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Thursday, September 16, 2010

Negotiate and Sell

For everything you wanted to know on building leadership and management, refer Shyam Bhatawdekar’s website:

(Refer our High Quality Management Encyclopedia “Management Universe” at:

This management exercise is in the form of a role play. This role play can be used by you as the workshop facilitator or program leader of sessions on sales management, selling skills and negotiations. It is a group exercise.

Divide the participants of your program in at least three groups randomly (you can have more than three groups as well). For random formation of groups, use the method given in the management exercise titled “Pass the Message”.

One group will act as a “buyer” group or “buyer” company. Each of the other groups will act as the “supplier” group or “supplier’ company. “Buyer” is interested in buying a number of units of some product “X” from the open market and all the “suppliers” producing and selling that item “X” have shown interest by sending their proposals to the buyer quoting their commercial terms and conditions.

You being the program leader will distribute the exercise or role play brief to the buyer company. You will also distribute another brief to each of the seller (supplier) companies. The briefs given to each of the suppliers will be unique in their contents. Therefore if there are three groups acting as sellers you will have to prepare three different briefs.

Formats of the buyer brief and seller (supplier) briefs are given below. In this illustration, three suppliers are assumed. Product to be bought by the buyer is named as “X” and instead of giving the prices of the product “X” offered by the three suppliers in numerical terms; these has been specified as $M1, $M2 and $M3. Replace M1, M2 and M3 by some numerical values.

After giving the briefs, ask the four groups to reflect over it and conduct an internal discussions before they meet up for negotiations. Each supplier group will meet up with the buyer group one at a time, turn by turn. The supplier groups can meet the buyer group any number of times they wish to meet depending upon the buyer’s decision to do so.

After the sale has been made, share with all the participants all of the finally negotiated terms and conditions from the three suppliers and the one which finally won the order from the buyer.
Let the participants discuss the entire exercise and you should give additional appropriate inputs on negotiations and selling and wrap up the exercise.

The exercise briefs start now:

BUYER BRIEF (for “ABC Engineering” company)
Your company “ABC Engineering” supplies automobile components to the growing automobile manufacturers. With severe competition setting in, it has become imperative to cut down on costs, reduce rejection and rework and improve the overall productivity. In addition to taking other measures to do so, you have made up your mind to fit a special equipment called “X” to boost the productivity on at least 4 machines to start with. You have another 6 machines which are good candidates for this productivity boosting fitment called “X”. However, you wish to wait and see the results after fitting the first 4 “X”. You do have some constraints on money to be spent.

You have received quotations from three parties. Today you have invited representatives of these suppliers for discussions and negotiations along with you and your colleagues. Someone had told you recently that “Productivity Specialists” (one of the three suppliers) is more established supplier but you are keeping your mind open.

Quotations from the parties are as given below:
  • Price: $M1 per “X” from “Productivity Specialists” (Other two parties have quoted a price of $M2, and $M3 each which are significantly lower than offered by “Productivity Specialists”).
  • Delivery terms: Four weeks from “Productivity Specialists” and three and two weeks respectively from other two parties.
  • Warranty: Two years unconditional from “Productivity Specialists” (As against one year of other parties)
  • Payment terms: 40% advance, remaining within two weeks of delivery. Other parties have quoted 25% and 20% advance payment.
Following terms are acceptable to you:
  • Maximum Price: $M4 per “X” which is lower than M1 but may be higher than M2 and M3 (Willing to pay slightly more than M4 if satisfied on other requirements and terms).
  • Delivery: One week.
  • Warranty: As much as possible (However, you are satisfied with even one year warranty as other parties have offered).
  • Payment terms: Not more than 10% advance but keeping the advance payment to the minimum.
  • Excellent after sales service since you do not want any breakdowns of the equipment “X”.
Your priorities are:
  1. The equipment “X” should be very reliable.
  2. There should not be any breakdown of product “X” and if at all there is one, the same should be set right within 48 hours.
  3. Quickest possible delivery (literally on yesterday basis).
You are prepared to place the order on “Productivity Specialists” in case you and your team are satisfied on the above-mentioned points.
SELLER (SUPPLIER) BRIEF (one brief for each of the suppliers with appropriate terms and conditions offered by them as reflected earlier under “Buyer brief”. Following brief is for “Productivity Specialists” as an illustration)
You are sales in-charge of your company. After one meeting with the purchase manager of “ABC Engineering”, a medium sized firm manufacturing automobile components for the automobile companies (which is a growing sector), you have given them the following quotation for your product “X”. During the first meeting not much information was given by “ABC Engineering” except that they wished to fit a few of their machines with your equipment “X” so as to improve the overall productivity of their factory:
  • Price: $M1 per “X” (based on the client’s projected requirement of 3 to 4 units of “X”).
  • Delivery terms: Four weeks.
  • Warranty: Two years unconditional.
  • Payment terms: 40% advance, remaining within two weeks of delivery
You along with your team have been called by the top management team of “ABC Engineering” for discussions and negotiations.
Before the negotiation meeting you have contacted your company’s head quarters (corporate office) and they have advised and authorized you as follows:
  • To reduce the price only under extreme case by $m1 per “X” and not more than that.
    Delivery can be made earlier than four weeks minimum being one week.
  • You must try to get maximum advance possible. Can go down to not less than 10%. It should have some relationship to price etc.
  • You can negotiate further and lower the price by a further $m2 provided you can secure an order for at least two more units of “X”.
At present you have no clue as to how many machines in all they want to fit with your productivity boosting equipment “X”.
All you know is that they are very serious about the improvement of the productivity of the plant.
You are required to negotiate to get the best possible terms and conditions, maintain the leadership position of your company and above all satisfy your this customer the best possible way.
You are quite keen to secure this order but definitely not at the cost of loss to your organization.

Get Hold of the Related Books
You can order the following books on "management games and icebreakers" as printed books and eBooks from Amazon online:
  1. Classic Management Games, Exercises, Energizers and Icebreakers
  2. Classic Management Games, Exercises, Energizers and Icebreakers (Volume 2)
  3. Classic Team Building Games, Exercises, Energizers and Icebreakers
  4. 101 Classic Management Games, Exercises, Energizers and Icebreakers
Related Reading: (Repository of a large number of articles in management and leadership): and

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