Problems with Negotiation of Little One’s Products in Walmart

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Bill Nichol is the CEO of Kentucky Derby Hosiery (KDH), a clothing manufacturing company. The company has been working with Little One’s Products (LOP), to produce baby sox under this brand. This line of LOP branded baby sox has been sold at Walmart in a deal between KDH and Walmart. However, it has Nichol’s attention that Walmart is about to drop the LOP branded sox from its portfolio.
Bill Nichol believes that this situation can be salvaged and he does his best to ensure that they remain in business with Walmart. First, he organizes a meeting with LOP and Walmart’s buyer to discuss all options available. During this meeting, KDH and LOP focus on presenting financial and market data that shows that the line of sox is doing well in Walmart stores. The information provided show that the products have been doing well in the stores and consumers appreciate the product. KDH and LOP have maintained good numbers which are in line with Walmart’s requirements. However, from the information given by Walmart’s buyer, it is clear that the company wants to drop the line and the decision has already been made.
KDH has invested largely into the manufacture of branded baby sox to meet the volume needs of Walmart. When the contract between KDH and Walmart came into force, the company focused on increasing its volume capacity to meet the huge inventory needs. This means that the company has borrowed from banks such as JP Morgan to meet the costs of investment. Loss of the Walmart business will translate into huge losses for the company. In addition, KDH has a contractual obligation to LOP which it cannot meet with the loss of Walmart’s business. It is therefore necessary that Nichol negotiates with Walmart to find a way to continue collaboratio...

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...re that the company is able to continue producing high volumes of products thus meeting its financial obligations at the same rate
Secondly, in order to retain high profit levels, the company has to look into expanding its product portfolio. After retaining the socks line with Walmart, the company must find a way of developing a more varied line of products and markets. This will ensure that when one line of product is dropped, the company does not sink into losses. A varied product line will act as a cushion against market demand fluctuations.
In order to deal with the LOP situation, KDH should look for other markets to carry the brand. The company should approach other stores such as Target to ensure the brand is still visible to its customers. In addition, KDH should be ready to give up its exclusivity rights to give LOP the freedom to move into wider markets.

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