Pacific Oil Company The Pacific Oil Company is going through renegotiations. The company grew immensely early in its conception. The Pacific Oil Company is a “producer of industrial petrochemicals” (Lewicki, Saunders, & Barry, 2010). In 1979 the Pacific Oil Company established a contract with the Reliant Corporation. Pacific Oil company was purchasing “vinyl chloride monomer” (VCM) from the Reliant Corporation. The initial contract was established in 1979, the contract was now set to expire in 1982. The contract would need to be renewed or renegotiated at this point. The Pacific Oil Company and the Reliant Corporation were underway in negotiations There was a shortage of VCM, the material Pacific was interested in. Around 1984 VCM went from
The price was agreed upon after several meetings, and now the contract extension could be discussed. Both Reliant and Pacific Oil wanted to be upside right in the market. It seemed that one thing after another happened during negotiations. Concern for competitiveness, pipe issues, and other issues arose. The leaks in the pipes put a stop to everything for the moment. There were several individuals involved in the negotiations. This case is an example of how negotiations can take a while to be resolved and how you should be prepared for anything that can be thrown at you in
Fontaine and Mr. Gaudin were not effective for what they were trying to accomplish. The style of Fontaine and Gaudin was an integrative bargaining style. The textbook illustrates integrative negotiation as managing “both context, and the process of the negotiation in order to gain the cooperation and commitment of all parties” (Lewicki, Saunders, & Barry, 2011).
The Pacific Oil Company negotiators strove to stress how well this contractual relationship had been working for the past years. Fontaine and Gaudin made every effort to think of every scenario that could possibly inhibit the contract from going through. Their dedication to meetings, cost analysis, and predicting overages and shortages of supplies show their dedication to these negotiations. “They wanted to work hard to obtain a favorable renegotiation of the existing agreement” (Lewicki, Saunders, & Bruce, Negotiation Readings, 2010).
Fontaine and Gaudin made it a point to let the other party know that the longer they waited to seal the deal the more costly it would be. They strove to find common ground with the Reliant Corporation and address every issue that arose during negotiations. Furthermore, Fontaine and Gaudin reviewed metrics each year and attended every meeting in hopes of meeting all of Reliant’s needs. The ingegrative negotiation style involves our
This is a complex case, involving multiple parties and several variables that need to be examined thoroughly. The parties mentioned include Knarles operator of the facility maintenance company, his son Barkley, their employee, a licensed plumber, and Mr. Chetum. Although in the end Chetum is suing the facilities maintenance firm for a breach of contract, all factors must be examined to determine proper fault.
One of these factors was the logistical nightmare of redeveloping the infrastructure needed to transport oil to the refinery. As early as 1881, Standard oil operated approximately 3,000 miles of pipelines, eventually owning ninety percent of the nation’s pipelines. Although transcontinental railroads were an available alternative, pipelines were cheaper, reduced handling and storage fees, and were more efficient. The fact that modern oil companies invest hundreds of millions of dollars into speculating for sustainable natural oil deposits implies that such deposits are rare and hard to identify with a passing glance. If the spurts of oil proved to be isolated incidents, the capital invested in building pipelines and reestablishing a monopoly would have been squandered.
Deere & Company (Deere) has been experiencing a decrease in its profit margins for one of its aftermarket resale products, specifically the gatherer chain, over the past couple of years. Currently, the cost-price ratio is at 80% compared to last year’s 50%. The purchase cost for the gatherer chain has been steadily increasing, while the aftermarket price has been decreasing. Deere has been budgeting its price to match that of a major competitor, which has been causing the decrease. The company’s main supplier of its gatherer chain is Saunders Manufacturing, with which Deere has established a long term relationship. The owner of Saunders has a reputation of being a tough negotiator, and is someone who is known for not willing to share financial information about the company. However, the U.S. Department of Commerce has provided financial estimates in Saunders’ industry as follows: material spend, 42%; direct labor, 16%; indirect labor, 6%; Overhead, 20%. These percentages are helpful to Deere because they can be used in the negotiation process with Sanders. Since Sanders will not share any specific cost information, Deere is able to use these estimates as a way to justify Sanders reducing its prices. Using these estimates during the negotiations might also incentivize Sanders to provide accurate numbers for its specific manufacturing costs.
Planning for this negotiation was more difficult than the first negotiation in class. The first negotiation had a point system; therefore I knew what the maximum, minimum and average amount points were. Not only does the Texoil negotiation not have a point system, but there were two people on my side (sellers) and only one on the other side (buyer).
