Reference no: EM133186560

1.  What is your BATNA?  What does this mean?

2.  What is your reservation value? What does this value signify?

3.  What is your target point?  What does this point represent?

4.  What would your opening offer be? Why would you want to make the first offer?

5.  If you were to actually negotiate in this situation, how would you judge whether you were successful or not?

You have agreed to buy a new Ford from a dealer. The down payment on the new car is $4,700, with steep monthly payments.  You are low on ready cash, so if you can't come up with the down payment by selling your Volkswagen Jetta, you will have to borrow it at prime plus 5% interest.  You are supposed to pick up the Ford first thing tomorrow morning, so you want to sell the Jetta today.

You advertised the Jetta (which is in particularly good condition) in the newspaper and have had several calls.  Your only really good prospect right now is the person with whom you are about to bargain - a stranger.  You don't have to sell the car to this person, but if you don't sell the Jetta right away, you will have to pay high interest (on the Ford down payment) until you do.

The Ford dealer will give you only $4,400 for the Jetta (as a trade-in) since it will probably have to be resold to a Volkswagen dealer or to a used car broker. The local Volkswagen dealer is not anxious to buy the car from you because a large shipment of cars has just arrived; in any case, you probably would not receive more than $4,400.