Compressor Corporation, Inc.: Pat Divso

You are Pat Divso, a senior purchasing agent of Compressor Corporation, Inc. (CCI). You have been given a major purchasing assignment to find a solution to the deadlocked price negotiations with Scandia Steel AB, a major supplier of specialty high-carbon and stainless steels, and a strategically critical partner. You are now en route from your Paris office to Sweden where you will meet tomorrow, August 29, 1995, with Kaj Johansson (pronounced Ki), marketing director of Scandia Steel at Scandia's headquarters in Uppsala. Excerpt UVA-QA-0360 Compressor Corporation, Inc.: Pat Divso You are Pat Divso, a senior purchasing agent of Compressor Corporation, Inc. (CCI). You have been given a major purchasing assignment to find a solution to the deadlocked price negotiations with Scandia Steel AB, a major supplier of specialty high-carbon and stainless steels, and a strategically critical partner. You are now en route from your Paris office to Sweden where you will meet tomorrow, August 29, 1995, with Kaj Johansson (pronounced Kī), marketing director of Scandia Steel at Scandia's headquarters in Uppsala. Essentially, the problem which confronts you is that Scandia, the largest and most efficient of your two suppliers of X310, a new high-quality specialty stainless steel, is charging $ 920 per ton more than your second supplier, the British firm, J.J. Holloway and Sons, Ltd. This differential—which does not appear justified in terms of production costs— now amounts to more than $ l million per year and will continue to increase substantially if X310 requirements continue to grow at their present rate, which you expect they will. CCI director of Purchasing, Roberta Evers, has made several unsuccessful attempts to obtain price concessions from Scandia. You believe that your performance in this assignment may significantly impact your personal goal of becoming CCI's vice president of Procurement. This will be your second trip to Scandia to meet with Johansson; your first trip took place in February. Since that time, the two of you have had numerous phone conversations. Although you have found Johansson to be very competent and personable, you have yet to gain a satisfactory reduction of Scandia's price on X310. Negotiating good prices for CCI is a key part of your assignment, but you are aware that management views the purchasing function broadly. As a result, you will be expected to take into account the many intangible factors that may impinge on purchasing decisions. Indeed, it is important that you do nothing to jeopardize your company's strong strategic relationship with Scandia. . . .