Negotiation Planning

Price to recoup development costs and maintain competitive advantage Issues What should be on the table? What will the discussion focus on? Look for commonality and tradeoff The new technology Preventing the sale of technology to direct competition Net Profits Recoup the development costs Audio shouldn't sell the technology to external customers – Reducing profitability to the company Sharing Internal sales profit Terms What sort of stipulations may apply?Audio should not produce products using Z-25 technology Supply Z-25 magnets for free Magnetic Advances should be given first preference in any further technology advancements in magnets Avoid selling it to competition Goals specific/measurable/]sustainable; target/range you are shooting for; make best guess for the other side; rank them YOU: OTHER PARTY: 1. I am shooting for 61 mm in profits (the minimum I could go is 47-TAP and the maximum I could go is 140-TAP.TAP at minimum would be 32 mm. Taking the average of the above t wo would give me an estimate of 61. 5 mm as target) 1 . 80 mm as TAP ( If the deal succeeds, Mad's maximum profits would be 140 – 32 = 108, and minimum refits would be 20 – 32 mm = -12, so taking average of 108 and -12 and adding them to our opportunity cost ( 12 mm (development costs)+20 mm Internal sales)) 2. Audio should not produce products for Internal dollops 2.So they will be embarrassed to take up the issue with top management Through internal sale of Z-25 products we can get 20 mm in profits Z-25 has enormous commercial possibilities The technology two years lifetime and it cost 12 mm There is 15% and 10% profitability on external and internal sales respectively Negotiation Strategy How do you plan to approach the negotiation? What will you share/keep private? Keep private the net profits Keep private other potential offers I plan to approach by showing them the losses of no selling the product. They could potentially gain 8 mm (20 mm from internal sales †“ 12 mm deep costs) if they didn't go through the deal. So I would say that they will lose more if they don't do the deal because at minimum I am offering them 20 mm + 12 mm = 32 mm. I think even the other party would show losses supporting his argument.