Nora Sakari
Context
Nora is one of the leading Malaysian companies in telecommunications. It was founded in
1975 by Osman Jaafar and it is now made of 30 subsidiaries. Nora has 3 main activities as
cables business, telephone business and payphone business. Zainal Hashim is holding the
position of deputy managing director at Nora. Osman and Zainal made R&D a priority of the
company and created a fully owned subsidiary managing all the R&D activities for Nora but
also for other companies, government, institutions and universities. At this level, we could
understand that R&D was the key value of the negotiation ad probably of its failure. Sakari is
a Finnish company. It first was a pulp and paper mill, but during its history Sakari began to
extend its activities to rubber and cable industries. During its history, Sakari did several Joint
Venture that permitted it to enter new mobile phone markets as Europe with Sakari-Vantala
and United States, Malaysia or Thailand with its association with Tandy Corporation. More,
Sakari first entered the telecom market by selling switching systems licensed from France’
Alacatel. It also avoided strong competition by focusing on the development of dedicated
telecom networks for big private users such as railway companies or utilities. Its SK33 product
and its derivative also permitted Sakari to be a niche player in the global switching market1.
One of the key success factor of Sakari is its strong in-house R&D that permitted the company
to develop new products; and this strong R&D was possible because of the important
investment Sakari made in it: about 17 per cent of its annual sales revenue1. After the
economic recession in Finland, the company decided to focus on three main activities:
“telecom systems and mobile phones in global framework, consumer electronic products in
Europe, and deliveries of cables and related technology”1. The Malaysian government gave to
Telekom Malaysia Bhd (TMB), the national telecom company, the objective to enhance the
country’s telecom infrastructure. However, because of its lack of Knowledge in terms of
infrastructure projects, the company made an invitation to tender on a five-year project for
installing digital switching exchanges in the country. Nora Holdings SDN BHD was selected to
develop the project and decided to consider Sakari as a potential partner. Nora was aware of
Sakari’s SK33, a digital switching system that was based on open architecture. Indeed, unlike
big players like NEC, the Sakaris’SK33 used components freely available on the market.
Moreover, as a small company, Sakari would me more disposed to provide Nora with
customized solutions contrary to bigger players. This potential Joint Venture is an opportunity
for both companies since it could enable Nora to fulfill its commitment to TMB through
technology transfer and Sakari to acquire knowledge and access to South-east Asian markets.
The potential formation of the Joint Venture Company has been discussed for more than two
years during at least 20 meetings to build the relationship between the two companies in KL or
Helsinki. The main object was to invest in the digitalisation of its network in order to offer
services based on the ISDN (integrated services digitalised network) standard; invest in
international fibre optic cable networks to meet the needs of increased telecom traffic between
Malaysia and the rest of the world and facilitate the installation of more cellular telephone
11
Case Study : Nora-Sakari : A proposed JV in Malaysia, Richard Ivey School of Business, University of Western Ontario.
networks in light of the increased demand for the use of mobile phones among the business
community in Malaysia.
The Negotiation Failure
Negotiation failure causes are culture comprehension or misunderstanding, economic
prospective and technology development process expectations; so the unsuccessful result of
the negotiation process are that they both have different objectives, conflicting goals, and
motivations and cross cultural miscommunication issues.
Putting under our observation cultural differences and convergences , the main difference is
between individualism approach and collectivism relationship in Asia. Groups Vs Individuals is
the key divergence of those two companies about their management organization and
managerial main standards. In Finland business relationships exist between companies as well
as between individuals, and people are immediately accepted when business relation was
created and they are careful with the individual responsibility in work atmosphere when they
have a valid business partner, so as to reflect a culture is egalitarian in the world of work in
the world of affair and everyday life. Also communication skills are based on indirect style,
and silence is a negative message. Negotiation could be conducted in time or single people
but it is not an element of business intentions , and it is in fact a problem solving process, both
cooperative and information have a key role in the process to build trust and a long term
business relation. It is to remark that the timing of information is important not only for the
parties but also to construct a logical construction of facts and resolution. Deceptive
negotiation technique are frequently as a signal of disinterest in single concession. They have
much in common with the Malaysian culture especially in relations between management skills
and the approach to long term business, but it is different the overtures, distinguished
between formality and Finnish apparent informality. One important aspect connected to the
first is about where the negotiation is taken criticizing the approach between the two
companies. The question as where a negotiation should ideally take place is a critical one and
gives rise to both well-thought advice and knee-jerk reactions. The most widely held belief is
that negotiators are at an advantage holding the proceedings on their own territory.
