Rbrown - Coffee Contract 504h2l

C. Ryan Brown

Negotiations

8/31/16

Negotiation Exercise: Coffee Contract Student Name and Role in the Exercise: C. Ryan Brown; role of Sandy Grant, F&B Director Counter-Party Name: John Offerman, role of Pat Hammer, VP Anderson Coffee Negotiation Result ( of Agreement if Any): in RFB remain as is; delivery expectation is every 2 weeks at a price of $6.90 per pound. Analysis of Strategy or Tactics Employed: My initial strategy was to explain to my counterparty the situation that I was in and why I was looking to potentially change my coffee supplier, namely focusing on the fact that my current supplier satisfies my needs, but I’m considering Anderson’s product because I believe their product to be of higher quality. I chose not to disclose the prior issues I had with my current supplier regarding the attempted price increase. I also did not disclose my knowledge of Colonial Williamsburg’s price of $5.95 per pound. My initial negotiation tactic was to explain that my preference was to switch coffee suppliers to Anderson, but that the price was way too high; however, it would be advantageous for Anderson to lower their pricing due to the brand recognition and perceived quality that could result from Anderson being d with my Hotel. Using the knowledge that Anderson is willing to sell at $5.95 for bulk pricing, I initially asked for a price of $6. My tactic was to provide the first anchor in the negotiation at a price at which I know they would sell, but would not necessarily sell to me, with the assumption that a low anchor would give me a larger negotiating rage. After the initial two offers were released, I revealed that I had conducted taste tests and the results indicated that their coffee would be positively received. We eventually settled on $6.90 per pound. Although the worst deal acceptable was at $7.40 per pound, my personal reservation price was $7.00. I learned after the exercise that our initial bargaining range was $6.50 to $7.40. My BATNA was to simply stay with my current supplier at $4.70 and not receive the perceived benefits of better coffee. Identifiable Learning Points and Objectives from Exercise: This was an exercise in distributive negotiating, where each party was incentivized by a bonus structure to save or make the most money possible on the deal at the expense of the other party. I believe this exercise was a good introduction to the concepts of reservation prices, bargaining ranges, and negotiating tactics. I learned that there are some details that a negotiator will withhold initially, and some details that the negotiator may never reveal, which can make it difficult to anticipate the counter-party’s negotiating position.