MGMT2123 Lecture Notes - Lecture 2: Costco
11 Jun 2018
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Day 2
● Ex: Flea Market
○ Why would we negotiate for clothes?
■ People are often paid on commission, they have latitude
■ If the consequence of not giving discount is loss of sale, no one wins…
■ Things like clothes, appliances, etc you can
■ Many say it is not worth it…..
■ Other areas?
● `y…
● Ex: drone manufacturer \ political figure negotiation
○ Ex: donate 10M
○ What do I get back
■ Deregulate drone laws
○ Now party 2 comes and wants 10M
■ Not giving them 10 because you don't like them
■ Maybe say 8M
■ Why?
● If you bet on every horse you will win
somehow!
○ You are renting a politician.
● Ex: You hire a General
○ You want to overthrow the government
○ US has done this 135 times in last 30 years
○ Where does this money come from?
■ Who does the negotiation? CIA or state dept.
■ Why pay the general? Why not just invade?
● Stay out of it
● Argue it is less unethical
● Sometimes people negotiate because:
○ Easier
○ More or less ethical
○ Just for the fun of it
● But you don't have to negotiate. How could you get 10% off?
○ Go through a company like Costco, they will get you a discount
○ Why would a local dealer say yes to that?
■ We can assume their commission is more than 10% in this case
■ Didn't cost them anything and did not impact immediate inventory since it
is coming from the original manufacturer
■ Also to get access to Costco customer base
○ Sometimes there are organizations that do the negotiations for you… maybe you
don't like negotiating or don't have time…
● Amazon negotiates with sellers to get a discount, in many cases you could have done it
on your own but they do it for you
● There are a huge range of things that the initial price is just a beginning asking price
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
If the consequence of not giving discount is loss of sale, no one wins . People are often paid on commission, they have latitude. Things like clothes, appliances, etc you can. Many say it is not worth it Ex: drone manufacturer \ political figure negotiation. Now party 2 comes and wants 10m. Not giving them 10 because you don"t like them. If you bet on every horse you will win somehow! Us has done this 135 times in last 30 years. Go through a company like costco, they will get you a discount. We can assume their commission is more than 10% in this case. Didn"t cost them anything and did not impact immediate inventory since it is coming from the original manufacturer. Also to get access to costco customer base. Sometimes there are organizations that do the negotiations for you maybe you don"t like negotiating or don"t have time .
