The 2D will be briefly explained before commencing with a description of each of the four negotiation situations. The horizontal dimension represents a classical dichotomy in relationship management and portfolio theory, which is also widely adopted in SCM literature. Business relationships can be positioned on a continuum that has market governed transactions at one end (arm’s length relationships) and trust and hierarchy governed transactions at the other (partnership relations) (Dyer et al., 1998). Basically, the horizontal dimension reflects the possible dispute or
agreement among suppliers and buyers concerning the basis of their relationships. Which goals should they commonly pursue? On the partnership dimension of the dichotomy, parties seem to agree and get along on sameness of terms. On the arm’s
length dimension, future, common goals are unclear, making negotiations difficult
and resource heavy. The dichotomy could also have been termed “specific
buyer/supplier investments” on a low to high scale (Kraljic, 1983). The SCM literature
has stressed that supply chain members should be lead in a differentiated way