1. What are the interests and needs of the Buyer and Seller in this Negotiation
scenario? Do they have common interests?
2. Define the STAKE of the negotiation. What is being negotiated?
3. Define the Most Desired Outcome (MDO) and the Least Acceptable Agreement
(LAA) for UNIVEG.
4. Define the Most Desired Outcome (MDO) and the Least Acceptable Agreement
(LAA) for FRESH PRODUCE INC.
5. If you were UNIVEG what is your BATNA?
6. If you were FRESH PRODUCE INC. what is your BATNA?
7. If you were UNIVEG what would be your: a) Opening Offer (where would you start?)
b) Your initial Strategy? c) What would be your initial concessions?
8. If you were FRESH PRODUCE INC. what would be your: a) Opening Offer (where
would you start?) b) Your initial Strategy? c) What would be your initial
concessions?
I attached the question as a pdf file.
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FINAL WORK
CASE: We need to keep our Produce fresh!
UNIVEG – is a producer of asparagus in the north of Peru. It produces 242 tons of asparagus a year that brings an income of around US$320,000 a year.
But UNIVEG has a huge problem; it does not own a controlled atmosphere storage facility and is currently renting one. This means very high costs due to transportation, rent, logistic problems, etc. etc. Therefore UNIVEG urgently needs to build its own storage. This would mean they would save US$30,000 a year.
UNIVEG owns a piece of land where to build the storage facility it needs, but it does not have all the money for the project, it needs US$300,000 more.
Currently UNIVEG has a contract with a company from Panama, FRESH PRODUCE INC., that buys 30% of its asparagus production- that is 73 tons at US$96,000 a year.
FRESH PRODUCE INC. is aware of UNIVEG´s predicament and has accepted to start negotiations regarding the plausible advance-buy of their regular purchase, if and when UNIVEG improves sales conditions and of course the price. Over the last ten years the variation in the price of asparagus has been +/- 3%
After an in-depth study, UNIVEG´s financial department came up with an initial proposal which has already been submitted to FRESH PRODUCE INC. (Refer to Appendix 1).
In the meantime UNIVEG has been analysing other means of financing the venture. (Refer to Appendix 2)
FRESH PRODUCE INC. has now reviewed UNIVEG´s proposal and has sent their answer (Refer to Appendix 3). They have solicited a meeting for tomorrow with representatives of UNIVEG and see if they can make a deal.
APPENDIX 1
Regular market conditions for the sale of asparagus
Price per Kilo of asparagus: US$ 1.32
Payment conditions: upon delivery
Delivery time: 2 months
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UNIVEG´s proposal
Price per Kilo of asparagus: US$ 1.00
Payment conditions: four years in advance
Delivery time: 2 months
It is company´s policy not to sell more that 45% of its production to a sole client in order to diversify risk.
APPENDIX 2
UNIVEG´s Financing possibilities
Source
Comments
Cost
Bank Loan
Difficult as it has no guarantees
20% annual interest
Own resources
Will have to wait 4 years
At least US$120,000 (storage rent) plus other logistic problems
Other Clients
No one with enough cash
APPENDIX 3
FRESH PRODUCE INC. Proposal
Price per Kilo of asparagus: US$ 0.75
Payment conditions: two years in advance
Delivery time: 1 month
Increase their order from 73 tons to 242 tons
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Questions
1. What are the interests and needs of the Buyer and Seller in this Negotiation scenario? Do they have common interests?
2. Define the STAKE of the negotiation. What is being negotiated?
3. Define the Most Desired Outcome (MDO) and the Least Acceptable Agreement (LAA) for UNIVEG.
4. Define the Most Desired Outcome (MDO) and the Least Acceptable Agreement (LAA) for FRESH PRODUCE INC.
5. If you were UNIVEG what is your BATNA?
6. If you were FRESH PRODUCE INC. what is your BATNA?
7. If you were UNIVEG what would be your: a) Opening Offer (where would you start?) b) Your initial Strategy? c) What would be your initial concessions?
8. If you were FRESH PRODUCE INC. what would be your: a) Opening Offer (where would you start?) b) Your initial Strategy? c) What would be your initial concessions?
