Blue Star: The Compressor Conundrum

Blue Star, based in Mumbai, was one of India’s leading multinational companies and manufacturers of air conditioning and refrigeration systems. It faced a key challenge to reduce the cost of compressors, a major component of air conditioners. Its supplier was Beijing Cooling Systems (BCS), one of the world's largest manufacturers of compressors. Blue Star’s need for cost reduction was pivotal to the negotiation, but BCS also had a position of strength as a seemingly-indispensable supplier of compressor technology. This created a complex scenario where the Blue Star team had to negotiate skillfully to achieve the desired cost reduction without compromising its crucial partnership with BCS.