Sometimes parties would like to offer some alternative aspects for thought, and decided to
negotiate in a different context far from the industry or the same countries, for example in
another state with a proposal approach and cooperative meaning.
For example in this case, Nora and Sakari are two different industries in a IT and high
technology context, so negotiation activity is more powerful if they construct a situation in
which they have two time: a visiting team and an executive negotiation team that in the same
time, or period of relationship construction, they create a different behavour approach to
understand if the problems that are inerent to the technique implications are really the only
question that they have to resolve. In negotiations we don't have supporters as workers,
although we do know the territory. Unfortunately, our own territories of negotiation can work
against us. In fact the only advantage that we can see if the negotiation is taken in the same
place, for example in Malaysia, could only give quikely some response to the game, saving
time, energy and expense. It could be an office a rappresentative office or a restaurant,
neutral like a lawyer office or the office of one team. Probably it seems in contrast with
conforming norms, but it could be the first time to establish a long collaboration. Position of
each one part of the negotiation in this sense are addressed to a context of personal trust and
sense of friendly. In this case it could be a concession of Malaysian company to establish a first
un formal business relationship. They also expose themselves to a greater degree of trust and
openness. The greatest point of view is to manage that situation as a communication set of
skills, maintaining the level of communication non verbal indirect and understanding the
primary meeting as a moment of discussion almost like a pause in the wider management of
the business and in business management at the level of communication. This is also a good
technique if the meeting managed in this way is in response to a distance and low
conversation as a proposal. The message that they have to remark is that : if they think that
making you appear before them is a victory, and then let them win a cheap victory. Indeed the
could realized that they are there to win what's on the table, not win ego points. And probably
this approach is much more effective if the team leader in gerarchy management of the
Malaysian company is headed by woman, with management skills and a national experience in
business. This approach I think is similar to the second, legal and split percentage “Choose a
neutral country for apply the contract”.
In the case presented they have been difference opinion in the capital structure. Most legal
cases are resolved through negotiation, and it is generally beneficial to try this route before
making a court claim. Negotiation is far less formal than court proceedings. Parties have to
decide the outcome of the dispute themselves. In this case negotiation can be used before
makes a decision regarding the equity structure of the JV portfolio: in fact JV contracts could
resolve the economic power of each society . The main consequences of the contract indicated
are : salary cost of labour with Finnish standars that it is much higher in term of remuneration
and the contract power that it is based on technology and how to develop the digital
structure in the JV. It might seem fair, considering the economic value of patents and patent
royalties about open architecture system, these are two interest poit on which the negotiation
can be carried out. In fact open architecture is a computer architecture or software that allows
adding, upgrading and swapping components; in this sense the Finnish company’s main
business is protected although innovations can arise during the execution of the contract. The
equity split , without royalties of 3% just because the cash flow resulting by its return
corresponding to a long term prospective, is not a relevant element of the negotiation :
probably they decide to handle the management of services or high-tech patents in a second
moment, not during the decision making process for the equity distribution but to develop the
business as a common area of relationship, so the perception of long period relationship it
could be only a simple way to interchange their capability, or can be interpreted so by the
Malaysian but not by other one and it could be a point of competition until the start: we must
underline that parties involved are searching point of cooperation in the same sector and
competitiveness is not so distant from one side to 'other of the world. Moreover basic
structure of digital switch was also a problem assessed during the negotiation activity. At this
stage of the negotiation neither company seems to have placed as a fundamental aspect of the
synergies in areas of secondary work as a network and industry knowledge.
