CorporalNeutron9196 You are Chris Cook, an entrepreneur with 5 years investing in small…You are Chris Cook, an entrepreneur with 5 years investing in small businesses. You want to invest in a catering business and have been talking with a chef, Matthew, who has 5 years of experience that includes winning a prestigious gourmet food competition. You decide to negotiate to see if you could set up a business catering to high end parties and weddings. Your analysis indicates that you will need $35,000 in capital to get the business off the ground. There are four issues that you must decide in your upcoming negotiation: the contribution to the capital that you and Matthew will each make; the location of the catering kitchen; the size and age of the delivery van; and the quality of the kitchen equipment. Depending on the outcome of these negotiations, you will decide then on how to split the profits. Although you have as much as $30,000 available, you only want to put $5,000 in with Matthew putting up most capital and running the catering business and you running the financial and advertising. This would allow you to diversify your investments with the remaining money. You would be willing to put in more than $5,000 but that is your preferred option. You and Matthew agree that there are three possible spaces for the kitchen, all in the same neighborhood: sharing space in a small restaurant kitchen for $1000/month (Option 1), renting a moderate sized storefront on a quiet side street for $1500/month (Option 2), or renting a small storefront on a street with lots of pedestrian traffic for $1800/month (Option 3). Although the storefront options offer the potential to expand to a carryout business, they are more expensive, and you You also have three van options: you can rent a new Van 160 (cc-1600) for $15,000/year, you can rent a 2 year old Van 200 (c=2000) with low mileage for $10,000/year, or you can rent a 2 year old Van 120 (cc-1200) with low mileage for $8,000/year. You think a new van would be too expensive, but the capacity (1600) of the new van is preferred. You also worry about the maintenance cost of a used van but would prefer the economical used 120 even if it may be small for catering jobs. You have several options for kitchen equipment: use top of the line new equipment, new mid-quality equipment, used mid-quality equipment, or used low quality equipment. You think used mid-quality would be best. You are to meet with Matthew for 30 minutes to try and negotiate a deal on these four issues. Your goal is to negotiate an agreement as close to your preferences as possible so that you can invest in other businesses next year as well. If you don’t make a deal with Matthew, you can invest the money you save into another business venture. You even have another restaurant interested in a catering project – although this one is less preferable because the chef doesn’t have the name recommendation or creativity that Matthew does to appeal to high end clients. You also think it will cost more capital upfront than you would have to pay here.
Thread 1: How did you decide what your BATNA would be? How did you decide what it’s worth to help set your RP? Do you agree with other students’ assessment of how to set your RP?
Thread 2: What was the most important issue to you going into negotiation? Why did you choose this to be most important? Are you willing to make tradeoffs on other issues to receive this? Do you agree with other students’ ranking of issues? Why or why not?
Thread 3: Part of preparing for negotiation is to assess your counterpart. However, you often don’t have additional information outside your role. How would you project what Matthew wants?BusinessBusiness – Other
