C.

Ryan Brown

Negotiations

8/31/16

Negotiation Exercise: Coffee Contract

Student Name and Role in the Exercise: C. Ryan Brown; role of Sandy Grant, F&B Director
Counter-Party Name: John Offerman, role of Pat Hammer, VP Anderson Coffee
Negotiation Result (Terms of Agreement if Any): Terms in RFB remain as is; delivery
expectation is every 2 weeks at a price of $6.90 per pound.
Analysis of Strategy or Tactics Employed: My initial strategy was to explain to my counterparty the situation that I was in and why I was looking to potentially change my coffee supplier,
namely focusing on the fact that my current supplier satisfies my needs, but Im considering
Andersons product because I believe their product to be of higher quality. I chose not to disclose
the prior issues I had with my current supplier regarding the attempted price increase. I also did
not disclose my knowledge of Colonial Williamsburgs price of $5.95 per pound. My initial
negotiation tactic was to explain that my preference was to switch coffee suppliers to Anderson,
but that the price was way too high; however, it would be advantageous for Anderson to lower
their pricing due to the brand recognition and perceived quality that could result from Anderson
being affiliated with my Hotel. Using the knowledge that Anderson is willing to sell at $5.95 for
bulk pricing, I initially asked for a price of $6. My tactic was to provide the first anchor in the
negotiation at a price at which I know they would sell, but would not necessarily sell to me, with
the assumption that a low anchor would give me a larger negotiating rage. After the initial two
offers were released, I revealed that I had conducted taste tests and the results indicated that
their coffee would be positively received. We eventually settled on $6.90 per pound. Although the
worst deal acceptable was at $7.40 per pound, my personal reservation price was $7.00. I
learned after the exercise that our initial bargaining range was $6.50 to $7.40. My BATNA was
to simply stay with my current supplier at $4.70 and not receive the perceived benefits of better
coffee.
Identifiable Learning Points and Objectives from Exercise: This was an exercise in
distributive negotiating, where each party was incentivized by a bonus structure to save or make
the most money possible on the deal at the expense of the other party. I believe this exercise was
a good introduction to the concepts of reservation prices, bargaining ranges, and negotiating
tactics. I learned that there are some details that a negotiator will withhold initially, and some
details that the negotiator may never reveal, which can make it difficult to anticipate the
counter-partys negotiating position.