Negotiation Reflection - Knight Engine

Knight Engine/Excalibur Engine Parts Reflection

When thinking about the result of the negotiation and specifically my personal performance there is one mistake that immediately comes to mind.  I never thought to ask why Excalibur Engine Parts was the only supplier able to meet the deadline of Knight Engines.  This error allowed my negotiating partner to withhold information that I may have been able to use to my advantage in lowering the absolute dollar amount of the pistons.   Despite this, I find I am less disappointed with this result than when I found out similar information as a seller of the sugar bowl.  In this instance I believe this is because of two factors.  First, the lack of information was due to my error, and given the rest of my experiences during the negotiation I have little reason to believe that I would have been materially mislead by my partner.  Second, when the deal was completed I had no misgivings about the price we had reached.  While my experiences in this simulation were positive, I realize that not all partners will be as willing to enter the negotiation with a collaborative mindset, and thus it is vital that I identify these important probing questions in the future to obtain information, and at the minimum attempt to determine it veracity.

        Regarding the tools used by each side during the negotiation, I saw many positive things that allowed us to come to a fair agreement.  In the beginning I attempted to set an anchor price of $400, and my partner responded with his own offer of $650.  After beginning to bring down his offer by agreeing to the rush fee and the Excalibur branding the conversation turned to cost.  I had brought my offer up to $475 in response to his agreement to waive the quality inspection fee and allow me to return any excess units I had at the end of production.  This was instigated by a question about their defect rate which actually turned out to be higher than our normal supplier, allowing me to bring down the price.  In response, I enquired about his cost on a unit and he made what was in my opinion his only real mistake.  In telling me his cost was under $500 I had been given a relatively narrow margin between my current bid and $500.    Knowing this, I switched tactics to espousing our governmental relationships, mentioning that we had fulfilled contracts with them in the past.  At some point in tis discussion I made another error in mentioning that to have a competitive bid we would need to agree to a price of under $600, but this opening wasn’t exploited later, and whether as a show of good will or just by chance it was something that I appreciated representing Knight.  I believe my efforts to highlight our firms experience with military contracts and my mention of this contract being top secret and how that reflected positively on our firm allowed me to bring his price down to $530 plus the 5% rush fee.  I intentionally left this fee in until the end as a bargaining chip, although had I known the status of their inventory I could have achieved an even larger gain.  The offer as it stood would have amounted to about $556 per unit and after identifying that I offered a price of $540 inclusive of the fee, which was accepted by my partner.