Historically the lack of collaboration is not a problem if there is a company and dominant
player in a market with high margins. But as the market becomes more competitive even after
the end of JV contract, we will begin to see the company as unreliable and, in general, like
vendor difficult, and becoming more reluctant to enter into a relationship favorable.
Sakari negotiators demanded salary which seemed exorbitant to Nora negotiators. They
argued that Sakari negotiators did not take into account low cost of living in Malaysia and rates
were not compatible with industry standards. During the twentieth century, as Japan, South
Korea, Hong Kong and Taiwan faced sharply rising labour costs and protectionist barriers, this
increased the cost advantage of exports from Thailand, Malaysia and Indonesia, fueling a rapid
expansion of exports of labour-intensive manufactured goods. In the bargaining the salary is
related to Finnish standars and it is also an important decision that could give a different way
of view in the management organization after the conclusion of the negotiation. Rational
decision are bounded by the information available to employees. If managers don’ t
understand what it will cost coapture an incremental revenue they will always pursue the
incremental revenue. Rational decisions are necessarily bounded by the information available
to employees. If managers don’t understand what it will cost to capture an incremental
revenue, they will always pursue the incremental revenue. They can hardly be faulted, even if
their decision is—in the light of full information—wrong. In strong-execution organizations
field and line employees have the information they need to understand the bottom-line impact
of their decisions. This aspect plummets in weak-execution organizations2. This is too an
important element because can affect the perception of productivity in Malaysian industry, just
because the segmentation of the labor market that exists for atypical outsider implies a
degree of instability of the professional positions has a negative effect on the job training, with
negative effects on their human capital and their productivity and, in the long run, on the
same profitability of firms more than others use a fixed-term employment. The case study
would retain the two-level bargaining and their specializations: protection of the purchasing
power of minimum wage at the national level, the distribution of productivity gains to the
second level. The simple adaptation of standard wage would not be a reasonable assumption in
the long-term negotiations. A more decisive effect on wage differentiation according to
productivity differences across regions and business would likely increase demand for labor in
poor areas. But the margins are not large, at least in the short term: the levels of
remuneration that will still be extremely low, even considering the lower cost of living. And
probably the companies have a strategic map that it was based on research and development
in new markets with an implementation of specialized economic inside the corporate strategies
of each one.
We also have to consider the financial situation during the negotiate, between years
2001 and 2004. The Asian financial crisis of 1997-98 shook the foundations of the global
economy. The localization of currency crisis engulfed the entire Asian region. At the same
time, the market awaited answers world stability from Asia and especially a new development
model that probably would take into consideration the world beyond the Great Wall3. Sakari
has to mantain a face to face relationship with one of the most high-performing ASEAN
countries, Malaysia, (especially Indonesia,Malaysia and Thailand) were the major beneficiaries
of Japanese investments and the negotiation activity started went not far from the decisions of
the G8 to end nine hundred century. But By 1991, some 400,000 workers in ASEAN countries
were working in Japanese-owned companies. Perhaps one thing in common between the two
cultures, those of the two companies in question, who could have become a point of contact4.
Recommendations
Businesses of any size can use joint ventures to strengthen long-term relationships or
to collaborate on short-term projects. It is significatly that a cautionary tale comes from a
business-to-business company whose customer and product teams failed to collaborate in
serving a key segment: large, cross-product customers. A joint venture can help business
grow faster, increase productivity and generate greater profits. A successful joint venture can
offer access to new markets and distribution networks, increased capacity, sharing of risks and
costs with a partner, access to greater resources, including specialised staff, technology and
finance. But partnering with another business can be complex. It takes time and effort to build
2
“The Secrets to Successful Strategy Execution” By Gary Neilson, Karla L. Martin, Elizabeth Powers,Harvard Business
Review, June 2008.
3 “ The Asian Financial Crises”, Sharma, Shalendra D aut, 2003 Manchester University Press.