This negotiation took place between the Chief Officer of a US based company (BioPharm) and a small company (Seltek). BioPharm is operating in the pharmaceutical industry. It wants to buy or build a plant in the US to manufacture a new product called Depox. The main goal of our group as negotiators is to play the role of BioPharm to buy a plant belonged to Seltek. It is on sale. This plant is the most appropriate choice for BioPharm for a number of reasons, namely to save time and cost of building a new plant because the Seltek’s plant is running and gets the FDA approval. Besides, it also has a highly experienced workforce, which can help us reduce the cost and the time for recruiting and training new employees.
Fisher, R., Ury, W., & Patton, B. (1981). Getting to yes: Negotiating agreement without giving in. New York, NY: Penguin Books.
Fisher, Roger, William Ury, and Bruce Patton. Getting to yes: negotiating agreement without giving in. 2nd ed. New York, N.Y.: Penguin Books, 1991. Print.
“In sailing, you rarely if ever get to your destination by heading straight for it. In between you and your goal are strong winds and tides, reefs and shoals, not to speak of storms and squalls. To get where you want to go, you need to tack – to zigzag your way toward your destination. The same is true in the world of negotiation.” -William Ury
The first problem with the renegotiation of this contract was the projected demand for VCM creating a “buyers market”, according to the textbook, “the demand was high, but the supply was to increase exponentially” (Lewicki, Saunders, and Barry 2010) Reliant was already locked into a five year contract with Pacific Oil, but there would be stiff competition at the expiration of the that contract. Knowledge of this market situation put Reliant in a position of leverage and trapped Pacific Oil into a desperate sign at all costs scenario. Gaudin and Fontaine assumed that even with a fluctuation with price; Reliant would sign a new because of their established relationship Pacific Oil. Gaudin and Fontaine’s assumption opened themselves up to more concessions by not attaching conditions to the price adjustment. They could have countered with a reduction of the formula price on the condition of contract length.
The dynamic of a win-lose bargaining situation can cause negotiations to be exceedingly tense and volatile because only one side will gain at the end of these type of negotiations. This makes the concept of distributed bargaining controversial. Michael Wheeler, the author of the article, Three cheers for teaching distributive bargaining, discusses how many professors at an Academy of Management conference disapproved of distributive bargaining negotiation tactics. Wheeler explains, a huge majority of the attendees disapproved of exposing their impressionable pupils to the reality that in some negotiations, more for one party means less for the other” (Wheeler, 2012). The reluctance to teach the distributive bargaining tactic may be due to the fact that most teachings on negotiation skills are centered around the notion of all parties coming out of a deal with something they want.
Negotiations styles are scholastically recognized as being broken down into two general categories and those are distributive bargaining styles and integrative negotiation styles. Distributive bargaining styles of negotiation are understood to be a competitive type of negotiation. “Distributive bargaining, also known as positional bargaining, negotiating zero-sum, competitive negotiation, or win-lose negotiation, is a type or style of negotiation in which the parties compete for the distribution of a fixed amount of value” (Business Blog Reviews, 2011). This type of negotiation skill or style approach might be best represented in professional areas such as the stock market where there is a fixed goal in mind or even in a garage sale negotiation where the owner would have a specific value of which he/she would not go below. In contrast, an integrative negotiation approach/style is that of cooperative bargaining, or win-win types ...
Lewicki, R. J., Barry, B., & Saunders, D. M. (2007). Essentials of Negotiation. New York: McGraw-Hill/ Irwin.
Lewicki, R. J., Saunders, D. M., & Barry, B. (2010). Negotiation: Readings, exercises, and cases. New York: McGraw-Hill Irwin
Negotiation is the “process of bargaining in order to settle differences or solve a problem” (Engleberg and Wynn 182). It is also a nightcrawler’s main method of conflict management. Louis and other nightcrawlers have to negotiate with news stations to get the most money for their work. Like everything else that Louis deals with, he also pushes the boundaries of negotiation with Nina. He is aware that her station is the lowest performing in Los Angeles and that her contract is nearing its end period. He uses this information to negotiate and basically blackmail her into providing him a base payout for each footage submission, verbal credit to his company on-air, and even an intimate relationship. He does the exact opposite of what principled negotiation calls for. Principled negotiation is a process for resolving conflict that focus on “people, interests, options, and criteria” (Engleberg and Wynn 182). He provides only one solution for mutual gain, establishes a standard that Nina must agree with at the risk of losing her job, and instead of separating her from the problem, he directly associates her with
Negotiation approaches are generally described as either distributive or integrative. At the heart of each strategy is a measurement of conflict between each party’s desired outcomes. Consider the following situation. Chris, an entrepreneur, is starting a new business that will occupy most of his free time for the near future. Living in a fancy new development, Chris is concerned that his new business will prevent him from taking care of his lawn, which has strict requirements under neighborhood rules. Not wanted to upset his neighbors, Chris decides to hire Matt to cut his grass.