Assume that you own and operate a business. Your production this year was based
ID: 456795 • Letter: A
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.
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?
Explanation / Answer
How would you assess whether or not you should negotiate? Identify the factors you would consider and the overall rule you would apply.
I was about to dispose the products so selling them for $3 seems a better option however it is important to negotiate with the retail organization, if they are desperate for the product I could try to sell it to them for $5 and break even, the important factor here is that they want a product that I have and I need to find out how much they are willing to pay for it
What factors can you readily identify that will affect your negotiation options and outcomes?
I need to consider if I can sell it to a similar retailer, or the cost that I would need to pay to buy extra storage and hold these products longer. What is the difference on cost between the $3 per product vs the cost of extra storage
What unconscious factors might also affect your negotiation performance?
Fear due to past experiences.