Knight_Engines

Assignment: Knight Engines 1. What goal did you set to be achieved in this negotiation' Your opening bid' Your bottom line' We were representing Excalibur Engine Parts. Our aim was to sell as many Type A pistons as we could at the maximum price possible. We also wanted to make sure that Knight Engines carried our logo on their engines to indicate that their engines were fitted with quality Excalibur parts. This advertising would help us attract more customers in the long run. We also wanted to try to get Knight Engines to buy our insurance of 10% over the price for the pistons which would ensure defect-free pistons. These were our tangible goals. We were careful to maintain a cordial relationship with the opponents since we wanted to make sure that they used Excalibur pistons for all their future contracts. This was our intangible goal. We wanted to minimize the loss caused due to the Swiss deal and increase the company’s revenue and retain the shareholders. Our opening bid was $600 each with a 5% rush fee which was a total of $630. We also gave the opponents an option to buy the insurance which was another 10%. The total came up to $690. This was our target point. We were aiming to sell 8000 or more pistons. We had 10,000 pistons which would otherwise have to be sold at $100 each. Therefore, our resistance point or bottom line was $100. 2. Did you have a “Best Alternative” or “Option” if a deal was not struck' How good was this option' How did it affect your negotiations' Our BATNA was $100 per piston that was being offered by Hank’s Super Monster Tractors Inc. Usually the availability of a BATNA offers a negotiator significant power (Essentials 4th Edition, Page 162). This option was not at all attractive to us. This option meant that we would have to sell the pistons at a loss. But it was better than having inventory that was not being sold at all. We were very confident about this negotiation even before it began. The large difference between our target and resistance point gave us a lot of room for negotiating. We were able to reach an agreement quickly because it was apparent that the zone of agreement between the two parties was somewhere between $690 and $500. I believe for this exercise, we were willing to make concessions more readily than others simply because we had more leverage- especially since our BATNA was a very unattractive alternative. 3. Did you reach an agreement in the negotiation' If yes, how satisfied were you with your agreement after you reached it' If not, were you convinced that it was a good idea not to agree' Yes, both parties reached an amicable agreement. We were very satisfied with our agreement. The price we settled on was $500 each with a 5% rush fee. Knight Engine agreed to have our logo on their engines for a price of $100,000. We were to provide them with 8000 working pistons or 8400 pistons – whichever came first. Knight Engines were responsible for the testing of the pistons. The price we settled on was significantly higher than our resistance point of $100. We were aiming to sell at least 8000 pistons and we were able to do that. Through collaboration we were able to reach a mutually beneficial solution. I was also pleased with how satisfied my opponents looked. It was certainly nice to know that both parties came out of the negotiation feeling like they got a good deal. 4. How satisfied were you with your agreement after you heard other groups report in the general session' What was the impact of hearing other solutions on your own level of satisfaction' Though I was still satisfied with the outcome, I realized that ours was probably the lowest total price quoted. We were able to include the 5% ‘rush’ fee and have our logos on the engines, but it came at a cost of $100,000. I was a little disappointed. I felt that we should have maybe pushed more to settle for an amount higher than $500. We also could have aimed for selling higher number of pistons. Although we could have made more money, I still think that both parties won. The deal was closed at a price that was much below our resistance point and it also ensured the quality and speed that the Knight Engines needed. 5. In addition to a price for the pistons, what were the other elements of the deal that you agreed to' Did these factors help to make the negotiation more or less competitive' The other elements that were important to us were to get Knight Engine to agree to indicate that their engines were fitted with quality Excalibur pistons. This would help the government become aware of the high quality of our pistons and could work to our advantage the next time the government requested submission of engine parts. We were willing to negotiate with Knight Engine to let them allow us to put our logo stickers on their engine parts. We agreed that we would pay Knight Engines $100,000 to have their engines carry our logos. We also agreed on 5% ‘rush’ fee to get them the pistons at such short notice. We decided that we would provide 8000 defect free pistons and the testing was up to the Knight Engines. This exercise was an interesting mixture of both distributive and collaborative bargaining. Since it was a multi-issue negotiation, trade-offs and collaboration were necessary to reach a favorable agreement. It was distributive because price was definitely the most important factor for both parties. I know it is important to focus on interests and not position (Reader 5th Edition, Page 422), it was hard for me at least, to be not focused on position, especially since price was our highest priority. The other elements in the negotiation helped us align our incentives with our opponent. We were able to trade-off issues based on the relative value of the issue to the opponent as well as to ourselves. 6. What strategy and tactics did you use to help you achieve your objectives in this negotiation' Did your strategy and tactics “work”' Our strategy was to collaborate and build trust, openness and long-term relationship. We wanted to maximize our profit so we needed to stay competitive in our negotiations. One of the most important parts of negotiating is to plan and anticipate what your opponent would do. This gave us an idea of how and when to deliberately exert power (Reader 5th Edition, Page 409). Planning ahead made me appreciate the fact that power is not static, but I was able to anticipate when the power would shift and this helped us empower ourselves (Reader 5th Edition, Page 409). We were able to negotiate over the price because it was evident that Knight Engines needed the parts urgently. This information power (Essentials 4th Edition, Page 153) helped us challenge the other party’s position. We did not disclose the fact that we had 10,000 pistons that we needed to get rid of. By failing to mention that we had the pistons in stock we were using the scarcity persuasion technique (Reader 5th Edition, Page 203). This enabled us to get the 5% ‘rush’ order fee in addition to the price of the pistons. Our opening price was $690 which was high for the buyers and we came down to $630. We agreed on 8000 working parts or 8400 parts whichever came first. We got the Knight Engines to agree to do the testing of the engines. We were very particular about advertising our name on the Knight Engine logo. We offered to pay Knight Engines $100,000 in order to have our logos on their engines. By positioning this as a discount on their total price, we were able to get Knight Engines to agree to have our stickers on their engines. This way we invented options for mutual gain (Reader 5th Edition, Page 422). We further brought down the price by negotiating that we would be considered for future contracts. This ensured future working relationship. 7. What strategy and tactics did the other party use' Did these tactics “work”' Why or why not' The other party successfully traded advertising for a discount in the total price. They mentioned that other companies were selling Type ‘A’ pistons for a considerably lower price. But we were able to convince them that the competitors’ pistons were of inferior quality and that our pistons were of the highest quality. We mentioned that since it was a government contract it was imperative that they used pistons of the highest quality available. They kept stressing that it was important for us to reach a favorable agreement since there was a lot of potential for our relationship. It was something that we were looking for too. They asked us a lot of questions (Essentials 4th Edition, Page 142). We were able to successfully answer the questions without divulging a lot of information. For example, we were asked if we had ever tried advertising our logos on other engine parts. We replied saying that it was an ongoing project we were doing in order to increase our visibility to customers. I believe if we had disclosed that we were trying this technique for the first time, we would have had to trade off something more than just $100,000.