Jordan Electronics

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.