Final answer:
John is using an ambush negotiating strategy by surprising the salesperson with a demand for price renegotiation, leveraging the markup information. In business, a firm entering a monopolist's market should be cautious of predatory pricing, where the monopolist may temporarily reduce prices to drive out competition before raising them again.
Step-by-step explanation:
In the given scenario, John appears to use a win-lose strategy known as ambush negotiating. This strategy involves catching the other party off-guard by introducing a significant change or demand, such as a price renegotiation, after an agreement has been presumed. By asserting pressure on the salesperson based on the information about markup, John strategically aims to tilt the negotiation in his favor. Although the terms browbeating, lowballing, limited authority, and red herring are other types of negotiation tactics, they do not accurately describe John's straightforward approach of challenging the tile pricing after the work has started.
When managing a small firm considering entering a market dominated by a monopolist, it is essential to anticipate how the monopolist might react to a new competitor charging lower prices. One significant possibility is that the monopolist may engage in predatory pricing, temporary lowering their prices to levels that the newcomer cannot match, effectively pushing them out of the market before raising prices again once the competition has been eliminated. This strategy can deter new entrants and uphold the monopolist's market power.