Negotiations
Please read very carefully and answer the questions on the template. CASE IS ATTACHED.
THIS IS A NEGOTIATION ASSIGMENT AND THE ROLE IS “Kaley Kumar Director Marketing & New Product Development”
For CASE 1 you as a member of either the AJANTA team or the SF Foods Team will have specific responsibilities and goals. In this first Negotiation, you have to meet with the other member of your team and get to an agreement of the sort of strategy you have to put together to be prepared for the next Negotiation with your opposite team.
If you are a member of the Ajanta TEAM, you must make sure that your bests interests are represented and included in this first negotiation with the other members of your own team.
Directions: In the provided text box (accessible only to you, the instructor, and the coach), you will answer some questions about your role, your goals, and planned strategy for each negotiation. Also include your thoughts about the following :
Your BATNA and reservation point
Your goal or expectations for what you can achieve in this negotiation
Your thoughts about what your counterpart will want or expect in this negotiation
Any planned strategy for how you will try to get to your goal
Case 1 – Pre-Negotiation Journal
Directions:In the provided text box (accessible only to you, the instructor, and the coach), you will answer some questions about your role, your goals, and planned strategy for each negotiation. Also include your thoughts about the following:
Define your role; explain your goals and your planned strategy
Write your answer in this space. As you type, box will expand.
What is your BATNA and reservation point?
Write your answer in this space. As you type, box will expand.
What is your goal or expectations for what you can achieve in this negotiation?
Write your answer in this space. As you type, box will expand.
What are your thoughts about what your counterpart will want or expect in this negotiation?
Write your answer in this space. As you type, box will expand.
Any planned strategy for how you will try to get to your goal (s)?
Write your answer in this space. As you type, box will expand. W18241
AJANTA PACKAGING: KEY ACCOUNT MANAGEMENT
Sandeep Puri and Rakesh Singh wrote this case solely to provide material for class discussion. The authors do not intend to illustrate
either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying
information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [emailprotected]; www.iveycases.com.
Copyright 2018, Ivey Business School Foundation Version: 2018-12-17
Offer good quality products at a reasonable cost and provide exceptional customer service,
and the customers will remain loyal.
Pushpak Agarwal, managing director, Ajanta Packaging
On October 18, 2017, during festival season in India, Ajanta Packaging (Ajanta) shifted base to a new, modern
office in New Delhi, India. At that time, Pushpak Agarwal, the managing director of Ajanta, was pleased with
the companys growth over the past five yearsAjanta had reported revenue of 604 million1 in 2016, a
growth of 21.3 per cent over the previous financial year. Agarwal seemed positive about the companys future
and was planning for the next five years. His positive mood dissipated, however, when his son Deepanker, a
director at the company, walked into his office seeming extremely concerned. Agarwal asked his son, Why
do you look worried, Deepanker? Is anything bothering you?
Deepankers reply acquainted his father with a problem he had not been anticipating. Have you seen the
rate quotation from our biggest client, S.F. Foods [SF]? The company is offering a 50 million order with
profit margins of less than 7 per cent. They want us to supply the goods by December 1, 2017, but have set
the payment period for 60 days. Our key account management needs to be reworked.
In addition to SFs order, Ajanta had 90 million worth of orders from other customers that had profit margins
of more than 10 per cent and that were to be supplied on December 15, 2017. Supplying to SF with a 60-day
payment period risked jeopardizing other orders, which could result in higher customer dissatisfaction and the
possible defection of customers to competitors. Ajanta had good customer-management practices in place,
with more than 80 per cent of its revenues coming from repeat customers. One cause of concern for the
company, however, was its over-reliance on SF, which accounted for 15 per cent of Ajantas business, and 10
other customers who made up almost 50 per cent of the companys total revenue.
Deepanker was aware of the worth of a company such as SFand of the consequences of defaulting on the
other orders with a higher profit margin. He wanted to retain business with SF as well as keep his companys
commitments to its vendors and other customers. Now that he had a larger buyer base of 1,700 customers,
and realizing the importance of doing well by all of them, Deepanker had to consider some serious
questions: Would it be wiser to accept the order on SFs terms, or renegotiate the price, payment date, and
delivery schedule to favour Ajanta? What processes could Ajanta adopt to prevent such a situation in future?
