Iberia airlines build batna

Introduction.

This paper seeks to explore the negotiation strategies and tactics of three executives in the airline industry and the marketing strategies of the aircraft makers involved in an article critique.

Mr. Leahy of Airbus is a persistent negotiator who investigates the client’s target price and carefully places his bargain around this price to ensure that his competitors do not close the gap a head of him. Knowing that the competitors are better off in terms of plane capacity, he offers guarantee on the future value and lower price which appeals to Mr. Dupuy. Mr. Leahy bases his bargain on what is offered by the competitor especially on price and the client requirement. Mr. Bright tend to shy away from competition especially on price as the Boeing is more expensive than Airbus and would rather negotiate based on larger plane capacity, lower operational cost with a promise of comfort and increased revenue to the airline company. Mr. Dupuy has the habit of setting the two plane making companies against each other to achieve lower prices through discounts for a reliable, cheap and assured future resale values. During the negotiation, he makes the salesmen aware of the offer that each side has brought forward. This makes the teams work on compromising their stand especially on price. Mr. Bright sees lower price as a reduction in product standard while Mr. Leahy is more willing to compromise price in the client’s favor. (Daniel, M 2003, p.658)

According to Daniel, M (2003, p. 659), the Airbus’s flexible bargaining powers make it popular with Iberia airline company hence higher sales compared to Boeing. Boeing is very conservative in its strategy trying to avoid competition with Airbus especially on price and prefer direct sales without much competitive bidding. The Airbus has learned to capture the market by simpler and cheaper planes which eliminate the cost spare parts, maintenance or training costs. This meets Iberia’s taste for cheaper and easy to operate planes. Mr. Leahy won the Iberia bid by presenting the new A340 which could fly further with more lifting power than Bright’s Boeing 777. Leahy also offered a lower price on the Airbus which was uniform with Iberia’s existing fleet. The other factors which pushed Airbus a head of Boeing were offering guarantee on the planes future value, lower maintenance costs as well as opportunity for attractive financing terms. Airbus focuses more on the client needs hence offering a product that is most likely to meet client target while Boeing’s focus is more on the plane cost and the expected revenue to the airline company.

In order to secure a Jetliner deal with Iberia, Mr. Bright needs to keep a breast of information about Iberia’s tastes especially as regards to Mr. Dupuy pricing strategy that sets a lower target price but does not divulge it during negotiations. This is because he had lost the deal to Leahy who was more aware of Mr. Dupuy’s strategy.  Mr. Bright should investigate this privately including consulting those who have dealt with Iberia before to negotiate the sales from a point of knowledge. Mr. Bright should also focus on issuing guarantee on the planes future value as this appeal greatly to Mr. Dupuy. The lower price set by Mr. Dupuy can only be achieved if Mr. Bright improved their financing strategy to reduce the cost. This may involve Boeing approaching engine manufactures and supplies for discounts on engine prices and developing cheaper and simpler Jetliners. (Daniel, M 2003, p.661)

Conclusion.

            Although Mr. Bright appears to be aggressive in helping Boeing to capture the market, Mr. Leahy combines aggressiveness with tact and his moves are defined by the client’s pre conditions.

Reference.

Daniel, M (2003). Boeing and Airbus in dogfight to meet stringent terms of Iberia’s executives.

                       Wall Street Journal. New York: Dow Jones & co. p. 658-661.

 

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