Team 8 Buyers

DM23404 Akshita Talreja

DM23143 Swagato Mukherjee
Parties Vericomp
Roles Buyer
Concerns: Immediate Delivery
Needs: Service Package 2/3
Interests Wants: Best nomial price
Desires: Back-loaded payment schedule
Tradeables: Premium for immediate delivery
Value Depends on Multiple Factors
BATNA Look for other sellers
Barriers Immediate Delivery. Cannot negotiate on that.
Use the recycle rate as leverage for a lower price.
Power
To help the other party in logrolling and to generate maximum value
creation from the deal and ensure that both buyer and seller get a profit
Ethics out of this deal
Riggs
Seller
Concerns: Front-loaded payment schedule
Needs: Higher nominal price
Wants: Vericomp to believe their 95% claim
Desires: Service package 2
Tradeables: Delivery date
Depends on Multiple Factors
Refuse to sell
Comparatively less bargaining power
The other party wants immediate delivery. So can use that as leverage to
get their concerns and needs
To help the other party in logrolling and to generate maximum value
creation from the deal and ensure that both buyer and seller get a profit
out of this deal
 Initial Offer Option 1 Option 2
Purchase price 5,000,000 5,000,000 5,000,000
Payment schedule back loaded even front loaded
Service package standard standard standard
Disposal cost
Case A Present Value No Immediate Delivery 4,100,000 4,300,000 4,550,000
Case B Present Value if Immediate Delivery 4,000,000 4,200,000 4,450,000
Present Value of Disposal Cost given Case A 4,300,000 4,500,000 4,750,000
Present Value of Disposal Cost given Case B 4,200,000 4,400,000 4,650,000
Present Value of NO Disposal Cost given Case A 4,100,000 4,300,000 4,550,000
Present Value of NO Disposal Cost given Case B 4,000,000 4,200,000 4,450,000
Option 3 Option 4 Option 5 Option 6 Option 7 Option 8 Option 9 Option 10
5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
back loaded even front loaded back loaded even front loaded back loaded even
Package 2 Package 2 Package 2 Package 3 Package 3 Package 3 Package 4 Package 4

3,200,000 3,400,000 3,650,000 2,800,000 3,000,000 3,250,000 2,450,000 2,650,000

3,100,000 3,300,000 3,550,000 2,700,000 2,900,000 3,150,000 2,350,000 2,550,000
3,400,000 3,600,000 3,850,000 3,000,000 3,200,000 3,450,000 2,650,000 2,850,000
3,300,000 3,500,000 3,750,000 2,900,000 3,100,000 3,350,000 2,550,000 2,750,000
3,200,000 3,400,000 3,650,000 2,800,000 3,000,000 3,250,000 2,450,000 2,650,000
3,100,000 3,300,000 3,550,000 2,700,000 2,900,000 3,150,000 2,350,000 2,550,000
Option 11
5,000,000
front loaded
Package 4

2,900,000
2,800,000
3,100,000
3,000,000
2,900,000
2,800,000
 Initial Offer
Nominal Price 5,000,000
Payment Schedule Back-Loaded Installments
Service package Standard
Delivery Date 6 Months from date of contract signing
Delivery Premium 0
Waste Recycle % 95%
Hazardous Waste 50,000
NPV 4,150,000
there will be added cost of 6 month delay

Payment Schedule Front-loaded

Even payments
Back-loaded

Service package Standard

Package 2
Package 3
Package 4

Delivery Date Want immediately

 Final Offer
5,500,000 Calculations
Front-Loaded Payments
Package 3 Price
Immediately Payment Schedule
0 PV after payment schedule
90% Service Package
100,000 Assumption Benefits from Service package
3,805,000 Premium for early delivery
No added cost Shipping of Hazardous
Total Cost
91%
86%
82%

Savings for Vericomp

0
900,000
1,300,000
1,650,000

Can pay premium upto 100,000

Proposed by Proposed by
Riggs Vericomp
5,800,000 5,000,000
Back-loaded Front-loaded
4,988,000 4,550,000
Package 2 Package 4
900,000 1,650,000
- 100,000
50,000 200,000 Assumption
4,138,000 3,200,000