Case | HBS Case Collection | 2010

Bill Nichol Negotiates with Walmart: Hard Bargains over Soft Goods (A)

Abstract

CEO Bill Nichol must somehow negotiate a surprise ultimatum from Walmart, his largest customer, about his largest and most profitable product line: “We're dropping it.” Among its hosiery products, the Kentucky Derby Hosiery Co. produces and sells a branded line of infant socks to Walmart under an expensive license from another manufacturer, subject to unconditional, multi-year sales minimums and significant forward financial obligations. Taking out long-term bank loans, his firm has purchased modern, high-speed machinery to manufacture this line. Yet his Walmart contracts run only one year at a time. Without the Walmart volume and profit on these branded infant socks, Kentucky Derby Hosiery Co. faces financial distress. In a generally bleak North American textile environment, Nichol ponders the most promising negotiating strategy and tactics to rescue this product line.

Keywords: Customer Relationship Management; Crisis Management; Negotiation Tactics; Conflict Management; Apparel and Accessories Industry; North America;

Format: Print

6 pages

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Citation:

Sebenius, James K., and Ellen Knebel. "Bill Nichol Negotiates with Walmart: Hard Bargains over Soft Goods (A)." Harvard Business School Case 910-043, April 2010.

Describes the hardball tactics facing Peter Welz, who seeks to negotiate a make-or-break contract with a vastly larger potential client. Welz's counterpart team is led by Preston Spitzer, a notoriously tough player who fully understands his side's massive advantages in the process. With the economic fate of Welz's newly public smaller firm in the balance, Welz and his team must figure out how to handle some very tough tactics by Spitzer and his minions aimed at extracting lopsided contract concessions. These tactics include demeaning remarks, repeated threats to opt for a competitor, misrepresentations, repudiation of previously agreed provisions, last-minute demands, divide-and-conquer moves, and a waiting game that exploits the smaller firm's evidently urgent need for a closure. The (A) case sets up the negotiations and poses an immediate tactical challenge in the context of the overall process. The (B) case describes the strategies, tactics, and results of these negotiations, along with Welz's broader insights into a more productive approach to the common challenge of dealing with very hard bargainers.

Beginning in 1994, a series of articles and public discolures indicated that Swiss banks may have retained assets belonging to victims of the Holocaust, and also may have engaged in long term attempts to block survivors' ability to recover those assets after World War II. Stuart Eizenstat, a longtime government official, and U.S. Special Envoy for Property Restitution, undertook a complex multi-year negotiation between victims' representatives, advocacy groups, government officials, and the banks in an unprecedented attempt to obtain restitution for the victims. Unifying fractious parties within an uncertain legal, social, and business landscape, Eizenstat's unique approach of quantifying "rough justice" in order to enforce the accountability of corporate entities and governments for past injustices in Switzerland, forms the basis of this study.

Roger Fisher's career and writings not only offer lessons about negotiation but also about how an academic, especially in a professional school such as law or business, can make an important, positive difference in the world. By his relentless engagement in vexing disputes—whether in South Africa, at Camp David, on the Peruvian-Ecuadorian border, or elsewhere—Fisher gained a firsthand sense of the issues as negotiators actually experienced them. This enabled him to ask better questions and to formulate more valuable answers. Fisher collaborated across academic disciplines and wrote a series of books, mostly coauthored with junior colleagues, that are best understood as project around an evolving theme—an interest-based, problem-solving conception of negotiation—rather than as a series of one-off products. His commitment to expressing powerful insights simply, concisely, and memorably led to the remarkable influence of Getting to Yes, which has sold over eight million copies and has spawned endless academic and popular offshoots. While the most familiar form of intellectual capital in the social sciences is the deductive proposition, supported by experimental and observational evidence, other forms of knowledge can be both valid and useful. In particular, Fisher and his colleagues constructed frameworks of prescriptions that, on average, respond to widely felt practitioner needs and systematically direct the focus of negotiators to aspects of the situation that generate helpful insights.

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Bill Nichol Negotiates with Walmart: Hard Bargains over Soft Goods (A)

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