Buyers Strategy Negotiation Paper

Akshata Patil FT153005

Shashank Pushp FT151050
Gaurav Tolani FT153070
Ashwin Jayaraman FT153086
Robin George FT153106

1. Cost per unit for each supplier:

As is evident from the table, technotronics is the most viable supplier from the
given set of suppliers.
Possible reasons for the two suppliers not providing their quotations could be
missing the deadline, their quality not matching up to the standards that Porto is
looking forward to, they might be supplying only major players in the industry
(given that Porto is coming up with a new component).

2. The key issues that were negotiated included the cost per unit and quality
standards. The possibility of Porto bearing the tooling cost also given the fact
that the transportation terms are that of freight collect i.e., that would be
incurred by Porto itself, was also touched upon. Payment split & the schedule
was discussed as well.

As a buyer, we could not settle anything less than 95% on quality

standards of the component.
As a buyer we decided to be ready to bear the cost of tooling and
transportation, given that the unit price of the component will reflect that
and seller will make equal concessions.
Our range of unit price was $4.3-$5.5
Payment Schedule We decided to pay 20% in advance second payment
in 25-30 days. We also decided to keep the 10% of the payment on hold
until all the components are checked for meeting the quality standards.

3. Most important issues for the seller:

Making the maximum possible profit on each unit sold

Meeting the quality standards set by Porto
Long term contract
Pitching the issue of high tooling cost for maintain high quality

4. Going as per Portos analysis of the cost estimate, the lowest price was $4.30
per unit and the highest price for New Prod was $5.80 per unit.

5. Agreement:

Technotronics will maintain the 95% quality for the components delivered.
If not, Porto can legally decide to not pay the last 10% of the payment.
Porto will bear the cost of tooling and transportation, requirements of
which will be pre-decided and conveyed by Technotronics. Technotronics
will not charge or account any extra cost other than the manufacturing of
the component.
The unit price of the component will be $5.5.
Payment Schedule 20% of the payment will be made in advance and
the second payment in 25-30 days. Porto will also keep the 10% of the
payment on hold until all the components are checked for meeting the
quality standards.