Aspect Supplier A, Bangalore Supplier B Remarks

Hyderabad
Final offered price 57 Lacs 65 Lacs
Insurance Extra@ 2% Extra @ 3%
Freight INR 2 Lacs INR 3 Lacs
Delivery 6 Months 4 Months You require in three months’
time-Delay beyond 3 months
will have an impact of INR 1
Lac per week for you
Payment terms 25% advance 65% on 50% advance You can pay advance max
despatch and balance after and 50% prior to 15% You need retention
commissioning-No delivery 5% (10%) also as the solution is
Retention retention agreed new

You cannot pay more than

50% prior to delivery

50% that you plan to pay

after delivery can be paid in
45 days

Late delivery Not acceptable Acceptable @1% What is offered by supplier B

compensation per week subject is OK for you
to max of 5%
Warranty 1 Year 2 Years Failure cost would eb INR
50,000 per day
Up time Guarantee 90% 98%
Service Moderately strong network Very strong
network
Functionality Good but Not all options in Marginally Predictive diagnostics could
predictive diagnostics Technologically give you some advantages
superior with though not very significant
advanced
predictive
diagnostics
Guaranteed output 1 Lac pieces per day 1.15 lac pieces
per day
Operating costs per Rs 1000/Hr Rs 750/Hr
day
Spares and Not mentioned Not mentioned You must probe this may be
maintenance cost as a % of machine cost?
Risk Purchase Not acceptable Not acceptable You need acceptance on this
Reputation/market Moderate Excellent
standing
Good and scalable Good and more
Technology scalable
Evaluation cost 1 Lac Nil
Trial and inspection 1 Lac 1.5 Lacs
cost
Additional utility cost Nil 1 Lac
Training Nil INR 25000

1
 requirements
Your budget 52 Lacs (This need be seen
from Overall price
perspective)
Other requirements Lower operating
costs/Spares and
maintenance cost/1.5 Year
warranty/acceptance of
Late delivery
compensation/Financial
guarantee on performance

Data driven Role play

You need to negotiate on a major contract involving buying a technology driven powder
packing machine

You are based in Cochin

 You have shortlisted two options (A and B) after a first round of review

 A comparison between the two sources is as below

Your strategy should be to get best out of A and then use this to negotiate with B

But B will always focus on how they are different from A (which you must counter logically)

Your objective is to find out what best you will be able to extract out of A and B

Prepare an outline for negotiation in the following lines

a) Your approach towards A

 Strengths of A that you would like to use
 Weaknesses of A that you would try to exploit to make them accept your
requirements
 Your planned outcomes from A on each of the terms
 Your strategy to achieve the same/Bridge the gap
 Negotiation flow -Sequence of issues in order of importance
 Concessions that you could offer
 Counter to possible difficulties raised on each term by A

b) Prepare a similar outline for Supplier B