Negotiation - Porto case:

Negotiations involve two or more parties. For this case, we will consider the buyer for Porto, Gerald Stecklen, and the sales manager for Technutronics, Brad Tennant. Each party has items which are important to them, and which they want to be a part of the purchase/sales agreement. As in all negotiations, there is a need to prepare for the meeting. You have information for both firms to review, and some cost/pricing calculations to make.

Each side in a negotiation must prepare for the meeting. For this exercise, you can play the role of the buyer and the seller. Your response will include two paragraphs. In the first one, there are 4 questions to answer for you, as the buyer, to respond to. In the second, there are 3 questions for you, as the seller, to respond to.

1. Calculate the total cost from each supplier and show your results.

2. Answer the 4 questions for the buyer.

3. Answer the 3 questions for the seller.

Buyers:

1. Given the unit price, tooling costs, and estimated transportation charges presented in Exhibit 2B, calculate the cost per unit for each supplier (using 200,000 units). What are some possible reasons why two suppliers did not provide quotations to Porto?

2. Prepare to negotiate a contract with Technutronics. As the buyer, identify the key issues and the range of your position on those issues. Remember that price is not the only variable subject to negotiation.

3. What do you think will be the most important issue(s) to the seller?

4. What do you believe is the lowest price that Technutronics is willing to accept? What is the highest price for New Prod the buyer might be willing to pay? (This defines the buyers negotiating range on the price issue).

Sellers:

1. Identify the key issues and the range of the sellers position on those issues. Remember that price is not the only variable subject to negotiation.

2. What do you think will be the most important issue(s) to the buyer?

3. As the seller, what do you believe is the highest price that Porto is willing to pay for New Prod? What is the lowest price you are willing to sell New Prod? (This defines the sellers negotiating range on the price issue).