4 For example, Sony Corporation was making more color television sets in Malaysia than in Japan, Cfr. “ The Asian
Financial Crises”, Sharma, Shalendra D aut, 2003 Manchester University Press.
the right relationship. Situations in which the objectives of the venture are not totally clear and
communicated to everyone involved the partners have different objectives for the joint venture
there is an imbalance in levels of expertise, investment or assets brought into the venture by
the different partners different cultures and management styles result in poor integration and
co-operation the partners don't provide sufficient leadership and support in the early stages
are the problems or focal points for a good JV, Also representing the elements of risk. Success
in a joint venture depends on thorough research and analysis of aims and objectives. This
should be followed up with effective communication of the business plan to everyone involved.
This is more comprensible if we refer to the constituent elements of a JV and retracting the
case presented, let us now try to find the points where the approach could be improved by the
identification of areas of collaboration and areas of conflict.
A joint venture agreement is a document setting out how two parties, whether
individuals or businesses, intend to work together, setting out details such as: the
type of work you will do together, how time and resources will be allocated and how
the profits will be split. The contents of joint venture agreement will depend on what
you are trying to do. You may decide to co-operate on a one-off basis, for a particular
project, or for a limited period such as a year. Alternatively, you and your partner
may decide to set up a separate joint venture business, owned by both parties.
Before you decide, you should seek legal advice as to the best option.
You should both be clear about the nature of your agreement, and satisfied that it is
fair to both parties. The agreement should set out in detail what each party will
contribute, and what you are trying to achieve. Make sure your expectations are
realistic, to avoid problems between the parties later on. The agreement should set
out the nature of your partnership; there are two main types of agreements. If the
joint venture is to be a business in its own right, it will be an incorporated joint
venture. A co-operative arrangement between two existing parties that keep their
separate identities is called a contractual joint venture.
The management control explains who has responsibility for the processes involved during the
joint venture. If you are setting up a new company, the composition of the board - eg chief
executive and chief financial officer - should be stated, and the board's voting powers
specified, and on the other hand shareholders agreement is about the incorporated joint
venture agreements may need to include a shareholders agreement, covering issues such as
dividend policy, and how the management accounts will be produced and made available.
One approach to resolve this two aspects is a systems thinking, as managers behavoir are
increasingly seeking to improve results.
We see that managerial approach of these two companies is very different: team and
individuals, collective and individualistic. During the negotiation, meetings suggest an idea of
contrast and that each comapany has opposite way to underline their key aspects.
It seems like a misunderstanding of temporary and non temporary organization, as a
collaborating activity to accomlish a joint taskwith a duration of collaboration and explicit end
fixed term. In this time parting we find the value that companies attribute to the relationship,
as a JV or other forms of collaboration. JV is to develop a project, and projects are embedded
in multiple systemic contexts, e.g. organizations, interorganizational networks and
organizational fields, which jointly facilitate and constrain project organizing. As projects partly
evolve in idiosyncratic ways as temporary systems, embedding needs to be understood as a
continuous process linking projects to their environments5.
In this sense, an approach that seems it could take structural theory, characterized by tasks
times and teams and a systems thinking based. Structuration theory may shed light on this
phenomenon, like an interaction of structure, that could help us to understand temporary
social systems in multiple context. Structuration theory will be used as a theoretical framework
to clarify how these structural properties ‘operate’ and how they ‘link’ projects to their multiple
systemic contexts – organizations, networks and fields. the structuring of a project collides
with the structuring of such a perspective, which is often the cause of increased risk aversion,
5
“Temporary Organizations: Prevalence, Logic and Effectiveness”,By Patrick Kenis, Martyna Janowicz-Panjaitan, Bart
Cambré, 2009.
or rather to ensure that the risk is perceived not only in terms of eco nomic but also
relationships and loyalty; following this concept, a structuration perspective on projects as
temporary systems is developed that helps clarify how projects are both constituted and
embedded and it is consistent with the ‘practice view’ of project organizing associated with
‘Scandinavian’ project research. .Structural properties of projects a combination of task
specifications, time constraints and team relations and interaction in projects is based on
certain teams allocate & accomplish, certain tasks under certain time constraints, application
of typified project structures as sets of rules & resources, reproduction and typification of
project structures as sets of rules & resources. In other words, the 'goal' to recognize cultural
differences as something relevant as to enhance the social contexts between istitutional
different fields and company projects. Conditions that could develop a collective cultural
individuality by the actors considering that the point of view is to improve the coordination of
projects, both temporany of with long prospectives.
