Negotiation Case Analysis #$1$ Winter $2024$:$$Sarah Meets Goliath

Provide your answers in clear and concise manner directly below each question. Ensure that the answer is in$$bold$.$

Provided, below, are several elements of a negotiation with Walmart. You may research, as needed, to provide context and depth to your answers.

Any$$outside research$$must$$be cited. AI and plagiarism is an automatic $0.$

Although we cover Distributive Bargaining in Week $4,$ you can complete most of the assignment prior to the Week $4$ lesson.

Submit, as a word document, in dropbox, under Assignment #$1$ by the end of$$Week $4$by Saturday $1159$pm$.($Feb$.6,2024)$

Value is $15\%$ of semester grade.

Negotiating With Buyers Representing Wal Mart

Summary

Walmart$$s professional buyers are trained to treat their vendors in a variety of ways, depending on where the vendors fit into Walmart plan. This case shares a story of a vendor called Sarah who negotiated a win$-$win outcome with Walmart.

Walmart, the world$$s largest retailer, sold $$514\mathrm{.}4$ billion worth of goods in $2019.$ With its single$-$minded focus on $$EDLP$($everyday low prices$)$ and the power to make or break; suppliers, a partnership with Walmart is either the $$Holy Grail$$ or the $$kiss of death$,$ depending on one$$s perspective.

There are numerous media accounts of the corporate monolith being a very difficult customer for its suppliers. But what about those who manage to survive, and thrive, while dealing with the classic hardball negotiator?

$$The concept of win$-$win bargaining is a good and powerful message,$$ Harvard Business School Professor Jim Sebenius says, $$but a lot of executives face negotiation counterparts who aren$$t interested in playing by those rules. So$,$ what happens when you encounter someone with a great deal of power, like Walmart, who is also the ultimate non$-$negotiable partner?$$

The case details how Proctor &Gamble $($P & G$)$ executive$$Tom Muccio$$pioneers a new supplier$-$retailer partnership between P & G and Walmart. Built on proximity $($Muccio relocated to an area near Walmart$$s head office in Arkansas$)$ and growing trust $($both sides eventually eliminated elaborate legal contracts in favor of Letters of Intent$),$ the new relationship focused on establishing a joint vision and problem$-$solving process, information sharing, and generally moving away from the $$lowest common denominator$$ pricing issues that had defined their interactions previously. From $1987,$ when Muccio initiated the changes, to $2003,$ shortly before his retirement, P&G$$s sales to Walmart grew from $$350$ million to $$7\mathrm{.}8$ billion.

$$There are obvious differences between P&G and a much smaller entity like Frey Farms,$$ Sebenius notes. $$Walmart could clearly live without Frey Farms, but it$$s pretty hard to live without Tide and Pampers.$$

Sarah Talley was $19$ in $1997,$ when she first began negotiating with Walmart$$s buyers for her family farm$$s pumpkins and watermelons. Like Muccio, Talley confronted some of the same hardball price challenges, and like Muccio, she acquired a deep understanding of the Walmart culture while finding $$new money$$ in the supply chain through innovative tactics.

For example, Frey Farms used school buses $($$$1,500$ each$)$ instead of tractors $($$$12,000$ each$)$ as a cheaper and faster way to transport melons to the warehouse.

Talley also was skillful at negotiating a coveted co$-$management supplier agreement with Walmart, showing how Frey Farms could share the responsibility of managing inventory levels and sales and ultimately save customers money while improving their own margins.

$$Two sides in this sort of negotiation will always differ on price,$$ Sebenius observes. $$However$,$ if that conflict is the centerpiece of their interaction, then it$$s a bad situation. If they$$re trying to develop the customer, the relationship, and sales, the price piece will be one of many points, most of which they$$re aligned on$.$

Research Associate Knebel points out that while Tom Muccio$$s approach to Walmart was pioneering for its time, many other companies have since followed P&G$$s lead and enjoyed their own versions of success with the mega$-$retailer. Getting a ground$-$level view of how two companies achieved those positive outcomes illustrates the story$-$within$-$a$-$story of implementing corporate change.

$$Achieving that is where macro concepts, micro imperatives, and managerial skill really come together,$$ says Sebenius. And the payoffs$$as Muccio and Talley discover$$are well worth the effort.

Sarah Talley$$s Key Negotiation Principles

When you have a problem, when there$$s something you engage in with Walmart that requires agreement so that it becomes a negotiation, the first advice is to think in partnership terms, really focus on a common goal, for example of getting costs out, and ask questions. Don$$t make demands or statements. Rather ask if you can do this better. If the relationship with Walmart is truly a partnership, negotiating to resolve differences should focus on long term mutual partnership gains.

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