The following is a classic distributive bargaining scenario, wherein
each party is attempting to maximize their gains at the expense of the
other. In this situation, Michelle is interested in purchasing a Toyota
Highlander. Michelle has two dealerships to choose from (Toyota of
Louisville and Green Tree Toyota). Although she has no desire to travel a
long distance, there are dealerships in Cincinnati, Ohio and
Indianapolis, Indiana that she could represent as alternatives as well.
Michelle decides to visit Toyota of Louisville first and finds the
vehicle she wants – a 2013 Toyota Highlander.
Suggested Retail Price (MSRP) for the vehicle is $29,865, while the
factory invoice (the price paid by the dealership for the car) is
$27,929. While Michelle only knows the MSRP for the vehicle, the dealer
knows both the MSRP and the factory invoice price. Michelle has a
trade-in, but she is unsure of whether or not to let the dealer know
this, as she is unsure of what impact this will have on the dealer’s
initial offering price.
Consider the following questions and answer each, employing concepts and terms from the text, in a three to five page paper:
What should Michelle’s negotiation strategy be (e.g., how much
information should she share concerning where she is in the buying
process, that there is a vehicle trade-in, that she is looking at other
dealerships as well, that she knows the MSRP, whether and how much
deception is ethical/allowable, etc.)
2. What do you expect the behavior of the salespeople to be when Michelle visits the Toyota dealership?
Develop a negotiation plan, including the characteristics of the
opening offer, reservation price, tactics, tradeoffs, they should make,
how to react if the seller bring up issues before you are ready to
discuss them (such as whether you have a trade in vehicle). Do you have a
Plan B if your original plan becomes untenable?
adapted 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.)
Must be in APA format. Please cite any outside sources used.