What is the role of innovation and does it make sense to relationship within a price
corrispondence in equity or revenue? We see innovation as an improvisational dynamics of
'moving to' the future' and use the concept of future perfect thinking, which has been lately
debated in studies of project management , to develop a tool that can reduce the perceived
uncertainty of innovation. In this case the two companies not only operate in sectors with high
technology but also have strong corporate cultures sent to the high technology, not only in the
activity of research and development activities but also in the production of collateral and
diversified business. At first sight unlikely partnerships of this kind do not go well, and it is not
acceptable that a failure can be attributed solely to reasons of cultural or other corporate
organizational structure. Understand the potential business can be a key element to give
moments of conflict negotiation in the consciousness of the value that the company will have
ex post. Equity premium puzzle? Prospect theory under risk? Through numerous experiments
in cognitive psychology, in fact, showed how the choices humans systematically violate the
principles of economic rationality. In particular, there are two important psychological
phenomena,connected on framing:
individual is making a choice, has an effect on the choice itself, and loss aversion
as for most people the motivation to avoid a loss is greater than the motivation to make a
profit. This is an important prospective to understand if the evaluation of utility is rational by
the companies , it could be useful create a logical relationship between two behaviour of the
system being investigated, based for example on the dipendence between deterministic and
non deterministic characteristics and steady or dynamic points ; otherwise : how we can
resolve a problem of allocative productive resources in order to maximize profit when may
alternatives exist and optimal solution is only ex post valuable.
REFERENCES
“Case Study : Nora-Sakari : A proposed JV in Malaysia”, Richard Ivey School of Business,
University of Western Ontario.
“Industrial relations”, Blyton, Bacon, Fiorito, Heery, 2008.
“The Secrets to Successful Strategy Execution” By Gary Neilson, Karla L. Martin, Elizabeth
Powers, Harvard Business Review, June 2008. The Secrets to Successful Strategy Execution
Harvard .
“The Asian Financial Crises”, Sharma, Shalendra D aut, 2003 Manchester University Press.
“Temporary Organizations: Prevalence, Logic and Effectiveness”,By Patrick Kenis, Martyna
Janowicz-Panjaitan, Bart Cambré, 2009.
“Systems thinking, creative Holism for managers”, M.J. Jackson, 2003.
Fray Farms Wal Mart
Context
Frey Farms is a family owned and operated supplier of fresh fruits and vegetables. It began to
sell its products locally and regionally in the 1980s. In 2005, Sara Talley is the 28-year-old
CEO of Frey Farms.
The company really began its growth in 1997, when Sara Talley, then 19, succeed in her
negotiation and began a local Wal-Mart supplier.
Wal-Mart was founded in 1962, when it opened its first store in Rogers, Arkansas. The
company was then incorporated as Wal-Mart Stores Inc. by 1969. Recently Wal-Mart operates
under 69 different banners in 27 countries and plans to have during 2012 fiscal year about
£444billion of salesi.
In 1997, Wal-Mart began to expand its Divisions One stores into Supercenters to provide a
wider offer to its customers by proposing to them groceries and fresh products in addition to
all non-consumable items already offered. For this purpose, Wal-Mart had regional produce
buyers for whom the major focus was to offer Wal-Mart customers locally grown, fresh produce
at fair market pricesii.
Frey Farms’ first deal with Wal-Mart was the supply of pumpkins to local Division One Stores.
As the Division One stores were becoming Supercenters, Sara Talley contacted the regional
produce buyer of the Olney, Illinois distribution center, to see if she could negotiate with him
to become one of its suppliers, and so increase her market and her sales.
Then, as a Wal-Mart supplier, Frey Farms had to face many challenges: in order to satisfy Wal-
Mart needs (quantity, quality and price) Frey Farms would have to buy product from local or
regional growers to then sell them to Wal-Mart. Another challenge was that Frey Farms had a
lower strategic position than its competitors regards to product differentiation and resources,
because it was a young and small company. Moreover, Sara Talley was only 19 at the time of
the first negotiation, so there could have been some lack of credibility and trust issues from
Wal-Mart.
