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Establish and Conduct Business Relationships
Role play 2
You are the Purchasing Officer at Evolution Hotel and have just evaluated the supply arrangement you have with a major fresh meat supplier.
Their performance was well below your expectations and their promises: despite several warnings from you about the way things were going things only got worse.
You believe this may have been because they got complacent when you signed a 12-month contract with them – something you are loathe to do again with any supplier.
While you are still dealing with this supplier and will do so until the contract ends in 5 weeks’ time you are actively seeking a replacement supplier and believe you have identified a suitable candidate. You phoned this company last week and arranged for a representative to call in and see you today.
Whether or not you do business with them depends on how well the negotiations you are about to have go. As you look after last years’ purchase figures you feel confident you are in a fairly strong bargaining position but are mindful of the organisation’s need for all negotiations to have a ‘mutually beneficial win-win outcome’.
The organisation also insists you do not threaten or coerce the other party; that you remain civil, polite and professional in all stages of the process; that you do not put pressure on the other party; that you strive for mutual beneficial long-term business sustainability.
You really want to lock in the prices you paid last year from the previous supplier for the next 12 months without having to be tied to a contract that obliges you to buy a set quantity of each cut every week.
Your fall-back position is you are prepared to pay 5% more per kilo providing there is daily delivery (Monday – Friday) and no minimum quantity requirements. In addition you want to standardise payment to ’30 days’ instead of the ‘’7 days’ commonly required.
You also want to be able to do your usual ordering process – a phone call by 3pm today for delivery by 10am the next day (except Fridays).
Management has released the budgets for next year and they predict a 7% growth in food sales from your bistro, fine dining restaurant, counter meals and functions.
The figures from last year that you want to negotiate on for next year are as follows:
Cost per Kg
Total $ spent last year
Grass-fed New York Porterhouse Yearling Sirloin
Whole Scotch fillet grass-fed
Waygu Rump Rangers’ Valley (Marble score 5-7)
Grain-fed T-Bone, fillet in 500gms
Centre cut eye fillet steaks (150 day grain fed)
Instructions for Evolution Hotel’s Purchasing Officer:
Welcomed the representative and Introduced self
Used positive and appropriate verbal and non verbal communication skills.
Gave context for the discussion.
Explained and presented relevant historical information.
Sought to understand position of the other party.
Presented position of Evolution Hotel in relation to prices they want to pay and requirements for placement of orders, deliveries Monday to Friday and terms of payment.
Listened to offer/counter-offer from representative
Was respectful and demonstrated appreciation and understanding of the wholesaler.
Sought a win-win outcome.
Ensured organisational negotiating protocols were observed
Reached a mutually acceptable deal.
Recapped and Confirmed deal agreed is acceptable and agreeable to the meat supplier.
Explained next stage regarding development of written agreement and signing of same.
Identified dates for agreement to be ready for signatures and placement of first order
Instructions for Meat Supplier Representative:
You are a representative of ‘Sydney Sensational Beef Sales’ who are established wholesale sellers of meat to hotels, restaurants, take-away places and functions centres in-and-around Sydney.
Your business has been going well over recent years but you have noticed a worrying trend of buyers moving away from you to buy meat from their local retail butcher who is prepared to sell to business at ‘trade prices’ and in much smaller quantities than you normally sell.
You aren’t all that worried but there is no doubt that this has become a trend that your business is keen to put a stop to, so the call from Evolution Hotel has come at an opportune time.
When you see the cost prices that the Purchasing Officer shows you for the meat they have bought in the previous year you realise your prices are on average $2 per kg more expensive – but the volumes you sell to businesses are normally significantly less than what Evolution Hotel is currently buying.
Your aims during the negotiations are to:
Negotiate prices with Evolution Hotel at your current cost prices (that is, $2 per kilo higher than what Le’ Culinaire paid last year): at this price point you are only making $1 profit per kg on cost.
Negotiate deliveries to the business on only two days per week rather than five days each week – cost of delivery to you is $15 per delivery.
Your walk-away position is you will settle for a deal where Evolution Hotel pays $1 per kg above what they paid per kg last year (which gives you 50¢ return per kg, the lowest your management is prepared to go to win business) – and you are prepared to deliver 5 days/week if necessary.
The aim is for you to actually negotiate a deal rather than accept what Evolution Hotel wants.
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