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Application Exercise

Please read the case "Becton Dickinson & Company Vacutanier Systems Division" and answer the following questions 1. 1982 to March 1985: Why did BDVS avoid negotiating with APG headquarters? What was the consequence? 2. April 1985 to July 1985- 4 meetings: How did the negotiations proceed? Why? 3. August 01, 1985-5 meeting: How did the meeting go? Why? 4. August 15, 1985-6 meeting: What are the issues? What is your advice for BDVS? Why?
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pgs NS- 34 to 40

BDVS was successfully dealing with all major hospitals in the US and was holding almost 80% of the blood collection tube market and 30% of needles market. At this stage APG came into being and wanted to standardize purchase of tubes and needles for all its affiliated hospitals and wanted a substantial price reduction. From BDVS perspective it did not make much sense to get into a centralized contract for all APG group hospitals as they had a strong hold on the market and was in a position to influence these group hospitals individually. They have a possibility of earning better profit if they negotiate with individual hospitals because they were offering price reduction on a case to case basis. On top of it APG was not having very good hold on the market which is evident from the fact that in spite of having a centralized agreement with Terumo, BDVS could retain its business. Apart from the points mentioned above APG was also trying to impose a private label program in which it was asking its suppliers to use APG logo for all products sold through APG contract. This was an indication of APG aggressive future plan and ambition which could have been a risk for a brand like BDVS. Consequence of such avoidance was clearly a bad relationship and APG was trying to influence BDVS customers. APG even recruited a group of personnel to campaign and promote APG central processes. That had resulted in a difficult atmosphere for sales personnel in the field who are responsible for dealing with individual hospital administration. APG was also gaining popularity and influence. From 20 hospitals in 1975 APG had grown to a number of 500 hospitals in 1985. APG was certainly not an organization which could be ignored but relationship between BDVS and APG was also not giving a room for proper negotiation. APG was trying to hold its position and BDVS was also not ready to give in.

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