Week 2 assignment Case Study

The following is a classic distributive bargaining scenario, whereineach party is attempting to maximize their gains at the expense of theother. In this situation, Michelle is interested in purchasing a ToyotaHighlander. Michelle has two dealerships to choose from (Toyota ofLouisville and Green Tree Toyota). Although she has no desire to travel along distance, there are dealerships in Cincinnati, Ohio andIndianapolis, Indiana that she could represent as alternatives as well.Michelle decides to visit Toyota of Louisville first and finds thevehicle she wants – a 2013 Toyota Highlander.

The Manufacturer’sSuggested Retail Price (MSRP) for the vehicle is $29,865, while thefactory invoice (the price paid by the dealership for the car) is$27,929. While Michelle only knows the MSRP for the vehicle, the dealerknows both the MSRP and the factory invoice price. Michelle has atrade-in, but she is unsure of whether or not to let the dealer knowthis, as she is unsure of what impact this will have on the dealer’sinitial offering price.

Consider the following questions and answer each, employing concepts and terms from the text, in a three to five page paper:

1.What should Michelle’s negotiation strategy be (e.g., how muchinformation should she share concerning where she is in the buyingprocess, that there is a vehicle trade-in, that she is looking at otherdealerships as well, that she knows the MSRP, whether and how muchdeception is ethical/allowable, etc.)

2. What do you expect the behavior of the salespeople to be when Michelle visits the Toyota dealership?

3.Develop a negotiation plan, including the characteristics of theopening offer, reservation price, tactics, tradeoffs, they should make,how to react if the seller bring up issues before you are ready todiscuss them (such as whether you have a trade in vehicle). Do you have aPlan B if your original plan becomes untenable?

(Case studyadapted from Luthy, M. R., Ryan, M. H., Desselle, B. R., & Byrd, J.T. (2007). Developing a strategic negotiation plan: Toyota Highlander.Journal of the International Academy for Case Studies, 13(4), 51-59.)