The Book of Real-World Negotiations

12When Rushing to Yes Leads to Bigger Problems – but Then a Solution

Based on an interview with Vantage Partners

As you will read in the following case, when a difficult problem arose between two companies involved in a complex partnership, finding a solution involved significantly expanding the scope of the negotiation and broadening the aperture on possible ways to meet each side's interests. With the help of a third party, however, the negotiators ultimately uncovered a collaborative solution.

Background and the Negotiation Challenge

Two companies had entered into a long-term agreement where one agreed to serve as external manufacturing partner to the other. The first company is called Arma and the second, acting as the manufacturer, is called PPM. The agreement came under a great deal of pressure for a number of reasons. After the agreement was signed, Arma found that demand for their products significantly exceeded what they had forecast, and they needed more output from PPM. While in theory that would mean more revenue for both sides, it was not easy for PPM to meet a higher level of demand from the plant they owned that was to produce all products included in the scope of the agreement. At a minimum, doing so would require significant capital investments from PPM, and even with major investments, it was unclear the plant they had agreed would supply product to Arma could meet their needs. In addition to all of this, there were also significant quality and production ...