How will you prepare and negotiate a contract

Reference no: EM133024666

Automotive Fabrics - Negotiation Case Study Purchase Negotiation Case: Common Information

This simulation involves negotiating the purchase of an automotive fabric. The following information is common to all groups participating in the negotiation:

There are four potential manufacturers of textile products. These include the following:

Athena Corp. - Annual sales of approx. $ 40 million dollars, located in Bowling Green, Kentucky..
Cybaris Corp. - Annual sales of approx. $ 50 million dollars, located in Charlotte, NC.
Medusa Corp. - Annual sales of approx. $ 20 million dollars, located in Columbus, OH.
Orion Corp. - Annual sales of approx. $ 35 million dollars, located in Grand Rapids, MI.

There are four potential purchasers of textile products. These companies are second tier automotive suppliers, who supply the major automotive companies located in Michigan, Ohio, and the Southeast. These companies have all purchased in small quantities from all of the suppliers, and include the following:

King Corporation, located in Greenville, SC, has requirements for 150,000 yards of fabric for 2001. The products will be required in 2002 and 2003 according to current plans, and volumes are expected to increase.
Queen Corporation, located in Knoxville, TN, requires 250,000 yards of the fabric for 2001, but volumes for 2002 and 2003 are uncertain.
Duke Corporation, located in Cleveland, OH, requires 100,000 yards of the product, and production volumes required are expected to increase by 50% or more in 2002 and 2003.
Duchess Corporation, located in Lansing, MI, requires 200,000 yards of the product, and volumes are expected to decrease somewhat in 2002 and 2003.
Prices for similar fabrics are in the $12.00 to $15.50 price range per yard.
All identified suppliers are able to produce to specifications provided by the purchasing company. However, quality performance related to the product can vary greatly.
Individual cost structures of the firms providing the fabrics can vary significantly.
Suppliers provide widely different levels of service and technical support.
All suppliers have to satisfy the same quality and delivery terms, payment terms, and transportation (FOB seller's plant).
Industry capacity utilization is about 75 percent.

All purchasing companies have purchased relatively small amounts from all of the suppliers previously, never totaling more than $100,000 per purchase.

Questions:

1. If you represents a buyer, consider the different suppliers - which one would you select? What type of contract would you use? If you represents a manufacturer, consider the different purchasers - which one would you select? What type of contract would you use?

2. What are the risks and rewards to consider in this case? How can you balance these risks and rewards?

3. How will you prepare and negotiate a contract?

4. Based on the information within the case, which elements would you include within the draft contract? Why?

Reference no: EM133024666

Questions Cloud

Prepare analysis showing Jensen should process the further : Problem - Sell or Process Further - Prepare an analysis showing whether Jensen should process the assemblies further

Airline reservation database system : Is it possible for two travel agents located in different cities to book their respective clients the last seat on the same flight?

Write about the principles that you have learned : Write about the principles that you have learned. How do you want to apply them into your own business?

Define the term business process : Define the term 'Business Process' and describe, with examples how business processes are tied to a specific functional area of an organization.

How will you prepare and negotiate a contract : What are the risks and rewards to consider in this case? How can you balance these risks and rewards and How will you prepare and negotiate a contract

Do the song and film do justice or injustice : What are some of the "doubts, errors, and unknowns" that still haunt the case of Hurricane Carter? (Explain)

What is the origin of the video game industry : Case: The Golden Age of Home Video Games - From the Reign of Atari to the Rise of Nintendo

What aspects of american societies in 1750 seem unique : What aspects of American societies in 1750 seem unique or distinctive, and what aspects seem to be part of a wider global pattern?

How carbon foot print helps to reduce by transportation : -How carbon foot print helps to reduce by transportation? Provide one evidence that is given by Jacobson with reference

User Account

All Pages