advertising revenues we both think will come to WCHI as a result of having Moms.com play on their station. I feel there is a strong likelihood of achieving ratings in the 5-6 range. Base range for 2-3 pts = $6-$8M, with each pt increasing $.5M-$1.5M. What level does Kim feel they are likely to achieve? Since advertising revenues are related to the ratings points a program receives, there will be a high level of transparency to actual results that contingent portions of the contract could be predicated on. (Bazerman & Gillespie, 1999) • Because I know that WCHI has gone through some tough cost cutting times, I m fairly certain that they will want to extend financing terms and look for a lower cost per episode. Is there a way to structure the deal in way that makes WCHI pay more based upon achievement of higher ratings points? This is an example of enabling each side to bet on its biases. (Bazerman & Gillespie, 1999) I will offer that we can use the achievement of certain rating targets as a basis for a contingent clause with the contract relative to certain parameters. This is a way for both Hollyville and WCHI to share the risk. (Bazerman & Gillespie, 1999) Buyer Strategy and Tactics: • They will be concerned about Moms.com ability to bring in enough advertising revenues into WCHI. Based upon the fact that none of the networks have taken Moms.com into syndication, They will state that they believe that Hollyville is overly optimistic about what can be generated as a result of showing Moms.com. They will want to mitigate risk of over-paying if the show doesn t generate the amount of ad revenues that they are hoping for.
Expert Answer:
Example of Negotiation Situation Topic Divide assignment work among students Situation In the strate... View the full answer
Cases and Exercises in Organization Development & Change
ISBN: 978-1412987738
1st edition
Authors: Donald L. Anderson
Students also viewed these organizational behavior questions
-
If an intermittent fasting protocol helps someone to lose body fat, it is because the diet caused which of the following? Select one: a. Sparing of muscle glycogen b. Sparing of lean body mass c....
-
List the conceptual issues of importance in regard to pension expense.
-
List the conceptual issues of importance in regard to pension liabilities and pension assets.
-
Design for Quality (D4Q) is a consulting firm that specializes in the design and implementation of quality management programs for service companies and organizations. It has had success designing...
-
Suppose that f : [a, b] R. a) If f is not bounded above on [a, b], then given any partition P of [a, b] and M > 0, there exist tj [xj-1, xj] such that S(f, P, tj) > M. b) If the Riemann sums of f...
-
In Exercises 43 through 76, simplify the given expression as much as possible. Assume a, b, and c are positive real numbers. 655836
-
Using Table 3.2, discuss potential safety issues associated with the usage of hydrogen as a fuel for automobiles running on fuel cells in comparison with those associated with vehicles running on...
-
1. Workpaper entries normally: a. Are posted to the general ledger accounts of one or more of the affiliates b. Are posted to the general ledger accounts only when the financial statement approach is...
-
4) A machinist wishes to insert a steel rod with a diameter of 9 mm into a hole with a diameter of 8.993 mm. By how much would the machinist have to lower the temperature (in C) of the rod to make it...
-
The Investment Trust Fund for Watson County had the following transactions and events during the calendar year 2022: 1. The cities of Turtle Creek and Pineview contributed $132,000 and $88,000...
-
5. The price of trade Suppose that Greece and Austria both produce fish and wine. Greece's opportunity cost of producing a bottle of wine is 5 pounds of fish while Austria's opportunity cost of...
-
Which of the three types of government policiesantitrust, social regulation, and economic regulationis the basis for each of the following? a. Beautician education standards b. Certified Public...
-
Would it make any sense to say that, since a change in tax policy makes Jorge lose utility while Mary and Demitri gain utility, the policy is good if the loss in Jorges utility is less than the...
-
Use the distribution function method to obtain the density of \(Z^{3}\) when \(Z\) has a standard normal distribution.
-
Some airline executives have called for reregulation. Why might an executive of an airline prefer to operate in a regulated environment?
-
Explain what the costs of the regulation are in the scenario in exercises 10 and 11. Data from in exercise 10 The FDA is considering the adoption of a higher standard of success in clinical trials...
-
The following financial information relates to the capital structure of Safety Shipping Pty Ltd. $ 12% debentures, $100 face value 14% preference shares, $10 face value Ordinary shares, $1 face value...
-
Write the given system without the use of matrices. D) - ()- d (x sin t + 8 (2+ 1)
-
If you were consulting with Arthur on the problems or opportunities for organization development interventions in this company, how would you describe and prioritize the main problems?
-
Critique Vivian's approach to learning about what is going on in the organization. If you were in her shoes, what would you do differently? The same? Why?
-
How do you think Tim and Chuck will respond to your response?
-
Figure P32.94 shows, for an AC circuit, the instantaneous current through a circuit element and the potential difference across the element. What can you determine about the element? Data from Figure...
-
The circuit in Figure P32.96 represents your planned design for a wall power supply that will run a radio that usually runs on a 9-V battery. The power supply uses a transformer (not shown) to...
-
Your boss has purchased a new AC power source to run a high-voltage, low-current display, but it is not working. While he is fuming, you look at the owner's manual and discover that this power source...
Study smarter with the SolutionInn App