Organizational Negotiations

Organizational Negotiations

BUS445

Organizational Negotiations

For my portion I will be using a negotiation situation that occurred in my previous organization. I previously worked for Avnet, its a tech company that is located here in phoenix and has been in business since the early 1920’s. I was involved in a negotiation to bring a company onboard called Electronics for Imaging(EFI), EFI for short is a company that makes small circuit electronics for many different electronics in the computer industry. EFI is located in northern California and bringing the company to Avnet would allow the integration part of the Avnet business in northern California to build the components for EFI at a cost that was convenient too Avnet and EFI. Integration means takings raw parts and combining them to make a bigger more elaborate part, this requires testing and development that most companies can not afford and EFI was no different so the part that Avnet was trying to play was significant. The role I played was in the Profit controller for the integration center, I was working with my boss who was the director of operations to make sure the contract that was being negotiated with the VP of EFI and their product director was enough of a profit for Avnet to allow for the testing to take place in the San Jose facility. This negotiation process was a long and difficult process as the integration business in San Jose is quite expensive due to the economy in California dictating that people command a higher pay rate versus the people in California or Mexico. The first 3 contracts were denied either due to the first article charges which is the first batches of materials costing to much, or the profit was denied by me as not meeting the threshold to sustain business. The cultural impact for this is that San Jose was determined as being too much of a cost issue and the amount that EFI could pay was not beneficial for Avnet and the integration would need to be moved form San Jose to an outside location. This is where Mexico was presented and the idea was moved forward up until the Trump tariffs made the integration in Mexico too costly. Finally a meeting was called with myself, my boss and the VP of Avnet along with the VP of EFI and the product and operations directors for EFI to come to an agreement quickly as the time frame had quickly moved along and 8 months later a deal hadn’t been made and the contract was about up. A deal was made to void the first article charges and make them not cost EFI anything, this would allow the production of testing materials to take place in Mexico, in exchange the profit margin negotiated by me of being 7% on all orders after the first article was accepted and the production was to be taken place in phoenix with the Mexico and American teams cooperating on the builds. Both EFI and Avnet agreed to a 5 year contract after roughly 8 months of negotiations.