BHMH2160 Negotiation Skills

Past Paper Exercise 4

Question 1

Sabrina wanted to renew her home wi-fi service for two years. The salesman appeared to be nice in
answering her questions. After some bargaining, she agreed with the salesman at a $50 monthly
discount and the 13th month free. The salesman needed some time to serve other customers, and
asked Sabrina to come back in 20 minutes. When Sabrina returned, the salesman seemed to be tough
and told her that she could only get $30 discount and no free month.

Identify the hardball tactic the salesman has used and explain TWO purposes of applying this tactic.
(6 marks)
(Source: Question B1 of S1, 2022/23 exam paper)

Question 2

Beauty International is a famous pharmaceutical group in Hong Kong. Their products are
imported from Europe, Japan and South Korea. The prices of their products range from $100 to
$1,500 to suit all walks of life. Due to the downturn business situations in Hong Kong, most
retail shops have suffered from poor sales and big loss. As a result, Tammy, the group sales
manager, is keen to improve the sales volume and turn the deficit into profit.

Martin is the purchasing manager of a large medical group offering various types of medical and
dental services in Hong Kong. The medical group needs to buy a large range of caring and
cleansing products to meet the growing patients’ needs. After doing some market research and
phone calls, Martin has identified Beauty International as one of the potential suppliers.

Here are some of their meeting discussions:

Tammy: Hi Martin, it’s nice meeting you.

Martin: Me too. I hope we can conclude our business today. We have discussed the prices
of products A & B over the phone but compared with other suppliers, your offers
are not attractive enough. If we cannot reach a deal, I will work with the other two
suppliers.

Tammy: I see what you mean. Our terms are very good to you because we want to build
our business relationship. Please tell me what you expect.

Martin: For products A & B, we want you to offer 25% discount for both of them. If not,
we will consider another two suppliers.

Tammy: Martin, we have already offered 15% discount for the two products over the phone.
You now demand another big discount. I’m afraid we will not afford to do it, and
trust other suppliers are also unable to meet your demand. I am sure you know
product A comes from Germany which is a lot more expensive and product B is
from Japan with high quality.

To be very honest, 25% discount is very difficult. How about you buy some more
quantity and we then consider your requested discount?

Martin: Let me think about it.

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 Tammy: If you buy another 20,000 pieces for both brands, we will try our best to give you
a 25% discount for the two products.

Martin: Thank you for your kind offer. However, it seems difficult for us to buy so many
more. How about 10,000 more only? As you know, we are a reputable and
trustworthy medical group in the market. Therefore, if you can make a deal with
us, other medical firms will take it as a good reference. Also, if you accept our
terms, we will make the payment by two weeks after goods delivery. I know other
companies usually settle the payment in a month.

Tammy: It sounds acceptable. But please pay 30% deposit by 5pm today to confirm our
cooperation.

Martin: Okay!

(a) What kinds of bargaining power Martin has got? Briefly explain the nature of EACH kind of
power and support your answer from the case. (9 marks)

(b) What closing techniques are used by the negotiators in the case? Briefly explain the nature
of the techniques and support your answer from the case. (6 marks)

(c) There are two main types of power tactics in negotiation. In this case, which type of power
tactics should Tammy adopt to protect her interest? Explain the nature and briefly explain
why Tammy should use that type of power tactics and what she has used to achieve the
purpose. (5 marks)

(Source: Question C3 of S2, 2020/21 exam paper)

End of Past Paper Exercise 4

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