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Tom Muccio: Negotiating the P&G Relationship with Wal-Mart (A) Case Solution & Answer

Tom Muccio: Negotiating the P&G Relationship with Wal-Mart (A) Case Solution 

Main points of the case

Tom Muccio was the former employee at Procter & Gamble (P&G), which was located in nonviolent, Arkansas. Tom was leader in negotiating the early operational components of the supplier-retailer partnership between Walmart and Procter and Gamble, in late 1980s. Muccio had the responsibility of renegotiating with Walmart, for the deal that would not pressurize P&G to accept the large inventories of products. The extra inventory tended to put P&G under pressure to meet the requirement of making expenditures for the advertisement of the products with special prices so that the products would be sold effectively. The entire extra inventory’s scenario was pushing P&G towards incurring additional cost, which didn’t seem beneficial for the company. Another issue was the internal letdown within the organization, whereby P&G lacked a reward and management structure to provide incentives for the customer relationship management.

Additionally, Muccio pointed out unattainable efficiencies in operations which were concerning for the company, during the negotiations between Walmart and P&G. Muccio pointed out the fact that Walmart had refused to accommodate the pre-built displays program of P&G, despite the fact that the program was helping P&G to save the labor cost of 0.35 dollar per package. Walmart had deemed the deal unfair based on the fact that it had to fill the paper work each time when purchasing pre-build displays.

In addition to this, there were numerous internal conflicts that were emerging within the organization. These conflicts were mainly occurring between the new team’s approach and the sales personals who were seeking to manage the sales’ department and deal with the customers, as it was the traditional norm for them. Furthermore, the external letdown was another concern whereby many employees of Walmart were resistant to change, even after the mutual agreement between both the organizations. Moreover, the geographic barriers had also hampered the negotiation between P&G and Walmart, in a way that the staff and managers of P&G were located in Cincinnati, Ohio, while Walmart was headquartered in the state of Arkansas. The geographic barriers created challenges in having an effective collaboration and strong communication between firms, which was further hindering the operational understanding between P&G and Walmart.

The aforementioned issues were faced by Procter and Gamble (P&G), which could have be addressed by fostering the culture of change,wherein the staff and employees would be motivated and encouraged to contribute their parts to the overall success of the organization. Additionally, the company could’ve stressed over the significance of improving its relationship with the customers. The salesperson could’ve been motivated and provided with the clear description of the work, such as their responsibilities and duties so that their responsibilities couldn’t have collided with the duties of the new team.

In addition to this, the company could’ve handled the external issues by organizing joint social activities, whereby they would have had the opportunity of communicating, interacting as well as reducing the differences. As a result of the joint social activities; P&G would have been at ease to negotiate with Walmart, in a much successful manner……………..

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