1 = Indian rupee; 1 = US$0.0153 on October 10, 2017.
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This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
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COMPANY BACKGROUND
Deepanker joined Ajanta in 2005 after completing his MBA as a gold medalist from the Institute of
Management Technology, Ghaziabad. He wanted to lead the change in the three-decade-old company set
up by his father. Ajanta, which began with an initial investment of $5002 and only three employees in 1981,
had over 100 employees and a net revenue of 604 million in 2016 (see Exhibit 1), and was among the top
glass bottle suppliers in India.
The company began by supplying bottles, vials, and jars to pharmaceutical companies and manufacturers
of fast-moving consumer goods, and glass bottles to large liquor and wine companies. Over time, it
diversified and changed with the times. Soon after Deepanker joined the company, he effected some rapid
changes in the business model to attract new customers. An authorized stockist and distributor for
Hindusthan National Glass & Industries Ltd., Ajanta became the first company in the Indian bottle-trade
industry to become fully computerized. Although Ajantas customers still preferred glass bottles and 90 per
cent of its business came from glass bottles, the company began offering polyethylene terephthalate (PET)
bottles, crown caps, and glass bottle printing services.
Ajantas success was driven by sourcing service contracts with various global manufacturing companies.
The idea was to put in place strong procurement and supply-chain systems and a diverse supplier base to
eliminate operational risks. Having warehouses in multiple locations gave Ajanta a strategic advantage over
competitors in that it was able to offer its customers lower freight costs, resulting in higher sales for the
company. Ajanta could also capitalize on the location advantage it gained from its four marketing offices
across northern India by offering flexible, just-in-time service to its customers because of lower lead times.
By October 2017, Ajanta was a niche supplier of glass bottles in India and had 1,700 customers. Not only was
it a quality-focused and cost-effective company, but it also offered its customers prompt and customized glass-
packaging solutions. Wide-ranging quality products and professional expertise gave Ajanta muscle power to
negotiate with its suppliers and customers, and forge successful and profitable collaborations.
Deepanker was a stickler for commitment and quality of service. Because more than 80 per cent of Ajantas
revenues came from repeat customers, Deepanker knew that his business triumphs depended on customer
loyalty. Thus, he worked to enhance Ajantas customer-relationship management practices, as this
augmented the companys use of resources when providing customized services.
Deepanker also introduced many innovative packaging materials to serve the growing hotel, restaurant, and
catering segment. Although the company had no presence in the food segment until 2015, by October 2017,
40 per cent of its business came from that segment (see Exhibit 2).
The global packaging industry saw an annual global turnover of around $550 billion in 2015, of which
Indias share was around $16.5 billion. The Indian packaging industry was ranked 11th in the world, and
its turnover was projected to reach $32 billion by 2020.3
In the five-year period between 2016 and 2021, the Indian packaging industry was expected to grow at a
compound annual growth rate of 9.2 per cent as opposed to the 6.2 per cent growth registered between 2011
2 All currency amounts are in U.S. dollars unless specified otherwise.
3 Jagdish Kumar, Indian Packaging Industry Turnover to Reach $32 Billion by 2020, Packaging World, March 2, 2015, accessed
October 8, 2017, www.packworld.com/article/trends-and-issues/global/indian-packaging-industry-turnover-reach-32-billion-2020.
For the exclusive use of N. Martinez, 2020.
This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
www.packworld.com/article/trends-and-issues/global/indian-packaging-industry-turnover-reach-32-billion-2020
Page 3 9B18A023
and 2016. Factors such as rapid urbanization, a surge in middle-class consumers, an organized retail sector,
and the e-commerce boom were all key drivers of growth in the Indian packaging industry. Growth was
also fuelled by innovations such as the development of lighter packaging with better barrier properties.
