It’s no longer a game of hard-ball. Today’s negotiations are about more than just money
In the late 1990s, a European beverage company, number one in its market, squeezed suppliers so hard on price that a glass manufacturer with a strong supply links to the company went bankrupt. Not unusual in the cut-throat world of business but this time the tough stance backfired. When the market took an upturn a few months later the beverage company, with limited bottle supply, couldn’t feed demand and fell from number one to number two in a market of just three or four players. The company, according to Horacio Falcao, INSEAD Affiliate Professor of Decision Sciences who was brought in to look at what went wrong, lost more money in that one year than its aggressive procurement techniques had saved in ten.
[This article is republished courtesy of INSEAD Knowledge, the portal to the latest business insights and views of The Business School of the World. Copyright INSEAD 2024]