AccelMedia In Class Activity

For this blog post, I would like to elaborate on the in class project involving Accelmedia and GTechnica.  As soon as I read my part of the article, I couldn't wait to start the negotiation in class the next day.  I assumed the part of an Accelmedia employee, whose job was to negotiate an offer for a crucial component for one of our products.  My goal was to get the lowest price per unit, while not going above $35 per unit.  My boss was then going to evaluate my performance based on the negotiated price per unit.  Going into the negotiation, my plans was to come out low, and if necessary, raise my offer in small increments.  Once I met with the other side of the negotiation, I made an initial offer of $22 per unit, which was countered by an offer around $60.  Once I realized he wanted to play hardball, I knew I had to be much more aggressive in my negotiations.  We battled back and forth, making threats of ending the negotiation with no deal.  After a great deal of haggling, we reached a price per unit of $28.  This price was reasonable for me because it was under my boss's limit of $35.  I learned a great deal from this exercise.  I learned that if you are the seller in the situation, you want to make an extremely high first offer.  If one uses this approach, they will either create the "ballpark" and gain authority in the negotiation, or set the floor high for negotiation.  If you end up creating the ballpark, you might even get you initial extreme offer.  On the other hand, your extreme offer could be completely ineffective.  On the other hand, if you are the buyer, you want to make an extremely low first offer.  I think this idea of extreme initial offers is a key strategy in the television shoe Pawn Stars on The History Channel.  When someone brings an item to the shop that they want to sell, he or she usually says they want to receive an amount that is extremely high, thus trying to create the ballpark.  The pawn shop employee will then counter with an extremely low offer to get the seller to cooperate, and essentially lower the negotiation. When all is said and done, the seller usually gets paid an amount way under what they asked for, thus benefiting the pawn shop because they can resell the item at the price the seller initially wanted, and make a grotesque profit.