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They are capable of doing so because of the position that GMCR is in as an emerging and growing brand/company. If they build up sales for the Keruig other rival roasters would receive a free ride from GMRC marketing investment and adopt the product and be able to gain revenue from the product. This would allow rival roasters to obtain market share of the K-Cup from GMCR. The second issue is related to both GMCR and Keruig. Capital is going to be a big component of the structure of this deal because it is a concern of GMCR and Keruig. We know that Keurig need to be able to spread out its production costs which is starting to be a burden for them. GMCR on the other hand has been expanding so capital is quickly becoming scare but they still have a pretty credit line with their bank and cash on hand. They do not want to tap into the rest of their credit line until 1998, which is when Keurig wants to launch the product. They must be able to work something out where GMRC can stay within its 4.5 million range and where Keurig can outsource it production line, which is roughly about $700,000. I think the position that both parties will allow them create a deal where they both benefit in positive ways and if the product is successful capital and other sources of funding will not
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Is it the CEO who makes the final decision or the Venture Capitalist that are funding Keurig because this will be essential for them when structuring the deal. GMRC also does not know if Keurig is having conversations with any other roaster so they should keep this mind as well. They should also understand that even though they do not want other rivals to benefit from a free ride there is no way they will be grained exclusivity. The reason they will not be granted this right is because Keurig sees themselves as Technology Company and think they will not be able to maximize their profit and value is they limit the K-Cup to one single company. GMRC ideally would need more insight about Keurig financial situation as well and understand that Keurig wants them to pick some of their production costs. The Zone of possible agreement here is huge both companies can benefit substantially if they can come to agreement. I know most people when negotiating do not want to reveal much information because they feel they will exploited but I think this is an exceptional situation where Keruig should be honest and it will help them come to an agreement and be capable of structuring a deal that benefits them both. All of this taken into consideration will allow to them to execute a deal. Both representatives who are attending the meeting have the final say in whether the deal will be finalized so if they can come to
Is it the CEO who makes the final decision or the Venture Capitalist that are funding Keurig because this will be essential for them when structuring the deal. GMRC also does not know if Keurig is having conversations with any other roaster so they should keep this mind as well. They should also understand that even though they do not want other rivals to benefit from a free ride there is no way they will be grained exclusivity. The reason they will not be granted this right is because Keurig sees themselves as Technology Company and think they will not be able to maximize their profit and value is they limit the K-Cup to one single company. GMRC ideally would need more insight about Keurig financial situation as well and understand that Keurig wants them to pick some of their production costs. The Zone of possible agreement here is huge both companies can benefit substantially if they can come to agreement. I know most people when negotiating do not want to reveal much information because they feel they will exploited but I think this is an exceptional situation where Keruig should be honest and it will help them come to an agreement and be capable of structuring a deal that benefits them both. All of this taken into consideration will allow to them to execute a deal. Both representatives who are attending the meeting have the final say in whether the deal will be finalized so if they can come to