RMI sales and Negotiations Course

Wholesale Foods Case Study

6. From Terrys perspective, what BATNA do you recommend?

Note: There are 6 questions, I will post them in separated posts.

Wholesale Foods Case Study Liz is a regional manager with Wholesale Foods, a large and growing national produce distributor. She is responsible for managing relationships with suppliers, mostly small farmers in the state, as well as customers of Wholesale Foods, who range from small comer grocers to the stores of the largest regional supermarket chains. One of the suppliers with whom she must negotiate is Terry, the owner of a small fruit orchard at the northeast corner of the state. As the manager of a large territory, Liz has to worry about her profitability, which in turn is a function of a price at which she buys and sells produce. But her profitability is also affected by the amount of effort it takes her to get the produce to market and how much she has to spend to overcome glitches in her delivery system. For example, if a famer is late with his deliveries, Liz has to spend money to get produce from somewhere else, usually at a higher price, to meet her obligations to her customers, or if a farmer delivers fruit in bulk, Liz has to spend money to crate it properly. Similarly, her profitability is related to the price she can get for the produce from her customers. If she can develop a reputation for being a source of quality produce, she can get an extra few cents per pound over average market prices, which rapidly adds up to big profits. To manage some of these risks, Liz maintains a small fleet of closed-bed trucks capable of traveling around the state and employs a few more workers than is absolutely necessary in her warehouses. Terry is his own boss, running a farm that has been in his family for three generations. Over his lifetime he has seen the farm experiment with a number of different crops, but at significant risk: a bad harvest with a supposedly improved strain of one of his traditional crops could wipe him out. Similarly, the risk of planting something different and not being able to sell it at a good price could mean not being able to pay off the season's debts at harvest time, which in turn would mean not being able to buy needed stocks and supplies at planting time. Terry has one open-bed pickup truck he uses to bring in supplies and deliver fruit. He hires only seasonal help, at planting and harvest times. Each year, Liz and Terry get together and discuss terms: quantities and prices for his fruit, the dates on which delivery should be made, how the fruit will be crated, etc. Although they get along, Liz has the sense that there is more they could do that would be mutually profitable