In 2005, there were extremely hard growing conditions, especially in Georgia and Florida,
place of the company primary crop growth, these poor conditions were increased by pests and
disease, and lead to a shortfall of watermelons all over the USA and so to a dramatically
increase of the prices.
Moreover, it should be noticed that the Fourth of July is an important date for the watermelon
industry, as the consumption of watermelon reaches a peak around this date. But, more
generally, the sales of watermelon peak happens during May, June and early July.
The Negotiation Failure
Until 2005, everything seemed to work well between Frey Farms and Wal-Mart. But with the
shortfall in 2005, some issues raised in their relationship.
The negotiation on the price of watermelons went from June 1 through July 4, 2005 and was
very tough. In fact, both companies had certain pressure on their prices but not in the same
way: their acceptable price points were very apart; the watermelons prices were going up
whereas Wal-Mart wanted the prices to decrease. What can be illustrated by the following
graphiciii:
As Wal-Mart didn’t want to make concessions on its buying prices, the negotiation didn’t
succeed, even with the multiple resubmissions of the contract from Frey Farms.
Anyway, beyond the price asked by Wal-Mart, Frey Farms had a problem with its supplying
capacity of watermelons; which means that if they had done the contract with Wal-Mart they
would have been forced to source watermelons from the western shipping region, which would
have increased the transportation costs.
Moreover, Wal-Mart had kind of a lack of respect towards Frey Farms, as the Wal-Mart buyer
didn’t care about the exceptional market conditions, and didn’t really consider what Frey Farms
was saying. Doing this, Wal-Mart didn’t take into account the environmental factors. Indeed to
prepare its negotiations the Wal-Mart buyer should have done some research about the actual
market conditions, what could include a PESTEL analysisiv. Actually negotiations are mainly
influenced by two types of variables: background factors and atmospherev. Thus, it is really
important to take into account external factors for negotiations, as they can lead to the failure
of negotiation. Moreover, this perception of lack of respect is due to the fact that Wal-Mart
didn’t make any concessions given the market conditions, and the lasting relationship it had
established with Frey Farms. Even when Sara Talley adopted a “straightforward and respectful
approach”vi for the negotiation with Wal-Mart by telling the truth about the situation and
explaining it, the Wal-Mart buyer kept his position the whole way and tried to defend its
position claiming that conditions could change during June.
Besides this, as a good and lasting supplier Sara Talley asked to Wal-Mart to become one of its
co-managed suppliers. In fact, co-management is a process that Wal-Mart invented and
implemented in the late 1990s to simplify the purchasing process by allowing Wal-Mart key
suppliers to act as “co-purchasers”, and “so to manage their own inventory and co-manage
products sourced from other suppliers”vii. This process was a way for Wal-Mart to establish
particular relationship with the suppliers with whom they wanted to have better conditions of
business and greater deals, and also to control the bargaining power these suppliers, what is
really important for companies, as stated in the Porter’s Five Forces Modelviii. But Wal-Mart
refused to have Frey Farms as a co-managed supplier because, as for it, Frey Farms was too
small and wasn’t worth the investment in terms of time, people and money. Once again, this
move can be interpreted as a lack of trust and of interest for Frey Farms. Because of this
refusal, Frey Farms was forced to negotiate with other co-managed suppliers and not with Wal-
Mart anymore, what added a stage to the negotiation process. The co-managed suppliers
being bigger than the “normal” suppliers, they offered little choice on price and even added
charges to Frey Farms products, what resulted in a decrease of Frey Farms’ margin. Moreover,
Frey Farms didn’t know the amount of additional fees charged on the top of their price, so with
this lack of transparency, they hesitated to sell their products to these co-managed suppliers.
Recommendations
Regards to the issues discussed before, here are some recommendations about what should or
could have been done differently during the negotiation process.
Both parts should have shown more flexibility, to avoid what seems to be as a deadlock
situationix. Wal-Mart should have been more conciliatory about the prices given the special
market conditions of 2005. Both should have adopted a problem-solving approachx as
American people usually do in negotiationsxi, and they could have made efforts concerning the
terms of payment because it could permit them to build a long-term relationship.