These changes increased the demand for new packaging formats, such as different sizes, materials, and
strengths. The projections for 20162021 expected the soft drink and food industries to capture the highest
packaging market share by units, with a share growth of 3.4 per cent and 1.3 per cent, respectively. Glass
and rigid plastic packaging material were expected to be the major share gainers, with market share growth
of 0.7 per cent and 0.6 per cent, respectively, during the same period.4
GLASS BOTTLE INDUSTRY
The global glass packaging market, which was worth $57.22 billion in 2017, was estimated to grow at a
compound annual growth rate of 4.5 per cent and reach $108.3 billion in 2025.5 In 2015, the Asia-Pacific
(APAC) region led the market with a market share of 33.7 per cent, followed by Europe with a share of
28.5 per cent. Factors such as a rise in disposable income and greater acceptability of alcohol consumption
fuelled increased demand for glass bottles in the APAC region. The growing beer industry in India was
expected to increase sales and market share in the region. While the industry was losing its share in regions
such as the United States and Western Europe, it was gaining share in India because of greater penetration
level availability. Cost advantage, lighter and thinner glass products, and sustainability were important
factors aiding industry growth: glass bottles were about 30 per cent lighter than they had been in the past
decade, which resulted in better profits for manufacturers because of reduced raw material costs. Yet, glass
packaging was facing rising competition from other materials that were stronger, lighter, and cheaper to
manufacture and transport.6
Its recyclability, non-corrosive nature, non-permeability, and zero rate of chemical interaction made glass
a suitable packaging material for beer, soft drinks, beverages, and pharmaceuticals.7 Glass packaging
ensured that the products inside the bottles retained their strength and/or aroma and flavour. It also helped
preserve food and beverages for a longer time, and prevented contamination. Packaged glass was trusted to
safeguard not only peoples health and taste, but also the environment because it was 100 per cent recyclable
and had neutral reaction.8
The introduction and growth of the organized retail market led to both competition and innovation in the
Indian glass bottle-packaging industry. Considerable upgrades, and research and development led to newer
designs and technologies in glass production. While narrow neck press and blow process technology helped
increase the productivity of lighter and thinner containers, which made glass packaging cost effective and
consumer- and ecology-friendly, distribution was improved by a well-developed retail network. Because
of these promising factors, the industry was expecting immense growth potential through to 2021.9 Because
4 Trends and Opportunities in the Indian Packaging Industry 2017: Analysis of Changing Packaging Trends in the Food, Cosmetics
and Toiletries, Beverages and Other Industries Research and Markets, BusinessWire, May 9, 2017, accessed October 8, 2017,
www.businesswire.com/news/home/20170509006321/en/Trends-Opportunities-Indian-Packaging-Industry-2017-Analysis.
5 Global Glass Bottle Packaging Market Size, Market Share, Application Analysis, Regional Outlook, Growth Trends, Key
Players, Competitive Strategies and Forecasts, 2017 To 2025, Acute Market Research, October 2016, accessed October 29,
2017, www.acutemarketreports.com/report/glass-bottle-packaging-market.
6 Global Glass Bottles and Containers Market to 2020, Glassonline, May 24, 2016, accessed October 8, 2017,
www.glassonline.com/site/news/topic/Markets–trends/id/26170/Global-Glass-Bottles-and-Containers-Market-to-2020.
7 Glass Packaging Market Analysis by Application (Food and Beverage, Beer, Pharmaceuticals) and Segment Forecasts to
2020, Grand View Research, May 2014, accessed October 8, 2017, www.grandviewresearch.com/industry-analysis/glass-
packaging-market-analysis.
8 Ibid.
9 Ibid.
For the exclusive use of N. Martinez, 2020.
This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
www.grandviewresearch.com/industry-analysis/glass
www.glassonline.com/site/news/topic/Markets–trends/id/26170/Global-Glass-Bottles-and-Containers-Market-to-2020
www.acutemarketreports.com/report/glass-bottle-packaging-market
www.businesswire.com/news/home/20170509006321/en/Trends-Opportunities-Indian-Packaging-Industry-2017-Analysis
Page 4 9B18A023
of consumers view of glass as a premium packaging medium, Ajantas promotional campaigns emphasized
the benefits of glass packaging (see Exhibit 3).
The glass bottle industry was characterized by large buyers in each segment, and the demand for glass
packaging had become highly seasonal, especially for products such as soft drinks, cosmetics, and beer.
