Negotiation 1 Coffee Contract

My party’s (Sandy Grant, Statler Hotel):

 Interests and Goals:

 We try to provide the best coffee product to improve the customer
satisfaction.
 Anderson coffee has a superior quality in the market, however we still have a
business to run. Thus the entire expenses and budget should also be taken
into account.
 The Hotel needs to establish a good reputation that is fair and sincere to
corporate with. Such good reputation can benefit the Hotel from vendor
discounts or even free products.
 As the Director of Food & Beverage, it is always my best interest to receive

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additional bonus from this contract.

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 BATNA: still purchase from LaRoche at a reasonable higher price.

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 Reservation Point: $7.40/lb
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 Target: more than $5.95/lb
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Other party’s (Pat Hammer, Anderson Coffee):

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 Interests and Goals:

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 This deal is a good opportunity for Anderson to expand its reputation in the
coffee market and attract more customers in the future. So Anderson is
willing to bear a small financial loss to publicize the company in a positive
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 It is a necessity to develop a close relationship with the Statler Hotel in order

to guarantee future purchases.
 Anderson do not enter the bid with the extremely lower price and unfair
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negotiation, which might reduce the profit and damage its current reputation.
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 BATNA: give up this deal and continue to provide good quality coffee to
current contracted customers and improve reputation as a fair and reliable
company. Do not compromise to unfair negotiation and chill price.
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 Reservation Point: more than $5.95/lb

 Target: $7.94/lb

Sources of Power:
 The Statler Hotel is well located with abundant university demands and also it
is attached to a good reputation.
 Sandy Grant is the Director of Food & Beverage who has strong bargaining

https://www.coursehero.com/file/19620689/Negotiation-1-Coffee-Contract/
 power and responsibilities.

Key Weakness: The Hotel forgot to extend the current contract in time and
experience unhappy corporation with current supplier LaRoche. Thus if the
negotiation with Pat Hammer (Anderson) failed, the Hotel might face shortage in
coffee supply.

Opening Strategy:
 We set the initial price at $6.50/lb and increase it to meet the satisfaction of
both sides, but the price must be lower than $7.40/lb.
 Our party (the Hotel) can pay for the cost of shipping with a lower coffee
price, however the vendor (Anderson) should agree to deliver the coffee
every two weeks and when the shipment is received, we will pay the cost of
products every 10 days.

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Strategy for Concessions:

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In order to establish a long-term corporation, the Hotel can accept the higher price

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($7.94/lb) at the first one-year contract, but in the future, the price should decrease

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year by year and finally stabilize at an acceptable level by both sides.
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Personal Strengths & Capabilities
 Be sensitive to the price change and its influence;
 be friendly, honest and outgoing to the counterparty (Pat Hammer);
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 have a strong ability to control the negotiation and persuade the

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counterparty to agree your price.

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