Options: As good as price breaks
By Chester L Karrass -- Purchasing, 2/11/1999
Commodity prices are weak right now, but this won't always be the case. Options are a good way to secure today's prices in tomorrow's market. Some options are there for the asking; others must be won through hard bargaining.The following principles are important to keep in mind when shopping for options:
* Obtain options that buy you time, time to decide, time to look elsewhere if the need should arise.
* Obtain options that buy you freedom to avoid sole sources, to make parts internally, to change sources economically, to end or renegotiate an agreement if circumstances change.
* Obtain options that allow you to change quantities, to buy more at the same price or at a limited higher price, to buy greater or lesser quantities within a specified period at a specified price.
* Obtain options that grant you rights (resale, sublease, first refusal).
* Obtain future options, for example, options that allow you to buy associated accessories or parts under a fixed price schedule, or that allow you to take advantage of earned discounts.
The Karrass Organization presents over 500 Effective Negotiating customized in-plant seminars yearly. Karrass consultants tailor the seminar to meet specific purchasing or sales needs. KARRASS EFFECTIVE NEGOTIATING Seminars are presented regularly in over 65 North American cities, including Canada and Mexico plus another 25 cities worldwide. Also available: Fundamentals of Effective Purchasing, a program presented at public and in-plant sessions nationally. For more information on Karrass books and seminars call 213-951-7500 or visit us at www.karrass.com, or mail us at 8370 Wilshire Blvd., Beverly Hills, CA 90211-2333.
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