Essay about Excalibur Plan

1630 Words May 21st, 2012 7 Pages
Negotiation Plan – Excalibur Engine Parts

As the VP of Sales for Excalibur I am required to negotiate with Knight Engines Inc to come to an agreement for a rush order of 8000 pistons within two weeks. It is in my personal interests to deliver a substantial profit to Excalibur for the benefit of shareholders. However, negotiating a deal with Knight may be the only chance for Excalibur to avoid a major loss in this quarter. Consequently, I aim to secure a profitable contract but am willing to trade current profit for future gain.

For this negotiation I have three types of goals in place. My substantive goals are to negotiate a contract that will bring in $5.8m (target point 3) and to also secure future contracts with Knight. With
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My BATNA is taking Hank’s offer to purchase 10,000 pistons at $100 each for a total sale of $1m. This is not desirable as when manufacturing costs are considered my BATNA has an overall loss of $3.8m and it is in my interests to negotiate a contract that will bring greater value to Excalibur. From the perspective of Knight, it is assumed that their BATNA will be to purchase the pistons from one of the competitors at the price of $400/piston. This is substantially lower than my target points and so Knight will need to be convinced of the benefits of negotiating with Excalibur.
For this negotiation, my resistance point will be equal to my BATNA. The resistance point will be triggered if the contract is offered at a total loss of $3.8m, this equates to 8000 pistons at $125 each. At this price, I will be bringing in the same total sales as my BATNA but my resistance point is of greater value due to the potential long term benefits of a relationship with Knight.
To avoid a loss, I will have to charge at least $3.84m for the whole contract a price of $480/piston for 8000 pistons. However I would like to negotiate a contract that brings in a higher amount of revenue and considering that the Swiss government was willing to pay $600 and the manufacturing cost is $480, I have set my target to be halfway between the two at $540/piston.

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