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Question: 1a.) What are the important bargaining issues for both sides, b.) and rank the issues for both sides.

Coffee - Sandy Grant, FEB Director, Statler Hotel You are Sandy Graml, Director of Food \& understand that they buy coffee from Anderson Beverage for the three-star Statler Hotel. The at just under $5,95kg. You realize, though, that hotel is scenically located near the center of the you are unlikely to negotiate that good a price, as Comell Lniversity campus and is attached to the your friend purchases around ten times more renowned School of Hotel Administration. You coffee annually than does the Statler. On the assumed your position six months ago under a other hand, your friend does nol offer the same mandate to increase the cost-effectiveness of the level of product exposure to current and future hotel's purchasing practices. hotel managers. You figure the Hotel School Your focus is on collee. The Staller Hotel. with your coffee supplier that they might even be its three dining establishments and in-room willing to accept a contract below their cost. coffee machines, uses more coffee than the rest of the campus combined. Statler's guests are In sum, you are willing to pay more to Anderson demanding, and you realize that many guests than you currently pay to LaRoche because they judge the quality of a restaurant in large part by offer a superior product. However, the price the caliber of its coffec. It is extremely importaml difference is simply too grcal al this point. The that the Statler serve very good coffee. The hotel T.aRoche product meets your needs and is sold at has a repulation lo protees. a very fair price. If you can upgrade the quality Your current vender, LaRoche, sells a of Statler Hotel coffee while remaining costeffective, you think it will impress your boss, the product at a very fair price. Last year; you bought General Manager. approximately 4.500 kilograms of coffee from them al $4.70kg. LaRoche annoyed you last year In conversations with your manager, you discuss when they tried, in the middle of a contract, to other available premium brands and decide that pass along price increases in response 10 a very the quality difference between the Anderson and bad crop in Columbia. You threatened legal the LaRoche coffees is worth $2.70/kg. In other action to enforce the contract, which had a words, you are willing to pay as much as S7,40 locked-in price, and they finally agreed to for the Anderson colfee. Given the current effor continue supplying you at the same price. at cost-cutting, though, you know that inercases in expenses will be closely scrutinized. You Two months ago, you distributed a request for figure that it is prelly imporlanl for your job bids for coffee suppliers for next year's contract, security for you to do well in your first major and Anderson sent in a bid. You know that negotiations for the Statler. Your manager has Anderson coffee is superior to TaRoche. In fact, suggested thal cvery penny you are able to save you recently conducted a blind taste test of the the Statler will translate to a bomus of two brands against each other during a training approximately $50 for you. session for hotel seneral managers. The managers preferred Anderson to LaRoche by a You arrange to meet with Kelly IIammer, Vice margin of 3 to 1, with most of those managers President of Sales for Anderson Coffee. saying they "somewhat" preferred Anderson. and about 10% saying they "strongly" preterred Anderson. Also. Anderson's "fair trade" policy of paying a livable wage to independent farmers appeals to some of the university's stakeholders. The only problem is that Anderson's bid asks a much higher price than LaRoche offers. Anderson asks $7.94kg for their regular coffec. You are prelly sure, though, that the price is negotiable. A friend of yours works for Beetle Cove, a wourist attaction nearby, and you You are Pat Hammer, East Coast Vice President of costs have, you believe, p Sales for Anderson Coffee. You have been invited to superior coffee and reputation meet with Sandy Grant, Food \& Beverage Director for the Statler Hotel in Ithaca, New York. The hotel is scenically located near the center of the Cornell School of Hotel Administration. When Grant called many current and future You do not have other custor York area, so shipping alone Two months ago, you received a request for bids for $0.80/lb. You know that An coffee suppliers for the contract that runs July 2003cost$5.93/lb. - to a fen through June 2004. A copy of the request for bids is who are also conveniently attached. You responded to the request with a bid and selling cost to most restaurar a packet of promotional materials. As July that your bid price represents approached, you figured Anderson was no longer under consideration. You were surprised and pleased The CEO of Anderson Coffe to be invited to meet with Grant. you that you should not acce $7.25/lb. This price represen The coffee industry is, in many ways, risky. You from market rate due to the depend on weather patterns and on third-world school. Further, every penny politics for your production. However, modern the per-pound price will t technology has dramatically reduced the perishability commission of $50. of your product. Further, Anderson's extensive lines of flavored coffees have sold well. Anderson also Summary of Key Points offers its customers advanced clinics and All prices include delivery consultations on coffee brewing and water filtration. A recent letter from a major chain of pancake houses attests to the positive results of these clinics and to the fact that customers appreciate them. Demand for Anderson coffee this year has been substantially higher than last year. Overall, sales have been extraordinary. You know that your product is higher-priced than that of many of your competitors. This difference makes sense because you pay more for your beans and support extensive research and development efforts on the growing, processing, and brewing of coffee. Further, your company has a commitment to paying independent coffee farmers a fair price that allows them to earn a living wage. These substantial REQUEST FOR BID The following bid request is for coffee products and coffee related services. The requested time frame is for a one year period beginning July 1,2003 through June 30,2004 . Please review the enclosed details that may affect the bid price. PRODUCI: Colombian Coffee. Product shall be 100% Colombian coffee. Coffee will be provided in grind form appropriate for the equipment owned by the Statler Hotcl. PACKAGING: The above items should be available in both 12 ounce and 2 ounce packets. The individual packets should be gas-flushed or vacuur packed to maintain a shelf life of up to 6 monthis. EQUIPMENT: The Statler Hotul curtently owns their own coffee equipment with the exception of 3 Bunn-0-Matic ten cap pour over machines. It is expected that the company awarded the bid will supply the hotel with the above equipment at no charge while under contract. Furthermore, it is expected that coffee filters are provided at no charge for all coffee machires. EQUIPMENT REPAMS/SERVICE: It is expected that the vendor will provide service repairs on coffee machines at no charge. Any parts needed for the coffee machines owned by the Statler Hotel will be the responsibility of the Statler. ORDERSDELIVERY SCFIELDLE: To be discussed once the bid has been awarded to vendor. The minimum xequirement is one delivery per 14 days although one delivery per week is optimal and preferred. PRICING: Prices quoted are to remain in effect for the length of the contract beginning July 1,2003 through June 30,2004. CANCELLATION CLAUSE: Vendor may terminate the awarded contract upon 60 days wrilten motive with a copy to both the Food and Beverage Director and the Purchasing Director of the Hotel. Statler Iotel may terminate the awarded contract upon 60 days written notice to the vendor. ACCEPTANCE TIME FRAME: Please submit your bid to James Robinnet, Purchasing Director of the Statler Hotel no later than June 1,2003. Xt order for your compary to ealculate an appropriate price per pound for the coffer to be bid on, please note our annual usage this past year was approximately ten thousand pounds. In addition to the above, the Statler Hotel purchases flavored and diccuffeinated coffees. In addition to the above bid, please enclose a product/price list of the flavored coffees offered by your company. If you have any questions in regards to this bid, please contact James Robinnet at 607-254-xxxx Thank you

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