Negotiation: Coffee Contract

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

Our walk away point is $7.00/lb.

Given the need to prioritise cost-effective practices, this places unjustifiable pressure on our company's financial position. Tasked with making an advantageous decision, this exorbitant price is not advisable when LaRoche remains a viable option. Furthermore, such an unfavourable outcome is likely to threaten Sandy's job security.

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

Our target is $6.75/lb.

The $1.19 reduction from Anderson's original bid is rationalised by the significant exposure this partnership will provide. Similarly, we forfeit over $1.00/lb savings (as is offered to Colonial Williamsburg) to account for our relatively low annual purchase.

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

We bring valuable avenues of brand publicity to the table, facilitating Anderson's expansion into new regions. Our close affiliation with hotel managers will provide unique networking opportunities which could easily translate into long-term profits.

Our bargaining power is limited by our lower annual purchase. The high quality of the product and 'fair trade' policy may be points which Anderson rely on to avoid lowering their price.

What is your strategy for:

i. Getting a wise agreement?

Focusing on creating a shared appreciation of the situation, highlighting the mutually beneficial opportunities that this partnership will present.

Although substantive conflict exists (i.e. maximising profit vs. maximising savings), we hope to create common ground in our perceptions so that both parties are willing to make compromises which lead to a wise agreement.