Challenges Facing the Indian Glass Packaging Industry
Although glass was viewed as a premium packaging medium, the Indian glass packaging industry faced
some serious challenges.
Rising Prices of Raw Materials
The price of raw materials was always rising, which put immense cost pressures on the glass packaging
industry. As a result, glass bottles became costlier, driving smaller buyers to look for other packaging options
such as plastic and Tetra Pak cartons. For Ajanta, this meant spending more money on raw materials.
Moreover, increased warehouse rentals costs, interest, and freight costs put immense pressure on profitability.
Price Wars
The number of companies selling glass packaging in India had risen since 2014, leading to increased
competition, price wars, customer poaching among suppliers, and clients renegotiating purchase costs. All of
these problems considerably reduced profit margins in the industry. In light of the slashed prices of
competitors, many of Ajantas customers wanted the company to revise prices before they placed their orders.
Increased Use of PET bottles
Light, clear, tough, sustainable, and an excellent barrier to oxygen and carbon dioxidethe many positive
attributes of PET made it the most opted-for packaging medium among several industries that had
previously favoured glass. This had helped PET gain market share at a rapid rate and even replace a
considerable portion of glass bottles, which, in contrast, were extremely fragile, prone to breakage, and
costly. While consumers chose PET plastic for its convenience, ease of use, lightness, and sturdiness,
marketers were attracted to the material because of its light weight, cost effectiveness, product safety, and
pliability for their execution of innovative package designs; retailers found the unbreakable PET packages
easy to stack. PET was the packaging of convenience for companies in the soft drink, mineral water, fast-
moving consumer goods, pharmaceutical, agrochemical, wine and liquor, and food sectors.
KEY ACCOUNT MANAGEMENT AT AJANTA
Deepanker maintained a near-obsessive focus on Ajantas key customers because 80 per cent of its revenues
came from repeat customers. The company had two sales teams for customer managementone managed
the key accounts and the other catered to the other customers. Deepanker knew that developing and
maintaining solid relationships with key accounts was critical to the companys success in the hyper-
For the exclusive use of N. Martinez, 2020.
This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
Page 5 9B18A023
competitive market. While Ajantas churn rate10 for 2016 was 4.5 per cent, which was quite low compared
to the competition, the defection rate11 was 11 per cent.
Until 2014, the companys focus was big clients. It also supplied to around 400 customers, some of which
were major accounts. Most large deals were based on price and quantity, so when many of its bigger
customers delayed payments, Ajantas profitability was severely dented. Deepanker wanted to reduce this
severe dependence on the companys larger customers, so it began encouraging smaller orders to increase
its customer base. This strategy paid off, and by October 2017, Ajanta had 1,700 customers. Many of its
small-order customers wanted unique packaging, and were less price sensitive than its larger customers
were. For example, the first order placed by one small-order customer in May 2015 was for only 35 bottles,
but by 2017, that customer had begun to buy around a million bottles.
Until 2015, the company assigned new designs to manufacturers after the receipt of orders, but beginning
in January 2017, it began maintaining an inventory to cater to new and old customers.
Key Accounts
Ajanta had many renowned, revenue-generating customers, including Patanjali Ayurved Limited, G.K.
Dairy and Milk Products Private Limited (famous for the brand Gopaljee), Veeba Food Services Private
Limited, Amrit Food, Coffee Day Global Limited (also known as CCD), Carnation Hospitality Private
Limited (famous for the brand Barista), Super Milk Products Private Limited, SF, and Akums Drugs &
Pharmaceuticals Limited.
S.F. FOODS AND AJANTA PACKAGING
SF was a leading manufacturer in India of sauces, pickles, jam, custard powder, instant mixes, noodles, and
baking powder. The company was also a leading exporter of these products to the United States, Europe,
and the APAC region. SF reported net revenue of 15.5 billion in 2016 and registered year-over-year
growth of 23 per cent over 2015. Its expansion plan included launching new products and increasing its
footprint across Australia and Africa by 2018. Purchase decisions at SF were made by a purchasing
committee comprising a member each of the marketing, quality assurance, finance, and procurement
departments. The decisions were based on price, quality, previous experience, capacity, delivery period,
and payment terms. SF had good logistics management practices in place, and initially had a good delivery
timeof 45 daysto Ajanta. This time frame was sufficient for Ajanta to procure the required material
from the manufacturer and supply it to SF. SF bought bottles from three companies, but the majority share
(of 60 per cent) went to Ajanta.
