Defending Flipkart’s Case in the Negotiation with Walmart Concerning an Acquisition Deal

International Business Negotiation
Defending Flipkart’s Case in the Negotiation with Walmart Concerning an Acquisition Deal
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International Business Negotiations
1.0. Background of the Deal
Walmart, a leading US-based chain of retail stores, entered into a deal with Flipkart, an Indian e-commerce giant, in 2018. As per the deal, Walmart acquired a 77% stake in Flipkart for $16 billion (Rajan, 2021). The purpose of the deal was to pool the resources together and complement each other. Walmart is a giant retailer aimed to gain its foothold in India, considering it a fast-growing economy. However, it was overwhelmed by the geographic and cultural distance. The acquisition of Flipkart will allow it to leverage the market knowledge of Flipkart while also tapping into the potential of online retailing. At the same time, Flipkart saw its association with Walmart as a remarkable boost to its brand reputation and equity. The deal is now in its fourth year and has been considerably successful (Rajan, 2021). Flipkart's top management commissions me to help them improve the deal under the realization that Flipkart has not optimally tapped into its bargaining power. Flipkart is looking to get Walmart to add up to $5 billion to its consideration, making it $21 billion. According to Flipkart’s point of view, Walmart is the more significant beneficiary of the deal since Flipkart is an established eCommerce platform. Walmart is undergoing a downward slide in profitability, market share, and several other aspects. However, it was also clarified upon the condition of confidentiality that Flipkart also holds the deal in high regard and wants to ensure the continuity of its long-term relationship with Walmart. Flipkart’s management clarified that $21 is not the bottom line, and I should feel free to use alternative proposals of almost the same worth, if appropriate. This report aims to assess prospects for Flipkart to gain more advantages from the said deal and lay out the strategic recommendations in the light of negotiation theories and concepts.
2.0. Insights Shared by My Friend
To explore different possibilities, I called one of my close friends to take his advice after explaining the above case. His recommendations unfold as follows:
* Threatening Walmart of withdrawing from the deal if it does not raise the value
* Asking Walmart’s management to consider the growth of Flipkart
* Reminding Walmart of its failure in China to give an amplified view of its current deal with Flipkart
While sharing his insight, my friend was particularly interested to see both parties' contrasting growth trajectories. He advised me to adopt a strict competitive style of negotiation, which involves using the bargaining edge to force the counterparty to accept a deal (Warner, 2002). When I told him that Flipkart also wants to keep the deal irrespective of Walmart's response to the negotiation process, he took the time to brainstorm. Then, he advised me to adopt a mix of soft and hard approaches while leaning towards the harder side since Flipkart was in a position to convince Walmart. He also advised...