Pre-Negotiation Planning - Essay Example

? Pre-Negotiation Planning Document While working as an intern at Mr. Games Company in Indonesia in summer I organized the office sales, and marketing department for selling, and purchasing the games. Mr. Games company has 50 gaming station in Indonesia. At that time, I joined the Mr. Games Company to IAAPA exhibition in Malaysia for purchasing games, and I was one of the negotiations team members. I need to purchase Maximum Tune (game racing machines for Mr.Games) from IAAPA. They want to install the new Maximum Tune 3 in their gaming station. *Introduction (Greetings to tell the purpose of the negotiations): -Hello my name is Steven Wongsoredjo, I am the chair of the Sales team from Mr Games, and I am one of the representative for purchasing the Maximum Tune 3 racing game machines. - I was looking for 10 Maximum Tunes 3 gaming machines. - My company needs to get Maximum Tunes 3 in Indonesia in July 2012. *FINANCIAL My target: 10 Maximum Tunes for $150,000 My reservation: 10 Maximum Tunes for $170.000 IAAPA target: 10 Maximum Tunes for $190.000 IAAPA reservation: 10 Maximum Tunes for $175.000 *COMMON INTERESTS I planned to purchase 10 Maximum tunes 3 for $155,000 because I need to do my best to save money for my company, and I hope for purchasing 10 machines (consider big amount of machines) I can get discount from IAAPA. However, IAAPA had interest selling the 10 Maximum Tunes 3 $ 175,000. *BATNA If I can’t meet the deal with IAAPA, I will find the second hand machines from the Chinese exhibition that is going to be held the next month after IAAPA exhibition. Nevertheless, attending the Chinese exhibition, I need to inspect the machine carefully if I want to purchase the machines from the Chinese exhibition. It is because the second hand machines are vulnerable. *RELATIONSHIP This is long-term relationship because IAAPA is an annual event. It is held every year and we frequently buy previous gaming machines from them. So I will try to make a deal with them since it is going to have a positive impact on Mr. Games and IAAPA relationship, but I still need to consider the cost of the machines. If it is too high then I will politely reject their offer, but I still need to maintain the relationships. *MANAGE CONFLICT Possible conflicts: - IAAPA sets up a price more than $150,000, it is because this machine is highly demanded by gamers around the world, so they will not sell this machine for cheap price. - We are not going to meet at our target price, and we are having conflict to meet our target price. *TRUST As a marketing chair of the Mr.Games Company, I am having a responsibility to give the rational answer on why we are purchasing their product, or why we are not meet the deal. I will tell them that IAAPA has a good standard, and the quality of the gaming machines so we will be satisfied if we can reach deal with them. Mr.Games is going to have 10 additional Maximum Tunes for their arcades gaming station. We also are going to tell IAAPA where we are going to purchase the products if we are not meet a deal with them. I believe by being open for both sides we are going to maintain the trust. It is going to be not ethical, if finally they know we are not buying the machines from them because the price is too high, and buy from Chinese dealers instead. *QUESTIONS Is there any discount for buying 10 gaming machines? How does the maintenance of the Maximum Tune 3? *OFFERS -Anchor 10 Maximum Tune 3 for $ 155,000 -Re-anchor We are Mr. Games company, a loyal customer since 1994. We have bought a lot of gaming machines from IAAPA. I hope that this can be a consideration to get a cheaper price, and we will purchase 10 gaming machines directly. Furthermore, we always provide the payment on time, and pay the whole sum in cash. We will not take a credit to pay for the Maximum Tune 3 gaming machines. *Priorities on purchasing gaming machines (based on cost) 10 Gaming Machines with cheap price *The end of meeting As the ending, I should thank them for their time. No matter reaching a deal or not I should thank because these negotiations take time, so I should appreciate it Post-Negotiation Analysis The negotiations went well, even though I had a rough start. It was because my target price was too low and it didn’t even match with their reserve price. The Maximum Tune 3 machines are very popular in the society. This fact makes the price from seller very high. It was really difficult for me to get the reasonable price. Mr. Games supervisor told me to get as low price as possible, otherwise they were going to buy this gaming machines from Chinese gaming dealers that usually have a cheaper price. However, I tried my best and finally I reached the deal to buy the gaming machines for $ 157,000. At first, I talked to the IAAPA Maximum Tune 3 general sales representative, and didn’t reach any deal. Then I looked for one sales representative that usually assisted Mr.Games Company Michael Rohrbacker, and I hope I can get better deal by negotiating with him. He asked me about my target price, number of gaming machines that I am going to buy, and what if IAAPA and Mr Games still don’t reach any deals after negotiated with Michael Rohrbacker. I answered the first two questions that we need 10 Maximum Tunes with the price of $150,000. I explained to Mr.Rohrbacker that Mr.Games needs to save money because Indonesia was suffered from the financial crisis that indirectly affected Mr.Games. We should purchase this game with the possible minimum funds, so we need IAAPA to reduce or offer a special price to us this time. I started to give the anchor, and re-anchor. This actually worked well in our negotiation. I explained to IAAPA that we are loyal customers since 1994, and we have purchased hundreds gaming machines from them. We always pay cash, and never took the credit. These facts had positive impacts on the negotiations. Furthermore, I told him directly if we don’t meet any deal Mr.Games was going to purchase the gaming machines from the Chinese dealers. It was because Mr.Games could get a cheaper price from it. After listening to all of my explanation Mr.Rohrbacker understood that Mr.Games is a loyal customer. However, he said that $150,000 was too low for these gaming machines, and IAAPA would not make any profit by selling these gaming machines at $150,000. I finally realized that I should increase the amount, and I talked to him what is the reasonable price for him but I told him it should be below $160,000. He started to offer the price of $160,000 would be the best price since it was $15,000 below their reserved price. But I tried to push down a bit more to $155,000. Finally he said that $157,000 would be the fair price it was on the middle of $155,000, and $160,000. There were two serious factors that helped me reduce the price. First, my pre-negotiation plan of setting up the right anchor was very critical in getting the right negotiation, and being open that we are still going to buy the machines from another company if they don’t meet any deal. For somehow I understand that Mr.Rohrbacker doesn’t want to miss the potential customers like Mr.Games that can pay in cash for the gaming machines. Not all of the companies want to do that, and especially in this bad financial situation. Secondly, I guess after I decided to talk in friendly manner with the sales representative that usually assisted Mr.Games on purchasing games, explained all of Mr.Games plan clearly, and was open with him. It made him decrease the price from IAAPA reserve price of $175,000 to $157,000. What I have learned about myself in this negotiation is that I can be very critical before the negotiations start. My forecasting of how to hold this negotiation was correct. I learned that the big negotiation, especially when talking about a big amount of money, can be very complicated, and long. However I think that in order to solve the problems as a good negotiator you need to go directly to the point, because it will make the negotiation simpler. In addition, friendly attitude, talk to the right person, can give positive results. IAAPA respects Mr.Games’ needs, and they finally decreased the price so we didn’t have to go to China to sort other Maximum Tunes 3 gaming machines. However, I guess I need to improve my negotiations in future. There was a tension during the negotiation with Mr. Rohrbacker, when I told him that we want the price of $150,000. Next time before telling my anchor, I should start from the negotiable price otherwise our opponents will be surprised by the anchor, and it would lead into conflicts that may impact the negotiations negatively. Furthermore, I should be more patient in controlling the tempo of the negotiations. I feel that I am too fast, and I need more training to learn how to conduct more friendly conversation. Read More