Automotive Fabrics Negotiation - Instructor Handouts

Automotive Fabrics Negotiation - Instructor Handouts -...

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This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. 1 Automotive Fabrics – Negotiation Case This negotiation case has been successfully used in both undergraduate, MBA, and executive education sessions, and is an excellent simulation tool that allows participants to experience a true negotiation. Mock negotiations such as these allow students to experiment with different negotiation strategies, in a “safe setting” where there are no real dollars on the table. In some classes, the students have been informed ahead of time that part of the grade for the assignment will correspond to how good the relative outcome of the negotiation is for their team. This generates a great deal of competition amongst students! The case can be run over two to three one hour class periods. One of the “assignments” from this exercise is to get students to prepare a negotiation preparation paper that details their negotiation plan, their pessimistic, optimistic, and most likely goals for each negotiated item, and their concession strategy. Students should be assigned to teams of 3 to 4 individuals, and designated as either a buyer or a supplier team. Each team has available to them some common information, as well as proprietary information. It is critical that teams do not inadvertently gain access to the other team’s information, otherwise the negotiation will be patently unfair! Each team’s information is included in the next section. Discussion / Recommendation: A very important part of the negotiation process is the preparation for the meeting. Because the teams have limited information, they should prepare their negotiation strategy based on the available information. For instance, the buying company should ask themselves if 8% is a reasonable profit margin, given the number of qualified suppliers. There are different permeations of this negotiation that you can use with this case to set the stage: 1. You can assign teams to negotiate with one another according to their preferred supplier and historical relationship. In this case, the assigned negotiating partners are: a. King with Cybaris, b. Queen with Athena, c. Duke with Medusa d. Duchess with Orion 2. The second option involves allowing any buyer to partner with any other single supplier. However, each team is limited to one and only one other partner. This scenario can take a little more time, as buyer teams may go out for RFQ’s, and supplier teams may decide to send “sales people” out to find a preferred partner. Interestingly, although teams are already matched based on their reputations, the authors have observed situations where buyer teams have refused to do business with their initial team. 3.
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Automotive Fabrics Negotiation - Instructor Handouts -...

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