Selamawit’s Briquette Bargain
Selamawit’s shop is doing well, but her main cost is the biofuel briquettes she buys from a single supplier. The supplier has just informed her that the price will increase by 15% next month due to “rising transport costs.” This price increase would erase most of Selamawit’s profit margin on the briquettes.
She has heard about another briquette producer in a nearby town, but she has never worked with them and isn’t sure of their quality or reliability. The current supplier has been reliable, but he is known to be a very tough negotiator. Selamawit needs to have a conversation with him next week.
Discussion Questions/Challenges:
- What is Selamawit’s BATNA (Best Alternative to a Negotiated Agreement), and how can she strengthen it before the meeting?
A. Accept the 15% increase and adjust her customer prices immediately
B. Explore the nearby supplier, get quality samples, and negotiate a quote to use as leverage
C. Threaten to stop doing business with her current supplier without any backup plan
D. Focus only on persuading the supplier emotionally without considering alternatives
Correct Answer: B – Selamawit’s BATNA is switching to the other supplier.
She should evaluate their quality and pricing to strengthen her position in the negotiation.
- What is the supplier’s stated position, and what could be two possible underlying interests behind it?
A. Position: Price must rise by 15%. Interests: Cover rising transport costs and maintain consistent revenue
B. Position: He wants to stop working with Selamawit. Interests: Retaliation and market dominance
C. Position: The price is fair. Interests: He wants Selamawit to buy more products
D. Position: Lower production output. Interests: Avoid too much demand and increase exclusivity
Correct Answer: A – The supplier’s position is the 15% increase. Likely underlying interests include managing rising costs and ensuring a stable income.
- Using the idea of “inventing options for mutual gain,” what is one creative proposal Selamawit could make to avoid paying the full 15% increase.
A. Ask for a long-term supply agreement in exchange for a smaller price increase (e.g., 7%)
B. Demand a discount with no compromise
C. Offer to pay more than the 15% to ensure supply security
D. Stop buying immediately and walk away from the relationship
Correct Answer: A – Proposing a long-term contract or volume commitment can benefit both sides: the supplier gets stability, and Selamawit avoids the full cost increase.