5 Pages Posted: 21 Oct 2008
This case and its companion, "Centralia Construction Corporation" (UVA-QA-0298), constitute the materials for an exercise in role playing and negotiating. The exercise is a distributive-bargaining situation surrounding the negotiation of the price for the construction of a building (some minor opportunities exist for creating mutual value). Myerson is the purchaser of the building.
Rev. Nov. 9, 2010
Roger Myerson, striding purposefully into his office, was resolved to award the contract for the construction of the addition to his plant very soon. The need for the space was becoming more acute with each passing day.
Myerson Industries was a highly successful designer and assembler of low-cost printers for personal computers. Three years ago Roger Myerson founded the firm to capitalize on an idea he had while writing his master's thesis. From the beginning, business had been excellent. Sales projections for the next two years indicated that growth would continue to be impressive. Until now the necessary additions to productive capacity had been easily accommodated within an existing facility adjacent to the firm's offices in southern Illinois, approximately 200 miles from Chicago. In light of the aggressive sales forecast, however, an addition to the plant was necessary if capacity was to keep up with the anticipated growth.
The special technology involved in Myerson's printers and the desire to keep tight control of product quality led to the decision that, if capacity were to be increased, it would not be done by subcontracting assembly to smaller vendors. The decision was made to double the plant's floor space. The company estimated that this would treble output, because several innovative design features would be adopted in the new facility that were not present in the old.
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Keywords: pricing, role playing
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