Walmart Negotiation Case Essays
Walmart the world's largest retailer, sold $315 billion worth of goods in 2006. With its single-minded focus on "EDLP" (everyday low prices) and the power to make or break suppliers, a partnership with Wal-Mart is either the Holy Grail or the kiss of death, depending on one's perspective.
There are numerous media accounts of the corporate monolith riding its suppliers into the ground. But what about those who manage to survive, and thrive, while dealing with the classic hardball negotiator?
In "Sarah Talley and Frey Farms Produce: Negotiating with Wal-Mart" and "Tom Muccio: Negotiating the P&G Relationship with Wal-Mart," HBS professor Jim Sebenius and Research Associate Ellen Knebel show two very …show more content…
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 negotiated a coveted co-management supplier agreement with Wal-Mart, 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 Wal-Mart 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