SF had been Ajantas customer since 2001. It was one of Ajantas oldest and most important customers,
and constituted around 15 per cent of Ajantas business. However, although Ajanta received good business
from SF, the profit margins were very low. Also, over time, SF had begun making payments after 60 days
and sometimes even as late as 90 days. This did not work well for Ajanta, as it was expected to pay its
suppliers within 30 days. While this affected Ajantas profitability, Deepanker continued to compromise
because of the volume of SFs business.
10 Churn rate was calculated as the number of customers who left a business in a years time divided by the number of new
customers in the same period.
11 Defection rate was the rate at which existing customers left a business and switched over to a competitor.
For the exclusive use of N. Martinez, 2020.
This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
Page 6 9B18A023
THE DILEMMA
During 20152017, Deepanker made many changes in the business model, shifting away from Ajantas
heavy reliance on its large customers and particularly on SF. Deepanker could see the need for a new
customer-management system to service the companys customers more effectively, but was still unsure
about how to segment the customers. He struggled with his companys relationship with SFalthough it
promised sizeable business, its arm-twisting on payment dates and deliveries made it increasingly difficult
to manage. SFs large 50-million order came with very low profit margins, and accepting the order with
a 60-day payment period and a short delivery turnaround was certain to jeopardize Ajantas payments to its
vendors, in turn affecting the supply of orders to its other customers. Wanting to retain SFs business while
keeping his companys commitments to its vendors and other customers, Deepanker had to decide whether
to accept the order on SFs terms, or renegotiate the terms to suit Ajanta. He also wondered what processes
he could follow to prevent such a situation in the future.
Sandeep Puri is an associate professor at Asian Institute of Management,
Manila; Rakesh Singh is a professor at Bennet University, India.
For the exclusive use of N. Martinez, 2020.
This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
Page 7 9B18A023
EXHIBIT 1: SELECTED FINANCIALS FOR AJANTA PACKAGING (IN MILLIONS)
2012 2013 2014 2015 2016
Sales Turnover 204 306 396 498 604
Other Income 12.2 22.4 32.4 42.6 56.6
Total Income 216.2 328.4 428.4 540.6 660.6
Total Expenses 182.2 275.4 352.6 443.7 537.6
Operating Profit 34 53 75.8 96.9 123
Note: Figures have been changed to maintain confidentiality.
Source: Company documents.
EXHIBIT 2: BUSINESS FROM DIFFERENT SEGMENTS
Category % Share in 2015 % Share in 2016 % Share in 2017
Food 0 15 40
Pharmaceuticals 80 75 50
Others 20 20 10
Source: Company documents.
EXHIBIT 3: AJANTA PACKAGING PROMOTION POSTERS
Source: Company documents.
For the exclusive use of N. Martinez, 2020.
This document is authorized for use only by Nadreen Martinez in MS in Logistics & Supply Chain / Negotiating Fall 2020 Version 1 taught by NICOLO ALAIMO, Florida International University
from Aug 2020 to Nov 2020.
Structure Bookmarks
AJANTA PACKAGING: KEY ACCOUNT MANAGEMENT
COMPANY BACKGROUND
INDIAN PACKAGING INDUSTRY
GLASS BOTTLE INDUSTRY
Challenges Facing the Indian Glass Packaging Industry
KEY ACCOUNT MANAGEMENT AT AJANTA
Key Accounts
S.F. FOODS AND AJANTA PACKAGING
THE DILEMMA
EXHIBIT 1: SELECTED FINANCIALS FOR AJANTA PACKAGING (IN MILLIONS)
EXHIBIT 2: BUSINESS FROM DIFFERENT SEGMENTS
EXHIBIT 3: AJANTA PACKAGING PROMOTION POSTERS
