Negotiating în The Real World

I) DECRIPTION OF PARTIES AND REASON OF CONFLICT

The two parties of the negotiation are Lacatus Ana Maria the sales person from company Salerm Cosmetics together with Radu Alina, the sales director of the company Salerm and Zaharia Oana Claudia a young woman that wants to start a business in the cosmetics field, a beauty salon.

We present the case of launching a new brand on salon equipments that is meant to get the monopoly of the market. The companies on the market have different offerings, but the best offer and the best negotiation came from the Salerm Company. The negotiators from the beauty salon researched the seller and their motivation for wanting to negotiate with them on the products. They did their homework, knowing all their company, their products before they started negotiating. Salerm Cosmetics is a company from Spain that imports and distributes professional equipment and products in beauty salons. It is a new company in Romania and wants to penetrate the market and get exclusivity in beauty salons. The representatives of the company are Lacatus Ana-Maria, sales person and Radu Alina, sales director. The strategy that is applied by the company on the romanian market is offering the best quality and efficiency of products and best discounts.

Zaharia Oana is a young woman that wants to open a luxury beauty salon in Dorobanti. The money she wants to invest in this business reaches the amount of 65,000euros, which include equipment and products needed. Her dream is to have everything settled in two weeks before Christmas, because she consideres this a present for all the woman that search for a place of relaxation and improvement of image. She thinks that this business is a profitable one because it targets woman that are attracted to the luxury area.

The BATNA of the first party (the representatives of the company Salerm) in the negotiation is to satisfy their client, to sign a long-term contract and to get exclusivity. These will help the company to develop in the country, where the company is a new entrant and where are many powerful competitors.

The BATNA of the second party (the client) is to get the equipment necessary for opening a new beauty salon at the lowest price and the highest performance, to get discounts for the products and to get these two at the needed date, which is two weeks before Christmas.

NEGOTIATING IN THE “REAL WORLD”

II) NEGOTIATION

The two parties meet for the first time on the 21st of October at a Cosmetic Beauty Congress at Romexpo, and exchanged phone numbers for setting a meeting for negotiating the terms for future collaboration. On the 2nd of November Lacatus Ana Maria called Zaharia Oana for setting a face to face meeting for presenting the current offers of the company. Miss Zaharia showed her will of opening a beauty salon and the intention to buy professional equipment and products. The meeting was set on the 5th of November at 3pm at the central showroom of company Salerm in Bucharest.

The two parties meet on the 5th of November at the settled hour and place. First they introduced themselves and them Miss Zaharia was asked to describe the place where the beauty salon will be, so that the two representatives of Salerm could make the best offer and present the best ideas in the purpose of satisfying their client. They started by presenting their catalog and showing different types of chairs, mirrors, beds and other needed equipment.During the negotiation, the sales person from Salerm Company offered products for the entire salon with a discount of 10%. The total cost of the products and equiping the salon riched a price of 60.000 euros. Wanting to receive a better offering, the representative of the salon came with the argument that Christmas is going to come in two weeks and wanted to know if they don’t have special offer for holidays because the other companies do have. Another problem was the color wanted by the director of the salon that the company did not have, but they tried to satisfy their client and started proposing other colors that would match the needs of their client.

The sales person from Salerm Company discussed with the sales director and he offered a free sauna for the salon, but the salon director asked another discount. She came with the argument that the salon is in the best area of Bucharest, in Dorobanti and people will learn the name of the company very fast. Also the marketing plan is very powerful for the salon and they have a good PR to promovate it, so the name of the company that will equip the salon will become known in a very short time.

The sales person said that they have a special line for the year of 2009 and they will equip the salon with the new products offered, new on the market. They made a concept of products that are named Elizabeth Taylor and are associated with a name that is known in the entire world for beauty. Women will be very delighted with the idea. If the director of the salon gives the equiping company 10% from the profit, they will give a 10 % discount to the new price.

The director of the salon asked a very interesting question during the negotiation. Miss Zaharia wanted to know what is the best deal for the equipping company. If they receive a 7% royalty on 5000$ worth of sales or a 1% royalty on 500,000$ of sales. Even though 1% doesn't sound too impressive, of course it's the better choice in this example. The director of the salon has the intention to open a line of luxury salons all over the country.

The last offer or, “take it or leave it”, from the equipping company was to give them a free designer to arrange the salon. Together with the other offerings: the new line before established term, the sauna, the 20% discount and equipping all the salons in the country that will be going to be opened. The director of the salon said that if they offer a new discount of 5% that they have a deal. After consulting the director of the company, the sales person agreed to offer another 5% discount and they signed the contract.

NEGOTIATING IN THE “REAL WORLD”

MEMORANDUM I

Dear Client,

We, Lacatus Ana-Maria, sales representative and Radu Alina, sales director represent the company Salerm Cosmetics, a new entered company on the Romanian market that deals with importing and distributing professional equipment and products in beauty salons. As both of us, as companies seek a future benefit, the negotiation is a win-win one.

The best possible outcome from our point of view would be to serve the needs of you, as our client, by providing you with what you need now and to put the basis of a long term relationship in the benefit of both parties.