Riggs Vericomp Negotiation B Confidential Information for Vericomp Case Solution

2. What is the target deal?

• $5.5 Million

• Service Level 4

• I arrived at these numbers because of various reasons. Firstly, the level 4 service must push the price of the deal. Secondly, as described in the following part, the initial offer will start from a much low level. As the locus of the initial bargaining is set very low, $5.5 million should appear to be an attractive deal package for Riggs.

3. Suppose that you will be opening the negotiation, What is the opening offer?

• The opening nominal price of the contract will be $4.2 million.

• Service level 4

• In order to render the decided price ($5.5 million) very attractive, the initial offer to the Riggs must be very small. In negotiations, it is better to start with an option that is the lowest. One can subsequently raise the deal price and this act will certainly trap the other negotiating party to reciprocate in the form of slight compromises or adjustments. Moreover, when the other party will experience an increase of $1.3 million, it will surely perceive it to be a huge gain. But in actuality, the initial offer was so low that it set the goal for the acceptance of the target price.

4. Briefly explain your strategy for dealing with the installation date.

In order to deal with the installation date, I will offer the other party to reveal its reasons for delaying the installation. It is assumed that Riggs has the equipment ready. I will then increase the offer price to a small extent in order to incentivize for early installment.

5. Explain how you plan to approach the issue surrounding the recycling percentage disagreement. Be specific.

I will require some empirical proof from Riggs for their claim. Any claim must be based on some logical and factual information. If the information is clearly provided by Riggs, I will increase the already low offer price by $0.1-$0.3million. In fact, this increase is quite inconsequential. If there is no solid information, I will try to persuade the other party that a 15% increase in waste costs the company a hefty amount and it should result in decreasing the price. If the negotiating party only asserts the claims without any evidence, I will only increase the price by $0.5-1 million.

6. Case Analysis in the Form of How Me (Participant B) will handle the negotiation. I am the Purchaser – Vericomp

As the purchaser, I am looking forward to a complete service coverage of equipment from the installation party (because Vericomp has little experience in handling the maintenance of recycling equipment).