Question

Case 2 – The Skill of Negotiation

Background:

Assume that you own and operate a business. Your production this year was based on prior years’ experience. You have been left, however, with 100,000 unsold units on hand. You have been selling your

product at $5 each and expected the same price for these 100,000 units. You have exhausted all avenues you can think of for disposing of your excess product. You do not have the storage capacity for keeping these units in inventory while you continue production.

This morning a giant retail organization contacted you urgently seeking the type of product you produce to fill deficits in their supply. They offer to pay you $3 per unit.

Case Questions:

Question 1: How would you assess whether or not you should negotiate? Identify the factors you would consider and the overall rule you would apply.

Question 2: What factors can you readily identify that will affect your negotiation options and outcomes?

Question 3: What unconscious factors might also affect your negotiation performance?

Answer 1

1. Negotiation is the right thing but it is depend upon the value of the business,In this case the person who is forcefully selling the current stock,bacause there is inventory carrying related problems.The factors are:

• Failure of business objectives
• Poor market position
• Failure of current strategy
• Dont bother about the quality of product
• Not market oriented only selling oriented
• Poor status
• Forcefully selling the product at any cost,otherwise raising of inventory cost will happen
• Depending upon the client status we can raise the price
• Checking with the possibilty of negotiation
• Writing an agreement,that contains future major delings with our operating firm,this will help to restart our business and raising the value of business  

2.

• Dilemma arising at the time of after sales service
• product is burden to our business aspect
• continuing the inventory will leads to scrap
• Less availabilty of resources
• self operating ,so risk will focus only the one person
• Cost of inventory and carrying
• Not give importance for the value of a product only sales will be the obkective

3.

• Quality problems
• Inventory carrying cost
• Ordering cost
• Value for money
• Price
• Considering the client position for price fixing,we can use this depends upon the popularity of client