Market Leader, Intermediate, Unit 6 Ashbury Guitars

Market Leader, Intermediate, Unit 6 Ashbury Guitars

Preparation

One of the most important directions the following: reaching a reasonable consensus is A MUST.

The following notes were taken during one negotiation session. They are by no means guidelines for the negotiation, but may give a general idea of what such a negotiation can be like (see Table 1).

1. Range of products: both sides agree

2. Quantity:

KGC: increase the order to 3000 items

AG: SG, SG , the rest SG1000

KGC: SG1, SG500-600, SG

AG: AGREE

3. Quality: KGC SG1000 manufactured at KGC own plants, the rest according to the circumstances

AG: AGREE WITH SOME RESERVATIONS TO BE CONSIDERED LATER

4. Payment: AG: LC at 60 days CIIIA San Francisco KGC: 100% prepayment FOB Pusan.

Both sides come gradually to the consensus: 65% pre-payment by a bank transfer CIF San Francisco + an exclusive contract for 1 year

5.  Guarantee - 2 years

Negotiation Table 1

	Ashbury Guitars	ZONE OF POSSIBLE AGREEMENT	KGC
Models	·  SG200 ·  SG500 ·  SG1000 (special additional features)	·  SG200 ·  SG500 ·  SG1000	·  SG200 ·  SG500 ·  SG1000 (costly to produce because of the technical feat.)
Quality	All the guitars manufactured be KGC (Korean firms – non grata)	60:40 as KGC want.	60% manufactured by KGC 40% Korean firms (to reduce costs)
Quantity	Model Quantity Notes SG200 300 May sell well SG500 500 SG1000 750 Will sell well for sure If all sell well => a larger order in 3 months will be placed	2100 guitars (SG200 – 550; SG500 – 500; SG1000 – 950)	3000 guitars in whole. SG200 is profitable so it’d better to buy a large number of them.
Price	KGC quoted: Profit SG200 US$475 33% SG500 US$550 33% SG1000 US$920 40%	Model Price SG200 US$475 SG500 US$550 SG1000 US$920	Model Estimated cost of production Prices quoted to Ashbury SG200 140 475 SG500 220 550 SG1000 700 920
Delivery	By June 1! Not later.	June 1.	June 30. Or if earlier production costs will increase by 10%.
Discounts	6% this turn would be good. 10% on future orders for more than 1000.	5% now and 7% next turns.	3% this turn. 5% next turns.
Payment	Letter of credit 60 days.	Letter of credit 60 days.	Bank transfer as soon as the delivery.
Guarantee	Not less than 2 years. 3 years preferably.	2 years.	1 year.
Exclusivity	Non-exclusive contract to be able to order from Korean firms.	Non-exclusive or exclusive if all the guitars are manufactured by KGC.	Exclusive contract is Ashbury is a big distributor.
Transport	Sea containers. CIF San Francisco preferably. If FOB, +5% to the purchase price.	FOB	FOB preferably. If CIF San Francisco, +5% to the price.