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Rohan

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Vericomp Case Study

Team – Group 18

Team Members – Abhishu Rakshit (FT12182)

Rohan Shah (FT12183)

Planning and Preparation

Analyzing the numbers

Nominal Price - As put up during the earlier round of negotiation, the purchase price was $5,000,000. We had prepared to try and bring that down to $4,500,000 as normal bargaining.

Schedule of Payments - Initially it was decided to have back loaded payments. We went with an intention of earning better discounts by making them front loaded payments or level payments as we were the pioneers in the industry and thus would have good cash balance.

Service - Standard service was agreed upon. But as this is specialized machinery, we would require complete service coverage which was a level 4 service level. We needed to negotiate the service price.

Delivery Date - Our requirement was for immediate delivery. This should not be much of a problem according to us as Riggs was capable of delivering the machinery as soon as possible is what we assumed. Although due to relocation of labor resources we may have had to give some up charge regarding immediate delivery but we wanted to offset this by changing the schedule of payments.

Actions during the negotiation and Actions decided/done after:

We began the negotiation by starting the pricing for the level 4 service. Initial range of the service pricing was varying between $1.4 million and $2 million. After much persuasion and understanding each others’ issues, we finally agreed upon a pricing of $1.6 million for the level 4 service.

Against our expectations, the delivery schedule was not much of a hurdle as the counter party was ready to deliver immediately and did not ask for any extra charge. This gave us a hint that they had the machinery lying ready for delivery and wanted to get away with it to reduce any inventory carrying cost as it was a

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