Question

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

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

3. What unconscious factors might also affect your negotiation performance?

Solution Preview

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Answer 1:
In this case, negotiation should be conducted. This is because the other party is in urgent need of the products and the price which is being offered for this urgent fulfillment of the requirement is lower. The standard price is $5 per unit while the company is offering just $3 per unit. Generally, urgent orders are more expensive and so the business can consider getting at least a fair deal of $5 per unit...

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