F.W. Olin Graduate School of Business Babson College “MOB 7511: Negotiations” Personal Negotiation Analysis Course Midterm Paper
Written by: Wa’d Taweel Submitted to: Professor Melissa Manwaring Date: November 9th , 2012
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Negotiations Midterm Paper When I was in 11th grade, I started an event management company along with 27 of my classmates. We established the company from A to Z, and learned how to manage and run all the aspects related to our business. Our company was focused on adding a special touch to people’s holidays and occasions, so we used to make birthday cakes, greeting cards and decorate companies and houses during holidays such as Christmas, New Year’s and Valentine’s day. Since I was the CEO of the company, I had a great opportunity to learn all about starting a new business, running it, making profits and managing people. Moreover, I also needed to deal with suppliers, and vendors, and take care of all the logistics related to making and delivering the birthday cakes, and greeting cards to our customers. Our company had one supplier of birthday cakes whose name was Fadi. Fadi was well known in the city for making very delicious cakes and he had hundreds of orders every day that he needed to take care of and deliver. I approached Fadi in order to discuss with him the possibility of having him as the main birthday cake vendor for our company. Fadi was asking for very high prices for the cakes, and he was very strict about the fact that these prices are similar to the ones in the market and that he makes better quality cakes than other venders and therefore, he cannot go down in the price. After long negotiations with Fadi, he agreed to lower the price from $15 to $11 per cake under the condition that he will be an exclusive
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vendor for our company for at least 2 years. Negotiations with Fadi took quite some time especially that he was very stubborn and he didn’t do any work with my company before, so he didn’t know what to expect. However, and after we started working together, Fadi saw that we had large-volume orders and we were able to increase our sales tremendously by working together and cooperating. In terms of the “Seven Elements of a Negotiation” framework1, this negotiation has almost all of the elements embedded in it. The alternatives that I had if this negotiation with Fadi didn’t work out were that I approach other vendors in the market, which were too many with different price ranges, quality and efficiency. I also had the alternative to make the cakes inside the company but this would require additional staff members who are able to make cakes on time, and additional resources which would definitely result in increasing the costs of goods sold at the company. My BATNA in this case was to do business with another vendor in my city who was less known than Fadi but could offer me a low price that might go down to $10 per cake. However, I was interested in working with Fadi because he was very talented, driven and a young entrepreneur. Moreover, I wanted my start-up to be able to economically support other startups around and that’s why I wanted to work with Fadi, however, I was looking forward to a good deal with him in order for me to be able to make profits and produce cakes as efficiently as possible. Fadi’s alternatives in my opinion were to look for
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other customers who would agree to pay the high prices he was asking for. His BATNA was to find another company in the city that had large volumes and that was willing and able to pay as high as $15 per cake. My interests were that I wanted to work with someone who is outstanding in this field and who is known for his high quality cakes but I was also interested in getting good prices so I can make profits. On the other hand, Fadi’s interests were mainly to increase his revenues, increase his customer base and make more profits. The options that we had included me agreeing to his high price of $15, or him agreeing to lowering
