PLUMP PIES LTD
Plump Pies Ltd (PPL) is a medium sized bakery that produces vegetarian pies and pastries for the restaurant market. Its main product ‘The Crumb-licious’ has twice been voted ‘Vegetarian Pie of the Year’ by a leading hotel chain.
PPL Purchasing Team
The PPL purchasing team is run by former baker Cherry Well, a dynamic individual who works at a very fast pace. She has an assistant who processes the raw ingredient orders. Neither Cherry or her assistant are CIPS qualified or have any formal purchasing training.
An increase in demand as a result of recent magazine coverage has meant that at least three additional bakers are needed in order to fulfil existing and future orders. Cherry has decided to undertake a review of the labour market so that she can benchmark wage rates and recruitment agency fees prior to negotiation.
Cherry’s Approach to Negotiation
Cherry dislikes face to face negotiations as she believes they take ‘too much time’ and prefers to negotiate by telephone or email.
Cherry takes a distributive approach to negotiation. She does not engage in small talk and likes to tell the supplier what she is willing to pay in order to avoid bargaining. She is of the opinion that time is of the essence, and is only willing to speak to suppliers for five minutes in order to ‘get the deal done’.
There are only two recruitment agencies in the local area that can provide the baking skills required by PPL. Manbake Ltd charges on the basis of 25% profit margin, whilst BakePeople charges on the basis of 25% mark up.
In general, demand for baking skills is considered fairly elastic, however, due to skills shortages within the region, demand has become inelastic locally. This has meant that wage rates have reached an all time high. Consequently, two more generalist agencies have recently entered this market due to the high profit that can be made.
A hurried telephone conversation recently took place between Cherry and Philip, the sales representative from Manbake Ltd. The telephone call took place whilst Cherry was on her lunch break doing some shopping and went as follows:
Cherry: ’I have not got much time to talk to you as I am doing my supermarket shopping, but I do need to close this deal quickly as I am under a lot of pressure at work.’
Philip: ’We can agree a price over the telephone. All my facts and data show that you should be paying a premium for the type of skills you require. We are forecasting an increase in market rates.’
Cherry: ’I am not willing to pay any more than a 15% profit margin. If you cannot agree to that I will go to your competitors.’
Philip: ’We cannot get the right people for you unless you are prepared to pay the right price. We know our market and this is the best labour rate available. Logically speaking you have little alternative.’
Cherry: ’15% or nothing.’
Philip: ’OK. I am not very happy but I will agree to it. I will send you our terms and conditions by email.’
Cherry: ’Do not worry about the paperwork, I am fine with a verbal agreement.’
The information in this case study is purely fictitious and has been prepared for assessment purposes only.
Any resemblance to any organisation or person is purely coincidental.
You are required to analyze the above case study:
- How can you improve the negotiation style of the above case?
- Discuss on the “Collaborative Approach” that can be use for this negotiation process.
- Discuss on how to use Greenhalgh phases of negotiation as an effective negotiation method for case above.
This question belongs to marketing and discusses about collaborative approach that can be used for negotiation process.
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