Issues in negotiation:
Sale of produced units
Long term relationship leading to further sales
Both parties are interested in coming to an agreement. We (Excalibur Engines) are interested in selling these pistons but only at a price of $480 or more per piston. If an agreement can be reached we have the possibility of making a profit, branding and developing a relationship with Knights Engine Parts.
Priority of issues:
Sale of 10000 units of pistons which would otherwise have to be sold at $100 Price to be more than $480(excluding rush fee and insurance) and we could try till $650 (including rush fee and insurance) Advertising our product for attracting more customers in the long run
To minimize the loss caused due to the Swiss deal
To establish a long term relationship with Knights Engine To increase the company’s revenue and retain the shareholders
Tangible: To sell 8,000 pistons (what Knight needed) for $650 (desired price + insurance) and want the Knights to indicate on the chassis that their engines were fitted by us (Excalibur Engines) By this we are trying to maximize profits to $650 and minimizing loss by selling 8000 out of 10000 units produced for the government of Switzerland.
Intangible: We will try to establish both a good relationship and a reputation for fair deals, so that future business can develop.
Walkaway points and BATNA:
Walkaway point: We would walk away from the deal if the price drops below $480 and if they refuse to indicate on the chassis that their engines were fitted by us (Excalibur Engines)
BATNA: To sell more pieces at a little lesser cost thus reducing the average cost per piece. Negotiate the branding in exchange of the rush fee or the insurance cost. One of the most important parts of the planning process is to anticipate what your opponent will do, and along those...