Question

Monica is responsible for organising her company’s annual dinner and she decided to purchase 2,000 pieces of wallets as souvenirs for all participants. There are many souvenirs suppliers in the market that can offer her good prices.   Monica has searched the market price of wallet ranging from $280 to $330 per unit. Among the quotations she received, she decided to meet with Sam, sales representative of a firm which offers various souvenir items in good quality. In their first meeting, Monica said, “if you can offer me the unit price of $270, I will place an order of 2,000 pieces with your company.” Sam replied, “$270 is really a bit low. If you would raise it to $300 - $310, I’m sure we can get it done!” Monica then said, “It is impossible! You know, even Trendy Enterprise Limited, a reputable company in the market, can offer me a net price of $295 each! You should be able to offer more if you really want to get this business!”   

Question 1

Which negotiation approach has Monica adopted in negotiating with Sam? Briefly explain why Monica used this approach.                                                                               

Question 2

Analyse the negotiation behaviours of Monica and Sam. Identify and explain briefly ONE effective negotiation technique and TWO inappropriate actions for the above scenario. (6marks)   

Answer 1

In this Example Monica was trying to Negotiate a Vendor for Organising Her Company's Annual Dinner so this falls under Vendor Negotiation category.

To negotiate a Vendor successfully you need the below mentioned details:

1.) Market know how - you need to have deep market knowledge and should have details of at least 3 to 4 Vendors who are able to provide the same product at different rates

2.) Communication - When contacting a Vendor and negotiating a deal you must be polite and at the time of Price negotiation you must know the prices offered by competitor so that the party with whom you are speaking with is able to offer a lesser price than the competitor.

Effective business technique - In this Example the effective negotiation technique is Assertive, which is mostly Win Oriented and Monica was straight forward while negotiating price with Sam.