Getting a ground-level view of how two companies achieved those positive outcomes illustrates the story-within-a-story of implementing corporate change. 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. 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.” “However, if that conflict is the centerpiece of their interaction, then it’s a bad situation. “Two sides in this sort of negotiation will always differ on price,” Sebenius observes. 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. 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.įor 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.
Sarah Talley was 19 in 1997, when she first began negotiating with Walmart’s buyers for her family farm’s pumpkins and watermelons. “Walmart could clearly live without Frey Farms, but it’s pretty hard to live without Tide and Pampers.” Sarah meets Goliath “There are obvious differences between P&G and a much smaller entity like Frey Farms,” Sebenius notes. From 1987, when Muccio initiated the changes, to 2003, shortly before his retirement, P&G’s sales to Walmart grew from $350 million to $7.8 billion. Built on proximity (Muccio relocated to Walmart’s turf 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. The case details how P&G executive Tom Muccio pioneers a new supplier-retailer partnership between P&G and Walmart. So what happens when you encounter someone with a great deal of power, like Walmart, who is also the ultimate non-negotiable partner?” “The concept of win-win bargaining is a good and powerful message,” Sebenius says, “but a lot of our students and executives face negotiation counterparts who aren’t interested in playing by those rules.
NEXTBOOK TABLET CASES WALMART SERIES
The cases are part of a series that involve hard bargaining situations. In “Sarah Talley and Frey Farms Produce: Negotiating with Walmart” and “Tom Muccio: Negotiating the P&G Relationship with Walmart,” HBS professor Jim Sebenius and Research Associate Ellen Knebel show two very different organisations doing just that. But what about those who manage to survive, and thrive, while dealing with the classic hardball negotiator? There are numerous media accounts of the corporate monolith riding its suppliers into the ground. 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. WalMart, the world’s largest retailer, sold $514.4 billion worth of goods in 2019.