Development of a Strategic Negotiation Plan

5 May 2017

Highlander gives you uncommon comfort and unparalleled smoothness in an unmistakable form. It’s designed for those drivers who crave the versatility and space of an SUV, but aren’t willing to sacrifice a refined, comfortable ride. With exceptionally smooth handling, clean, unique styling and a spacious interior, Highlander is the civilized ride you’ve been looking for. ” (Toyota Internet Website and Highlander brochure). After months of investigating, Michelle knew that this was the vehicle she wanted.

Sifting through piles of Car and Driver, Auto Week, and Consumer Reports magazines, visiting websites for Acura, Subaru, BMW, and Honda brands among others, convinced her hat this was the vehicle for her. Now the question was how to get the best deal from one of the local Toyota dealerships in the Louisville metropolitan area. Located in the city were Toyota of Louisville and Oxmoor Toyota. Just across the river in Southern Indiana was Green Tree Toyota. Because of negative comments and stories she had heard about Oxmoor Toyota, Michelle decided to limit her dealership choice to either Toyota of Louisville or Green Tree Toyota.

Development of a Strategic Negotiation Plan Essay Example

An unexpected twist in Michelle’s deliberations came when one of her colleagues at work, Ashley Lacey, dropped by her ffice one day and told ner that sne and ner husband Robert were also looking tor a new sport utility vehicle for their family, which included their nine year-old daughter Alex and one good size Labrador retriever. After talking for a while concerning what Michelle had discovered in her research, and about a week after she loaned Ashley all of the information she had collected on various models, Ashley came back and told her that she and Robert were convinced the Highlander was the vehicle that was right for them.

Further discussions between the two parties discovered that with the xception of the choice of exterior color, they both wanted virtually identical models and accessories. Both Michelle and the Lacey family wanted the 6-cylinder, four wheel drive model, with a significant number of options. In Michelle’s case she would be able to purchase the vehicle outright, trading in her low mileage 1992 Honda Accord LX. The Lacey’s however, they would be keeping their current car and financing the purchase beyond a $5,000 down payment.

Both Ms. Tipton and the Lacey’s knew that if they went to the dealerships together with the intent of buying wo vehicles as a package deal, it would be a different, or at least unusual, situation that the salespeople didn’t see too often. They hoped that it would allow them to get a better overall price. Through various online sources, Michelle has been able to find not only the Manufacturer’s Suggested Retail Price (MSRP), which typically served as the high end or full price benchmark but also wholesale prices.

These wholesale prices represent the amount the car dealership paid for the vehicle, excluding any givebacks or other incentives provided by the manufacturer. Michelle’s further nvestigation indicated that there were no other incentives provided to the dealerships for sales of the Highlander model. As she sat at the kitchen table with the Lacey’s and with the financial information spread out before them, they knew they had a number of decisions to make and questions to answer in putting together their negotiation plan before they approached the dealerships. 1 .

What is the Negotiation strategy best used by Michelle and Lacey? Based on the case, the goal of the buyers is to get the best deal with the best price. Miss Michelle is looking forward o buy the Highlander model at a discounted price, but she is aware based on the Manufacturer’s Suggested Retail Price (MSRP) shows the price the car dealership have paid for the car and that the car dealership have not received any incentives for this car. Based on the Dual Concern Model, the best position for Miss Michelle and Laceys negotiation would be Competitive strategy.

Competitive strategy is basically a distributive bargaining, Distributive bargaining tactics aim for a large slice of a fixed pie of value, increasing one’s own payoff at the cost of the counterpart’s payoff Amanatullah, Morris, & Curhan, 2008). As in this case the dealer has to give in to accommodate Miss Michelle’s goals for a special or discounted price. In the purely distributive case, the interests of the parties are negatively correlated, with an increase in the utility of one party’s outcome associated with a correspondent decrease in the utility of the other party’s outcome (Walton & McKersie, 1965).

Based on this competitive strategy the negotiation will be “l win – you lose” basis. There will be a clear conflict of interest between the parties involved. A classic example is a haggle over the purchase price of a single item, such as a used car, where the seller seeks the highest price possible and the buyer hopes to pay as little as possible. (Barry & Friedman, 1998) The buyers will be forced to use external factors such as, Car dealer’s image and competitor tactor.

In this type ot situation, each negotiator presumably has in mind a reservation price (also known as a resistance point or a bottom line) beyond which he or she will not go in reaching an agreement (Raiffa, 1982) 2. Explain the negotiation process 1. Preparation: Miss Michelle has collected detailed information including the MRCP to have a clear picture on the pricing and incentives received by the car dealer. Through discussing Miss Michelle and Lacey are also well aware of their financial situation and clear on the steps they are planning to take during the course of the business. . Relationship building Miss Michelle and Lacey would have to make a warm up meeting with the chosen dealer; they may have a look around and test driving to build repo to provide the sense of commitment and interest to the dealer. This would create interest and erious negotiating atmosphere for the serious matter to take place. 3. Information gathering Even though well aware of the financial and business situation of both sides, the buyers may allow the dealer to explain to them of price offered and the details.

To be updated of any changes or latest deal the seller could offer. This information gathering session could be used by the buyer to express their interest through mild body language such as nodding or otherwise. 4. Information using Based on the information gathered from the preparation and also the information athering, Miss Michelle and Miss Yale could begin their discussion and bargaining with the dealer to offer a better or cheaper price. This would create initial conflict as the dealer is facing a losing situation. 5.

Biding Biding is the most critical stage of any negotiations. Heated arguments may arise; Miss Michelle and Miss Yale have to take control of the situation as they are in the upper hand of the situation. In negotiation, a first offer can serve as an anchor that biases the other party’s Judgments of the underlying economic structure of the argaining encounter.

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