Exercise | July 2000 (Revised May 2008)

Riggs-Vericomp Negotiation (B): Confidential Information for VERICOMP

by Michael A. Wheeler

Abstract

The seller (Riggs Engineering) manufactures and services recycling equipment for the computer industry. The buyer (Vericomp) uses solvents in manufacturing chips. Though set in a high-tech industry, this exercise illustrates fundamental aspects of negotiation analysis that would apply in any situation--specifically, potential sources of joint gains and the tension between creating and claiming value. While it may be possible to reach a deal on price alone, doing so is difficult. Students can expand the zone of possible agreement if they creatively trade on other issues, including the scope of services Riggs will provide, payment schedules, timing of the contract, and possible guarantees. Even as they jointly expand the pie, of course, they must be mindful of what slice will be theirs. All agreements can be expressed in present value terms, so it is easy to identify which pairs generated the most gain, and which individuals got the best deals for their particular companies. This is a two-party, multi-issue negotiation exercise. Students should read either the (A) or the (B), but not both, and then be paired up to negotiate. Results are reported using the simple form that is the (C) case.

Keywords: Agreements and Arrangements; Negotiation Participants; Negotiation Tactics; Value Creation; Computer Industry;

Citation:

Wheeler, Michael A. "Riggs-Vericomp Negotiation (B): Confidential Information for VERICOMP." Harvard Business School Exercise 801-097, July 2000. (Revised May 2008.)