Moreover, considering the lasting relationship between both parties, Wal-Mart should have
considered more carefully the request of Frey Farms to become a co-managed supplier.
Because, such an opportunity could really have been profitable for both, helping Wal-Mart to
reduce it purchasing prices and enabling Frey Farms to expand its activities. Furthermore, the
reject of the Frey Farms’ request could be interpreted as a lack of trust by Sara Talley and so
could compromise the future relationship between the two companies as trust is key in
negotiationsxii.
Besides, Frey Farms could have widen its offer, with new fruits or vegetables, and become
bigger and therefore more important to Wal-Mart. However, to do so with minimum risks, Frey
Farms should have struck a contract with Wal-Mart before widening the activity.
More, Frey Farms could have negotiated more globally, that is to say all the fruits and
vegetables provided to Wal-Mart, to be able to compensate the lack of profitability of
watermelons with the higher profitability of another vegetable or fruit. e.g.: if Wal-Mart buys
watermelons at its wanted price, it should have less power of negotiation on pumpkins prices,
or if Wal-Mart accepts to buy watermelons at the price Frey Farms wants, so Wal-Mart could
negotiate more on the pumpkins price. In fact, pumpkins represent an important business for
both companies; the proof is that Frey sells more than one million pumpkins per year to Wal-
Martxiii.
On another hand, even if Wal-Mart represents a big business for Frey Farms, this last should
not let Wal-Mart become too big for its business, not more than 20%, not to become
dependent on Wal-Mart and lose all the power of negotiation Frey Farms could have over Wal-
Martxiv.
Besides, Wal-Mart certainly underestimated Sara Talley’s capacities to do business and
negotiate because of her young age when they first began their cooperation but also in 2005
when she showed that she wanted more for her company e.g.: her interest for becoming a co-
managed supplier. So Wal-Mart should have considered more carefully what Sara Talley
wanted because it could have made sense, in the way that by Frey Farms being a co-managed
supplier, the Wal-Mart-Frey Farms relationship could have got rid of an intermediary and so
reduce buying costs for Wal-Mart and increase margins for Frey Farmsxv.
i
Wal-Mart company website, [Link]
ii
Case study : Sara Talley and Frey Farms Produce : Negotiating with Wal-Mart (A), Harvard Business School, 2006
iii nd
Ghauri, P.N. & Usunier, J-C, International Business Negotiations, 2 edition, Elsevier, 2003
iv
“Principles of Marketing”, 5th edition, ed. Pearson, Gary Armstrong, Stewart Adam, Sara Denize, Philip Koetler, 2011
v
“Guidelines for International Business Negotiations”, Pervez N. Ghauri, 1986
vi
Case study : “Sara Talley and Frey Farms Produce : Negotiating with Wal-Mart (A)”, Harvard Business School, 2006
vii
Case study : “Sara Talley and Frey Farms Produce : Negotiating with Wal-Mart (A)”, Harvard Business School, 2006,
page 5
viii
“Competitive Strategy: Techniques for Analyzing Industries and Competitors”, Michael E. Porter, 1998
ix
“Flexibility in International Negotiation and Mediation”, Daniel Druckman, Christopher Mitchell, 1995
x
Personality and negotiation style: The moderating effects of cultural context, Alma Mintu-Wimsatt, Thunderbird
International Business Review; Nov/Dec 2002
xi
“Negotiating International Business - The Negotiator’s Reference Guide to 50 Countries Around the World”, Lothar
Katz, 2008
xii
“Negotiation Skills: making the most of every sales opportunity”, Mark Hunter, 2009
xiii
Wal-Mart Corporate Website, Press-room: “Illinois’ Frey Farms Teams with Wal-Mart to celebrate America’s
Farmers”, 2006. [Link]
xiv
“Negotiating with Wal-Mart”, Julia Hanna, 2008, [Link]
xv
“Negotiating with Wal-Mart”, Julia Hanna, 2008, [Link]
