Sarah Talley of Frey Farms Produce is negotiating with Walmart to supply pumpkins and watermelons. Frey Farms is a family owned business that supplies fresh produce but is smaller than suppliers Walmart prefers. Negotiating the price of watermelons for Fourth of July is challenging due to issues with supply and Walmart's demands for low prices. The document suggests Frey Farms take a collaborative approach, build a long term relationship with Walmart, and compromise on pricing to become a co-managed supplier rather than lose Walmart's business.

1. Sarah Talley and Frey Farms
Produce: Negotiating with
Wal- Mart

2. About The Company
• Family owned and operated supplier of fresh fruits and vegetables
• Sarah Frey : CEO of Frey Farms Produce
• Headquartered in Keenes, Illinois
• Frey Farms supplied to local and regional customers in 1980 through independent grocers
• They were Known for it’s Fresh:
• Pumpkins Watermelons Cantaloupes

3. Background
• ‘’Home grown Freshness’’ Emphasis; Direct delivery ensures freshness
• direct store delivery routes and shipments to major distribution centres
• In 1977 Sarah approached Walmart which has the aim of converting Division one stores into ‘’Supercentres’’
• Leading grocery stores and independent were supplied by Frey Farms
• They used to manage massive operations from offices in Indiana and Illinois

4. Negotiating to Supply Pumpkins to Wal-Mart
• Pumpkin Delivery to local Division one stores
• Fair market price
• Negotiation challenges : Logistical Efficiency
‘’Every day Low Prices’’
• Lack of Positioning
• Products Differentiation

5. Suppliers Situation
Short term Challenges
Price of Watermelons
• Fourth of July
• Bad weather conditions and pest diseases ( Bacterial fruit blotch) , Demand> Supply
• Variability exists in watermelon prices
• Unable to match Wal-Mart’s price
• Difficult & expensive to supply

6. Co-Management
• Concept developed by Wal-Mart
• Establishing Relationships
• Frey farms was too small to be a supplier
• Additional overhead costs
•Charging higher price for the same product
• Hesitant to sell to mega co-managed suppliers

7. Suggested Strategy
Price of Watermelon
Frey Farms
Alternatives
available
Agree to Wal-Mart’s
Low price
Relative Power lies
with Wal-Mart
Sell Produce to other
regional store
Loosing Wal-Mart
could lead to a long
term loss for Frey
farms

8. Negotiation Strategies
1. Avoiding Strategy : No win solution
2. Competing Strategy : A Company pushes its offer with no cooperation
3. Compromising strategy : Both parties meet halfway
4. Collaborating Strategy: Serves Interest to both the parties

9. Distributive Negotiation
• Sarah Talley and Wal-Mart are in a distributive negotiation as they only haggle about the price for 4th of
July watermelons
• In such negotiations only one party can only win
• Huge power difference

10. Frey Farms should:
• Develop a systematic approach to reach top management
• Use a Collaborative approach which will help them to achieve the co-managed supplier status
• Focus on building a long term relationship with Wal-Mart and should show commitment's towards
future growth together
• Frey Farms should use an Intermediate pricing strategy to negotiate with Wal-Mart

11. Conclusion
• Sarah Talley should compromise on the price issues to satisfy Wal-Mart’s needs
• She should seek to build long term working relationship with them and achieve the goals of suppliers co-
management
• She must be collaborative and more about the relations rather than the outcomes