Keurig Case Study - Eric Jung(elj52 Keurig and GMCR Case...

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Eric Jung (elj52)Keurig and GMCR Case Study Soobin Song (ss2565)Keurig was given the opportunity to negotiate the terms of a partnership with Green Mountain Coffee Roasters (GMCR) chiefly to discuss how to divide the profit of $0.11 per K-cup based on the conditions of (a) how much royalty Keurig should receive per K-cup, (b) who should cover packaging lines costs, (c) whether or not Keurig should be exclusive to GMCR, and(d) whether or not to give GMCR some equity. However if an agreement is not met, other alternatives can be considered where Keurig produces and selling the K-cups under their own brand True North or sells the cups to other roasters.When discussing royalties, Keurig would see that selling the K-cups under their own brand True North lacks the potential to be most profitable. Under the True North brand, each cup has a profit of $0.06. However through GMCR, each cup would yield $0.11 profit per cup (Appendix A). Due to its disadvantageous lack of maximum profit, Keurig should avoid the True North brand alternative given that GMCR pays Keurig royalties of more than $0.06 per cup which is the minimum for a deal to happen. Therefore, the bargaining range of Keurig’s royalty payment

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