Negotiation Planning - Case Study Example

They provide an estimate with respect to the direct material and direct labour, and this puts the ball in their court despite the company or the buyer providing their estimates with regard to direct material and labour in order to make the modifications, because the sellers are the ones being used for their services. Furthermore, the sellers are in a better position because they are able to quote a price that covers damages caused during the process of making modifications and, thus, keeping aside a negligible amount for the same.

They also have taken into account an estimate for spoilage, new items, etc. in order to be on the safer side, keeping their profit margin at the best possible rate for the buyers. 3. In a contract, each party will do its best to emerge as the winner and have the best possible consideration at his/her end. In this contract, the sellers are in a better position than the buyers; however, it must be understood that the two parties do have misconceptions regarding one another. First, the buyers are doing their best to decrease the material and labour costs as much as they can because of the price that they will have to pay.

The sellers, on the other hand, are trying to negotiate the same in order to maintain a profit margin, as well as to keep room for damages and arrears. The sellers must understand that the optical instruments require modifications to be done within the best possible cost estimate in order to keep the buyers from shelling out much money. Nonetheless, the misconception that the buyers have that the sellers will give them a quote more than they expect may be considered outside the scope of negotiation because ultimately, the buyers need to look into quality and take into account that they would be ready to pay the estimate rolled out by the sellers in order to be left with the best possible end results which will, in turn, help them cover the investments that they made.

It is yet again another misconception for the buyers or the Gilbert Company to estimate the overheads and material costs that will be required for the purpose of modification, because the sellers will be able to provide a better estimate knowing that they have to provide their services while keeping a 10% profit margin. 2. In the second answer, we need to analyse the data carefully to ascertain the elementary assessment of the information. Negotiation Plan for the Buyer: The buyer’s position over here is conceptually taken on a different role than the seller’s position.

When Pilgrim asked for a cost analysis programme to be conducted for the product, there was a major difference between the cost analyses of Gilbert and Price Analyst. This catapulted Pilgrim to extract the date based on the report conducted by both the parties and a combination of the report between these two parties was evolved to determine the actual cost elements in the negotiation planning. Pilgrim finally called Price Analyst to conduct a negotiation plan for the company since there was an immense difference coming out of the analyses conducted by Gilbert and Price Analyst.

The proposed price by Pilgrim was 225,893 USD. This was the price at which he ideally wanted to sell all his 45 optical instruments to the buyer, which is Gilbert Instruments. Price analyst in its analyses compared the labour rates, the GA rates and the Overhead rates which went in modifying the optical instruments at the peak of their prowess. At the current level which is designed by the Price analyst,