‐2‐ As luck would have it, while at a trade show a couple of weeks ago, you ran into an executive with a graphics hardware firm in California called AccelMedia. AccelMedia, a relative newcomer to the market, has been growing rapidly because of the sudden popularity of its graphics accelerator products. The executive you spoke with at the trade show told you that AccelMedia has an urgent need for approximately 15,000‐20,000 processors for their newest accelerator card (a model called the AMPro 50). Figuring that this could be an excellent way to make use of the temporarily idle GT7 production capacity, you then contacted AccelMedia’s Director of Component Sourcing, who confirmed that they are seeking a supply of processors, and that GTechnica’s GT7 would meet their specifications. The two of you agreed to schedule a meeting to negotiate the possible sale of GT7 processors to AccelMedia. Your goal in the upcoming negotiation is to get the highest possible price per unit for the processors that you sell to AccelMedia. Your net unit cost for the GT7 is $16; anything above that will represent a profit for GTechnica, and given the fact that the production line will sit idle if no deal is made (there are no other potential customers on the horizon at this point), you should probably be willing to accept any deal that exceeds unit cost. But your boss, the Executive Vice President for Sales and Marketing, has made it clear that you will be judged by how much better than this you can do. Another issue is the volume of a contract: You have the capacity to make and ship as many as 15,000 units, and you would like a deal that comes as close to that as possible. However, you cannot make a deal for more than 15,000 units because the production line will have to be turned over to the delayed SysD contract at that point, and there is no other possible production capacity that can be shifted to making GT7s in the near future. Thus, the negotiation you are about to conduct is really a one‐shot opportunity to do business with AccelMedia. As you wait for the meeting with Accel Media’s representative, you are thinking through the approach you will take. • • • Before beginning this negotiation, write down answers to the following questions: • What is the unit price you would like to receive for the GT7s? __________ • What is the unit price you will initially present to AccelMedia? __________ • What is the lowest unit price you will accept for the GT7s? ________
