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Negotiation Project Essay

3110 words - 13 pages

Negotiation project
November 24, 2013
giang hoang
Arkansas State University – Fall 2013
November 24, 2013
giang hoang
Arkansas State University – Fall 2013

1. Explain your negotiation framework regarding price; i.e., what were your minimum – target – maximum and how did you arrive at those numbers?
Our potential customer is ASU Cosmetics. It is opening a distribution center in Jonesboro, Arkansas. This company has a manufacturing plant in San Francisco and one in Clinton, CT. Now, they need a carrier to handle finished goods freight between Jonesboro and San Francisco. In addition, they also have a supplier ...view middle of the document...

10. However, this price is still lower than market price of $2.15. Second option is finding a backhaul in Jonesboro. If we can do that, the price will drop to only $1.78 for the round trip.
There are several weaknesses for us in this situation. The first weakness is our CEO’s pressure. Our company’s CEO is counting on this business to meet her plans of expanding the freight volume for the next fiscal year. She is also interested in getting the consumer product company’s business in the northeast. It means that this project is very important with the company’s CEO and we have to negotiate it successfully. This pressure reduces our power and increase buyer’s power during the negotiation. In addition, we have competitors in this business. We do not have any information about them such as: price, on – time performance… Because of several competitors in this business, ASU Cosmetics has strong power to reduce price and control the negotiation. They also have leverage power when there are 3 round trips per week from San Francisco to Jonesboro and 3 more from Saint Louis to San Francisco. Thus, in total, they have 6 trips per week with thousands mile.
3. What were the important negotiation issues for you? Why were they important?
In my thinking, the most important negotiation issue is negotiating with buyer’s negotiators successfully with fair price. Besides, there are some other issues that I need to consider. First, will the company build a new terminal in Jonesboro? This issue is very important because it impacts the quality of on – time performance. If we use the Atlanta terminal to service our trucks and dispatch drivers, our on – time service performance will average 90% in Jonesboro. If we build a terminal in Jonesboro, our on – time service will improve to 99.5%. Second, the length of contract is also important. If it is a short – term contract, it will not worth to build a terminal in Jonesboro. Third issue is competitors. What do our competitor’s proposal? We do not know that so it is very difficult to set up price. Another issue is hiring lumpers. Our driver do not unload freight. We have deal with a local temp company to hire lumpers for $7.5/hour, no benefits. Should we include this cost to price? The last issue is fuel surcharge. Now, the average surcharge currently is $0.25 per mile. However, fuel price fluctuates frequently. Should we keep the constant level during the contract or adjust it during period?
4. What did you decide on for negotiation goals? What concessions were you prepared to makes?
My goal for this negotiation is a win – win result for both my company and ASU Cosmetics. My company win the business, both headhaul and backhaul trips with an acceptable price. The length of contract should be 6 months to 1 year. ASU Cosmetics has a carrier with fair price and good performance. The first concession that I can make is pricing. My range of price is from $1.90 to $2.10 but I can accept the price of $1.85. I...

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