This week we did the Jordan Electronics negotiation. I was
the VP of Finance and I was presiding over the meeting. I determined that my
number one priority was to reach a consensus. The role description indicated that
the worst thing that could happen is for the President to return and find the
issue still unsettled. I also thought it would be best to put the President’s
priorities above my own. The President stated, “I want the new model of the JAC
36, and I want it soon. The more up-to-date it is, the better, Above all, I
want it to sell.” Personally, I was mostly concerned about the cost, but this
conflicted with the President’s priority of being up-to-date.
I began the negotiation by asking the committee to briefly report
on their position addressing the issues of whether to produce a revised model
and if so, at what price to sell it. From each person’s response, I could tell
right away that everyone wanted either a new or revised model. Some people were
concerned about selling price and others weren’t. In fact, most of the
negotiating dealt with people defending their positions on these issues. The
senior electrical engineer seemed unprepared because she didn’t really know
what she wanted and she didn’t debate anything with the VP of manufacturing.
Soon the negotiation was going nowhere as the different committee members fired
reasons back and forth defending their positions. In response to this, I
suggested that each person tells everyone what is most important to them. Unfortunately, for both sales and
manufacturing, it was the price and in opposite directions. R&D really
wanted a portable model and the engineer wanted time.
When addressing the issue of price, I recalled the President
saying that above all he wanted the model to sell. Also, the background
information indicated that competing products sell for $3,000 to $5,000 more
than the present JAC 36 which would come out to a range of $19,000 to $21,000.
So, I first suggested that we stay within this range. VP of manufacturing then
told us his underlying interest that he was afraid of losing his job and he
really thinks that the costs will be a lot higher than we think. Eventually he
agreed to a $20,000 selling price if his job security was indicated in the
contract. In addressing R&D’s and the engineer’s concerns we decided to
make a portable model, but in 6 months. Also, we decided to start producing the
revised model in 3 months. I think by solving the problem this way, we
log-rolled these issues which created value for both director of R&D and
the senior engineer. If I were in the position of the director of R&D I
think I would have tried to form a coalition with the VP of sales. To do this,
they could have built off of each other’s ideas during the negotiation. I think
by doing this, they would have had more influence over the rest of the
committee and maybe would have had a better outcome in their favor.
Overall, I think that our agreement was favorable to
everyone because we were able to create some value for each party.
