Negotiations

1590 Words Nov 6th, 2014 7 Pages
Global Negotiation between FD and Conquip

Conquip’s Solicitation Of The 10% RFQ

Conquip sent the RFQ possibly attempting to anchor the negotiation and to prove its strong position towards the negotiation. This strategy is risky and could be harmful if the other party doesn't have this value between its reservation and target price (Chang, Chung, & Van de Vyver, 2014).

During meeting 2, FD walked into the negotiation with a poor BATNA: no agreement meant FD risked losing all its Conquip business to FF. Conquip seemed to have a strong BATNA: the company could easily switch to FF filters. However, de Winter convinces Conquip of the value of LEIF’s innovative technology, and Conquip knew they wouldn’t have suppliers
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Conquip also offered to keep FD as a companywide supplier if FD could meet the pricing demands made by Conquip, but de Winter was suspicious of the offer mainly because of the extremely close relationship between Conquip and FF. De Winter’s suspicions were also fuelled by the fact that FD’s high-volume products were missing from the RFQ and de Winter was almost certain that Conquip only wanted quotes from FD to reduce FF’s prices. FD was now determined that Conquip was planning to replace FD by FF throughout the company unless FD could meet the demands and convince the buyer the FD would be a better choice (Chang, N.D.).

Meeting number two was all about discussing pricing, product type, and volume of sales. FD’s main priority was to maintain positive margins and long-term sales relationship with Conquip. The meeting’s focus was almost exclusively on the price and Conquip seemed to not want to move forward before agreeing on the 10 percent price cuts. De Winter could have accepted the offer and not negotiate, but it would not have secured a sales relationship with Conquip, especially because Conquip was supposedly trying to cut FD’s prices in order to further reduce FF’s prices.

De Winter took a risk, but thought that Conquip would be ready to accept a smaller price cut if it meant that aftermarket sales would increase. Unknown
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