Coffee Contract

Coffee contract(seller)

1. What is your walk away point? How did you come up with that?

My walk away point is 6.7/lb; this is the sum of product and shipping cost. Although the worst deal acceptable is 6.5/lb, I do not want to make a deal that will make a loss, the time and money invested in the preparation process is a waste as well, not to mention the storage cost in the subsequent process if the deal is made.

2. What is your target? How did you come up with that?

My target is 7.14/lb; this is the bid price subtracted by the shipping cost. I would make a concession by subtracting the shipping cost if the buyers would like to make some concession as well, such as printing our company’s logo on the coffee cup or increasing the contract volume and extending period.

3. What are your sources of power and key weaknesses in this negotiation?

power: 1. the superior service and high quality of the product I offered are better than other coffee suppliers.

2. our coffee’s sales volume is high. 3. the reputation of our company is excellent by giving a living wage to independent coffee farmers.

Key weakness: higher price than other competitors which dramatically decrease the negotiation power. However, the shipping cost accounts for a large part of the price (approximately 10%), the price would decrease if I have other customers in the central New York area.

4. What is your strategy for maximizing your objective outcomes?

My objective outcome is reaching my target 7.14/lb as well as get some concessions in return. The Strategy include that expresses my difficulties, such as the high shipping cost, let the buyers know what I have given up is costly to me. Also, the 0.8/lb concession cannot be made at once. In the first round, I will provide a 0.3/lb decrease and observe buyers’ reaction. If they do not disagree, try to tell them if they can make the concession as well, I will further reduce my bid price. The concession could include that extending the contract period, promote our coffee by printing Anderson’s logo on their coffee cup, etc.

5. What is your strategy for preserving or enhancing the relationship with the other party(ies)?

First of all, establish a pleasant atmosphere of communication during the negotiation process. Starting with a positive and open talk with some greetings so that the entire negotiation will be held in the harmonious atmosphere. Second, establish trust with each other. Providing buyers with the standard restaurant price I offered and the shipping cost is an excellent way to increase trust. It is also necessary to express my difficulties so that they can fully understand my situation. For example, the high research & development cost of coffee beans and the fair price to independent coffee farmer make the price- cutting difficult.