You are the owner of a company, Box-It, that produces and supplies standard shipping boxes to manufacturing companies. Over the past 22 years of operations, you have been successful in streamlining operations to keep costs low. 

You have also been successful in negotiating supply contracts with several manufacturers, and have keep them satisfied because of high product quality and reliable delivery times. 

Your largest client, Snappy Stuff Inc., has been a satisfied and loyal client for nearly 10 years, and their business represents 75% of your annual business. Due to regulatory changes that affect Snappy Stuff, they have advised you that significant changes are required to the composition and shape of the boxes you supply. If you are unable to provide the boxes to meet the new specification, they will be forced to reluctantly find a different supplier. The regulation goes into effect in 6 months.

The cost to modify your production facility will be very large, and it may disrupt the flow of your present production volumes. However, because of your heavy reliance on the volume of business from Snappy Stuff, losing them as a client would likely destroy your company.  

You need to commit to the modifications to your production line to keep your business operational. However, you cannot afford the cost of the upgrades.  

You have called a meeting with the owner of Snappy Stuff to discuss the predicament, and to see if a solution can be found to meet the new regulations.  You hope to maintain the long-standing business relationship with Snappy Stuff. 

Your assignment -

1)Prepare to meet and negotiate a solution that will allow Box-it and Snappy Stuff to continue their close business relationship.

2) Would you approach this negotiation as Distributive or Integrative? Why?

3)  Written summary of your starting point, your target point, and what solution could be found to allow the production line modifications to occur.

4)  What is your BATNA?

5)      What do you anticipate the position of Snappy Stuff could be?

6)     Are there multiple solutions that could be generated?

7)      Identify what the common goals could be?

8)      Explain what information you will need to learn and what information you are willing to share to be able to reach a successful agreement.

Is there any information that you would be reluctant to share? 

Summary:

1. A solution that would allow the Box-It and Snappy Stuff to continue their close relationship is that the Box-it can ask for the requirements of Snappy Stuff and then make changes according to its budget and the production process and volume.

2. It would be an integrative approach because this solution develops a win-win situation for both parties.

3. The summary of the starting point would be the determination or identification of the requirements of the customer.

The target point would be the reduction in the cost of production of boxes and investing in new technology.

The solution that could be allowed to make modifications in the production line is by adopting the new technology for the production process.

4. The BATNA in this case can be approaching the third party that can produce the boxes as required by Snappy Stuff and providing the boxes to its customer.

5. The position of the customer Snappy Stuff that would be anticipated is the fulfillment of the requirements related to the changes in the shape and the composition of boxes within six months.

6. Yes, there are multiple solutions that can be generated in this case.

7. The common goals can be the retention of a good relationship between them and the fulfillment of requirements of both the organization as well as the customer.

8. The information that is needed to learn is the requirements of the customer and the cost that is to be incurred to fulfill the requirements of the customer.

The information that is needed to be shared is the discounts or other benefits that can be provided to that customer while making agreements.

The information that would be reluctant to share is the information related to the cost structure of the organization.  

Step-by-step explanation

1. A solution that would allow Box-It and the Snappy Stuff to continue their close relationship can be that the Box-it which provides the shipping boxes to the Snappy stuff can ask it the requirements for which they need changes in the composition and the shape of boxes and then modify them according to their facility.

It would be the best solution because the changes that Snappy Stuff is asking for need a huge amount of expenses which can lead Box-it to bear losses or to go beyond its budget, and it seems to be a loss-win situation. But, by analyzing the requirements of Snappy Stuff and then making changes in the shape and composition of boxes based on their budget and without changing the flow of the manufacturing process and also fulfilling the requirements of their customer without compromising the quality of the boxes.

It would be the best solution and it would create a win-win situation for both parties, allowing them to continue their close relationship.

2. This approach would be considered an integrative solution. An integrative solution means a solution that is beneficial for both parties and develops a win-win situation for both.

Similarly, the solution or negotiation that is provided to the customer will enable them to develop a win-win solution by fulfilling the requirements of the customer Snappy Stuff and keeping the expenses of the organization Box-It within their budget, and also keeping the flow of the process the same as earlier.

3. Summary of the following:

The starting point would be the determination or identification of the requirements of the customer and then making changes in the production process to produce the shipping boxes as required by the customer that is Snappy Stuff.

The target point would be the reduction in the cost of production of boxes and investing in new technology to fulfill the requirements so as to retain a good relationship with Snappy Stuff by fulfilling all its requirements.

The solution that could be allowed to make modification in the production line is by adopting the new technology for the production process that would allow the organization not to just fulfill the requirements of its one customer that is Snappy Stuff but also, fulfill the requirements of other customers as well and providing the best quality of products to all customers on equality basis.

4. BATNA is defined as the best alternative negotiation agreement. In this case, the BATNA can be that if the Snappy Stuff does not get agreed with the solution provided, then the organization Box-It can look for another organization that produces the same shipping boxes and can fulfill the requirements of Snappy Stuff. It is the best alternative as the organization would be able to provide the boxes as per the requirements of the customer without making changes in the flow or adding the cost to the budget.

5. The position of the customer Snappy Stuff that would be anticipated is the fulfillment of the requirements related to the changes in the shape and the composition of boxes within six months. Another expectation would be the increase in the cost of the boxes after the changes have been made but at a lesser amount.    

6. Yes, there are multiple solutions that can be generated in this case.

These solutions are either the organization that is Box-It should determine the requirements of the customer and Snappy Stuff should allow the organization to make changes according to their process and the budget, or the organization can make an agreement with some third party that produces the same composition and shape of boxes as required by the customer and makes those boxes available to the Snappy Stuff.

7. As both, the organization and the customer are dealing with each other for the last 10 years, this means that both are satisfied with each other. Therefore, their common goals can be the retention of the good relationship between them that has been developed for the last ten years.

The other goal would be the fulfillment of requirements of both the organization and the customer, that is, the requirements of the customer is to get the shipping boxes with the composition and the shape as desired and the requirements of the organization are to provide these boxes without making changes in the processor without increasing the expense at a higher amount.

8. The information that is needed to be learned is the requirements of the customer, what the customer is actually needed in the box. After this, the other information needed to learn is the cost that the organization needs to incur for making changes in the boxes. These costs can be the fixed costs, that is the cost to be incurred to make changes in the technology, the variable costs, that is, the cost to be incurred while making changes in the raw material, and various other costs. This would enable the organization to make an appropriate decision regarding the changes and reach a successful agreement.

The information needed to be shared is the information related to the discount that can be offered to the customer if the customer agrees to maintain the agreement for a couple of years or some other benefits that can be provided to it.

The information that would be reluctant to be shared is the information related to the cost structure of the organization.