Your company (a corporation) is planning to buy a piece of land on the perimeter of stanbul
Question:
Your company (a corporation) is planning to buy a piece of land on the perimeter of İstanbul towards the west, possibly in or around Erenoy, and erect the new company headquarters building there. You have done extensive research and discovered that a 3,000 m2 lot (what you need) would cost you 3,380,000 to 3,420,000 USD, depending on the location and proximity to main roads in the area. You have found such a lot. It is quite close to the main street leading to Istanbul Chamber of Commerce road junction. This lot belongs to two joint-owners who have inherited it from their late father last fall, and are willing to sell it soon provided that they get 3,400,000 to 3,430,000 USD from a corporate buyer. They have an alternative potential buyer, a proprietor-contractor who wants to build two apartment blocks with recreational facilities on it and has already offered them 3,380,000 USD, which apparently is his last offer. You have found another lot, 3,200 m2, in the southern part of Balgat, and they are asking for a firm 3,450,000 USD, which you think can be bargained down to 3,420,000 USD if payment is made in cash. However, your primary interest is in the 3,000 m2 lot. Late spring-early summer is the time when land prices are at their highest in the area and winter is when they are the lowest. We are now in December, which is late fall. You have contacted the owners of the first lot and informed them of your intention of buying it.
- 1. Can this deal be negotiated? Why or why not?
- 2. Assuming it cannot be negotiated, what would be your next step? For questions 3 to 10, assume you said “Yes, it can be negotiated.”:
- 3. What is the pie? Show the buyer’s and seller’s ranges separately but in the same diagram. (Improper labeling: -2.5 per item)
- 4. What is your BATNA?
- 5. What is the sellers’ BATNA?
- 6. What is your reservation point?
- 7. What is the sellers’ reservation point?
- 8. What would be your opening figure?
- 9. Close to what figure do you think this negotiation would tie up?
- 10. What elements would affect your answer for question 9? Name at least five.
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling