(Tiểu luận) group 7 project reportcase study on pacific oil company

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL AND BUSINESS -*** - GROUP PROJECT REPORT CASE STUDY ON PACIFIC OIL COMPANY Group members : Phạm Thị Bích Hằng - 2112150068 Nguyễn Hà My - 2112550033 Đỗ Hoàng Dương - 2113150017 Nguyễn Đ Thùy Dương - 2113150019 Trần Bảo Châu - 2113150012 Bùi Thị Hà Yên - 2113550022 Lê Thu Hà - 2112150061 Trần Minh Nguyệt – 2112150129 Nguyễn Anh Dũng - 2112150041 Class: KDOE302 (HK1 - 2324)1.1 Teacher: Dr Vu Thi Bich Hai Hanoi, September 2023 TABLE OF CONTENTS INTRODUCTION PART 1: OVERVIEW OF PACIFIC OIL COMPANY CASE 1.1 Introduction of parties involved 1.2 Initial contract .5 1.3 A renewal contract from 1982 .5 PART 2: ANALYSIS OF NEGOTIATION STRATEGIES APPLIED BY BOTH PARTIES 2.1 Case summary 2.1.1 Negotiation on formula price 2.1.2 Negotiation on contract renewal period 2.1.3 Negotiation on minimum quantity purchase 2.1.4 Internal decision on Pacific’s product development strategies 10 2.1.5 Negotiation on reinstallation of meters .10 2.1.6 Negotiation on two additional clauses 10 2.1.7 Negotiation on resale clause 11 2.2 Factor analysis in the negotiation between pacific and reliant 11 2.3 Strategies analysis 15 2.3.1 General strategy employed by both parties throughout the negotiation:15 2.3.2 Negotiating Strategy that Pacific Company mainly used: Accommodating (Lose - Win) .16 2.3.3 Negotiating Strategy that Reliant Company mainly used: Competitive (Win - Lose) 16 2.3.4 Negotiation Tactics Pacific Company used 17 2.3.5 Negotiation Tactics Reliant Company used 18 2.4 Evaluating the strength and weakness in the strategies applied by both parties 19 2.4.1 Pacific Oil 19 2.4.2 Reliant 22 PART 3: RECOMMENDATIONS & LESSONS LEARNED 24 3.1 Improvements: What should Pacific Oil have done in their deliberations to negotiate more effectively? .24 3.2 Lesson learned: 30 CONCLUSION 32 REFERENCE 33 INTRODUCTION Negotiation is unavoidable in all aspects of life It is a common, yet crucial activity used by people everyday to achieve their personal purposes People’s objectives may range from resources, time, to information, relationship, and support Individuals’ needs are sometimes distinctive and sometimes similar to each other Taking one's own needs and others’ needs into account, negotiation is fundamental in benefiting both parties and contributing to a more successful, prosperous life In business specifically, mastering negotiation is imperative for a profitable and sustainable venture From the simplest activity of bargaining for a cheaper, more reasonable price when shopping in the market, to discussing and bringing about enterprises’ business contracts, negotiation often plays a deciding role For students majoring in International Business Economics, honing negotiating techniques is even more important as these skills will pave the way for them to become a top businessperson In this report, a negotiation case between a supplier (a chemical manufacturing company) and a purchaser (a chemical purchasing company) in signing a contract will be presented with a view to analyzing relevant negotiating strategies used, proposing potential solutions to resolve the conflict, and extracting valuable experiences and lessons for prospective sides in future scenarios The case, named Pacific Oil Company, is prepared by Roy J Lewicki and featured in the book “Negotiation: Readings, Exercises, and Cases” It examines the negotiation process of Pacific Oil Company, a chemical manufacturing company, and Reliant Corporation, a manufacturer of wood and petrochemical products In this case, Pacific Oil Company is the supplier of VCM (vinyl chloride monomer) - a chemical used in manufacturing petrochemical products, and Reliant is the buyer of VCM Throughout the case, with applications of negotiation techniques, each having its own strengths and weaknesses, in discussing the terms and conditions of a potential supply contract, one party can be seen gaining more and more advantages and subduing the other party’s stance in the negotiation The report will provide an in-depth analysis of the case, evaluating each party’s position and strategies used, before summarizing potential recommendations and implications Petrochemical Supply Contracts: A Technical Note Before tackling the negotiation case, it is important to understand the background of supply contracts between chemical manufacturing/refining companies and purchasing companies This part of the report is based on the appendix “Petrochemical Supply Contracts: A Technical Note” In general, supply contracts protect suppliers and purchasers against the fluctuations of the market price On the front side of the contract are negotiable elements of the contract On the back side of the contract is fixed legal terminology, seldom changed The formula price is composed of: Feedstock characteristics, Fuel costs, Labor costs, and Commodity costs Each element is multiplied by a weighting coefficient that specifies how much each cost will contribute to the overall formula price The supplier generally sets a ceiling price The final formula price looks like this: Formula price = (Weighting coef * Feedstock costs) + (Weighting coef * Energy costs) + (Weighting coef * Labor costs) + (Weighting coef * Commodity costs) Advantages of a supply contracts include minimizing the risks of both parties in the event of rapid cost changes, as well as the price transparency for both sides Disadvantages of a supply contract are also present For sellers, it constrains them from setting a higher price than the ceiling price if market demand is very high, hence curtailing potential profit For suppliers, it makes production unprofitable for the supplier if market demand is very low (at least the contract guarantees a market to the supplier) Quantity Formula prices are computed with major attention given to quantity Suppliers must determine the quantities that a customer will want to acquire Quantity specifications are treated as minimum purchase amounts There are important terms: Over-lifting: A purchaser desires more than the minimum amount If the amount desired is significantly more than the minimum amount, there can be discount prices Under-lifting: is the reverse of over-lifting There will be penalty costs to the purchaser, called liquidated damages The purchaser can handle under-lifting in the following ways: Pay the under-lifting charges Not pay the under-lifting charges, assuming that the supplier will not press legal charges against the purchaser, endangering the contract Resell the commodity to another purchaser This can cause major instability in the market price and supply contracts Therefore, sellers prevent the right of purchasers to resell the products in the contract As for Quality, Delivery, Contract duration, and Payment terms, readers can refer to the book for more information Contract language: is the elements in the contract that illustrate the conditions under which both parties agree to bind themselves to the contract Contract management and maintenance: A good seller-buyer relationship meets the following criteria: The purchaser can be counted on to live up to the terms and conditions of the contract as negotiated The purchaser does not attempt to take advantage of fluctuations or aberrations in the spot market price to gain advantage When there is a mutual problem between seller and purchaser, it can be openly discussed and resolved between the parties Document continues below Discover more from:phán Đàm Quản trị xung đột KDOE302 Trường Đại học… 11 documents Go to course Negotiation - đàm 28 tài liệu Đàm phán Quản trị xun… None 2011 Getting to Yes 192 Negotiating… Đàm phán Quản trị xun… None Đàm phán ck - tổng 33 hợp Đàm phán Quản trị xun… None Sách giáo trình 49 Đàm phán Quản trị xun… None Homework - Cô Thu Hiền CLC Đàm phán Quản trị xun… PART 1: OVERVIEW OF PACIFIC OIL COMPANY CASE Reading 1.4 1.1 Introduction of parties involved 14 Pacific Oil Company: None - Negotiation… Đàm phán Quản trị xun… None Pacific Oil Company was founded in 1902 as the Sweetwater Oil Company of Oklahoma City, Oklahoma The founder of Sweetwater Oil, E.M Hutchinson, pioneered a major oil strike in north central Oklahoma that touched off the Oklahoma “black gold” rush of the early 1900s Through growth and acquisition in the 1920s and 1930s, Hutchinson expanded the company and renamed it Pacific Oil in 1932 After a period of consolidation in the 1940s and 1950s, the company expanded and developed extensive oil holdings in North Africa and the Middle East, as well as significant coal beds in the western United States Much of Pacific’s oil production is sold under its own name as gasoline through several chains of independent gasoline stations In addition, Pacific is also one of the largest and bestknown worldwide producers of industrial petrochemicals One of Pacific’s major industrial chemical lines is the production of vinyl chloride monomer (VCM), with the basic components being ethylene and chloride VCM is the primary component of a family of plastics known as the vinyl chlorides It is subjected to the process of polymerization, in which smaller molecules of vinyl chloride are chemically bonded together to form larger molecular chains and networks As the bonding occurs, polyvinyl chloride (PVC) is produced Through the manufacturing process, the plasticized polyvinyl chloride is converted to an enormous array of consumer and industrial applications: flooring, wire insulation, electrical transformers, home furnishings, piping, toys, bottles and containers, etc In 1979, Pacific Oil established the first significant contract with the Reliant Corporation for the purchase of vinyl chloride monomer The Reliant Corporation: It is a major industrial manufacturer of wood and petrochemical products for the construction industry At the time the negotiation happened, Reliant was expanding its manufacturing operations in the production of plastic pipe and pipe fittings, particularly in Europe The use of plastic as a substitute for iron or copper pipe was gaining rapid acceptance in the construction trades and the European markets were significantly more progressive in adopting the plastic pipe Reliant had already developed a small polyvinyl chloride production facility at Abbeville, France, and Pacific constructed a pipeline from its petrochemical plant at Antwerp to Abbeville Representatives from the Pacific Oil Company involved in the contract renewal process were Jean Fontaine - Pacific Oil’s marketing vice president for Europe and VCM marketing manager, Paul Gaudin Fontaine and Gaudin had worked well in their short time together, establishing a strong professional and personal relationship From the Reliant side, Frederich Hauptmann, the senior purchasing manager for Reliant Chemicals in Europe participated in the contract negotiations with Pacific Oil Company 1.2 Initial contract The Pacific Oil case, featured in "Negotiation: Readings, Exercises, and Cases" by Roy J Lewicki, sixth edition, McGraw Hill International Edition, presents a complex negotiation scenario between Pacific Oil Company and Reliant Manufacturing It examines the case study of Pacific Oil Company and its negotiations with the Reliant Corporation concerning a vinyl chloride monomer (VCM) contract in the early 1980s In 1979, Pacific Oil solidified its first major contract with the Reliant Corporation for the purchase of VCM This groundbreaking agreement was negotiated by high-ranking personnel from both companies' European offices, who reported directly to their respective corporate headquarters in the United States The contract was fairly standard in nature and set to expire in December 1982 In the beginning, Pacific Oil held a strong position in the vinyl chloride market, which made it relatively easy for them to formulate favorable terms with customers like Reliant Manufacturing 1.3 A renewal contract from 1982 As the initial contract neared its expiration, negotiations began to extend the agreement beyond December 31, 1982 From Pacific Oil's perspective, there were several factors justifying a favorable price increase for their product Firstly, it was believed that Reliant had been satisfied with the quality and service provided under the initial contract, further strengthening Pacific Oil's standing in negotiations Additionally, shortages in VCM supply on a global scale prompted increasing demand and continuously rising prices—a trend that was not expected to reverse in coming years During the negotiation process, their strategy was about to focus on five main things Concentrating on the value of successful long-term relationships they had built with Reliant Emphasizing all of the projections that predicted the worldwide shortage of VCM and the desirability for Reliant to ensure that they would have a guaranteed supplier Highlighting all the instances in which Pacific made extra efforts in the past to guarantee delivery and service Determining a high formula price based on the past and future quality of the relationship Last but not least, they wanted to emphasize that Reliant would not be able to find a better partner with better price and services The outcome of these negotiations culminated in a highly favorable contract for Pacific Oil On October 24, 1982, both parties signed an extended agreement that would last from January 1983 through December 1987 After the period of the first renewal contract, as their agreement came up to expire, in 1985 and 1986, Pacific Oil aimed to negotiate for another renewal to retain Reliant Manufacturing as a customer with a changed perspective Firstly, By December 1984, it became apparent that previous assumptions regarding VCM supply and demand were not holding true Instead of remaining scarce, supplies were anticipated to expand rapidly This newfound abundance in was that they treated this contract renewal as merely a renegotiation, not as a completely new negotiation Pacific Oil failed to anticipate the new terms proposed by Reliant such as: “favored nation” and “meet competition” clauses, leading to a passive response and ultimately resulting in significant concessions that posed a considerable risk to Pacific Oil Another time, Pacific Oil misjudged Reliant's expectations regarding the minimum quantity Instead of wanting to increase the annual minimum quantity, Reliant actually aimed to decrease it, and they faced significant difficulties in finalizing the terms Communication problems: Another problem is that when working with the consultant Kelsey, they didn't collaborate much and were reluctant to share more than the minimum amount of information This led to the issue that the consultant couldn't fully understand the case to provide adequate support Whenever a decision needed to be made, Fontaine and Gaudin would ask their superiors, who in turn would consult with Kelsey Inside the company, they didn't seem to be open and teamwork appeared to be lacking Specifically, during the negotiation process, in the end, the superiors decided to let Fontaine weigh and decide for himself about adding the two clauses Not clearly define their BATNA (Best Alternative to a Negotiated Agreement) They hadn't clearly defined their BATNA (Best Alternative to a Negotiated Agreement), leading to conceding in every concession and putting themselves in a weak, uncompromising position Many times, Pacific Oil did not feel comfortable with Reliant's requests, and they were even astonished However, instead of taking a firm stance to defend their own proposals and clearly specifying the points where Reliant couldn't make larger demands, Pacific chose the path of easy concessions Lack of alignment with the internal strategy Another issue is their lack of alignment with the internal strategy The headquarters delayed the product development strategy by almost a year Initially, they planned to develop VCM derivative products, which could potentially make Reliant a competitor However, later on, they decided not to proceed with this 21 product Fontaine was not satisfied with this decision, and it wasted an additional year of research without achieving anything, impacting Pacific Oil Company's position in the market Lack of control in technical issue Pacific couldn't control the technical issue that arose The maintenance of the pipeline was handled by a third party, so they couldn't immediately track whether the pipeline was leaking and the extent of the leak Contacting the third party or the operating manager was also ineffective because they couldn't establish immediate communication 2.4.2 Reliant a Strength The careful preparation and understanding of the market Hauptman and Zinnser were capable of analyzing the PVC market trends They have a good understanding of the market, so they know their negotiating position well They discovered the possibility of the emergence of new companies that could supply them PVC raw material at a low price The oversupply possibility for PVC material did result in Hauptman and Zinnser demanding Pacific Oil to incorporate the favored nations and meet competition clauses within the contract that offer protection to Reliant Company against the competition Their carefulness is shown in the fact that Hauptman and Zinnser, the representatives of Reliant Chemical Company, did question all the main contract clauses during the entire negotiation process And in every term, they managed to gain changes in their favor compared to the previous contract (e.g., the formula price decreased by cent per pound, and the contract period was reduced from years to years) Moreover, they even raise their concern towards leakages in the pipeline, showcasing their extreme caution and well-preparedness The firmness in negotiation Hauptman and Zinnser hold unique contract negotiation skills that exert pressure on other parties allowing Reliant Company to reap maximum benefit from 22 the contract Reliant is very adamant in all the negotiations No matter how the Pacific Oil Company tries to convince them, they remain steadfast with the proposals they put forward Also, Hauptman and Zinnser did raise uncertainty on Pacific Oil Company integrity and market fluctuations The integrity concern led to a discussion on the costs that Reliant Chemical Company incur while maintaining the tunnel that facilitates the supply of raw materials between the companies (Jung and Krebs (2019)) b Weakness Posing a potential risk to the long-term relationship Hauptman and Zinnser have been overly focused on negotiating for immediate benefits, specifically in securing terms related to price and timing in the contract that are most advantageous to them Hauptman and Zinnser derailed the signing of a new contract by intentionally raising discussions that would increase the operational costs of the Pacific manufacturing process and demanded the transfer of meter points and inspection of the piping system that connects the two companies before signing the contract extension This has made them somewhat unyielding in their dealings with Pacific Oil Company, pushing the other party into a difficult position and posing a potential risk to the long-term relationship 23 PART 3: RECOMMENDATIONS & LESSONS LEARNED 3.1 Improvements: What should Pacific Oil have done in their deliberations to negotiate more effectively? a Comprehensive Pre-Negotiation Planning: The Pacific Oil negotiation team failed to adequately prepare for the Reliant Chemical negotiation despite a changing market perspective Pacific Oil's lack of preparation left them in a defensive negotiating position and was not prepared to address the concerns and requests that Reliant brought up during the negotiation Therefore, it is essential that Pacific Oil team conduct a comprehensive prenegotiation planning: Assess the value of the relationship with Reliant and the potential impact of concessions on Pacific Oil's profitability and market position Conduct an extensive market analysis, considering historical data and current projections for VCM supply and demand, price trends, and competitor actions over the next few years Engage industry experts or consultants to provide an in-depth market assessment, including an analysis of Reliant's expansion plans Anticipate Reliant’s challenges if changing its supplier in the short run such as new contract negotiation cost, VCM quality control and assessment, pipeline construction cost…) and the fluctuation of VCM supply-demand situation in the long run to maintain a strong position in the negotiation with Reliant b Set Clear Objectives and define BATNA (Best alternative to a negotiated agreement): Once Reliant proposes a demand and Pacific Oil Company accommodates that desire, Reliant seeks an additional request Pacific seems incapable of holding firm in its negotiations If Pacific Oil Company had outlined its bottom line demands in advance; it would be more capable of forcing Reliant to back down from making unreasonable demands: 24 Define clear negotiation objectives and priorities What are the "must-haves" and "nice-to-haves" in the contract? Establish a walk-away point to avoid making concessions that could be detrimental to Pacific Oil's interests Ensure that all negotiators understand and adhere to the established objectives and walk-away points Avoid making last-minute concessions due to pressure or perceived urgency c Stay cool and collected, even when high stakes are involved: Pacific Oil’s negotiators express worries of losing an important customer by emphasizing the significance of a long-term business relationship during negotiations The expressions signal the representative of Reliant Chemical Companies how valuable they were to the Pacific Oil Company During negotiation, parties should not show the signs of fears or worries of losing a client because the customer might decide to take advantage of the situation and compromise the discussion d Strengthen Bargaining Power: Identify and leverage strengths, such as Reliant's dependence on Pacific Oil as a supplier or Pacific Oil's reputation for reliability and quality Clearly articulate Pacific Oil's value proposition, emphasizing factors like product quality, reliability, and long-term commitment Emphasize the long-standing, mutually beneficial relationship between Pacific Oil and Reliant in negotiation discussions Provide specific examples of past successes, cost-saving initiatives, and collaborative efforts that showcase the value of the partnership e Contractual Clauses Evaluation: Conduct a comprehensive cost-benefit analysis of the "favored nations" and "meet competition" clauses 25 Evaluate potential financial implications, considering the impact on Pacific Oil's profitability and long-term competitiveness Explore alternatives such as incorporating pricing adjustment mechanisms based on market conditions rather than fixed clauses Reasons Pacific Oil should reject the "favored nation" and "meet competition" clauses: Potential costs: Agreeing to these clauses may involve financial implications, such as matching competitors' prices, which could impact profitability Complexity: Implementing and managing these clauses can add administrative complexity to the contract and require ongoing monitoring and adjustments Precedent setting: Accepting these clauses may set a precedent for other customers to request similar terms, potentially leading to further concessions in future contracts Market stability: If Pacific Oil believes that market conditions are relatively stable and that the risk of dramatic price changes is low, they may argue that such clauses are unnecessary Refusing the "favored nation" and "meet competition" clauses while maintaining a good relationship with Reliant Manufacturing: Understanding Reliant's Concerns: Ask Reliant to elaborate on their concerns regarding market fluctuations and price competitiveness Listen attentively to their perspective Show empathy and understanding of their position, acknowledging that both companies want a mutually beneficial contract Alternative Solutions: Instead of accepting the "favored nation" and “meet competition” clause, propose alternative solutions that can address Reliant's concerns For example: 26 Offer a price adjustment mechanism that reflects market changes but doesn't automatically match competitors' prices Suggest periodic contract reviews and adjustments to ensure competitiveness without the need for automatic matching Value Proposition: Highlight Pacific Oil's commitment to quality, reliability, and customer service Emphasize that the company's value extends beyond price competitiveness Long-Term Relationship: Reiterate Pacific Oil's commitment to a long-term relationship with Reliant Stress the importance of trust and cooperation for the partnership's longevity Mention any future initiatives or investments that Pacific Oil plans to make to support Reliant's needs Financial Considerations: Explain financial constraints that prevent Pacific Oil from accepting these clauses Be transparent about these limitations with Reliant f Pipeline Metering Resolution: The parties should have engaged in sharing the cost of constructing and metering the pipeline: Propose a joint inspection of the pipeline by both Pacific and Reliant to assess the validity of metering concerns Consider sharing the costs of pipeline assessment and repairs, to maintain a fair and efficient solution to the pipeline-related problems g Using a Mediator: In most cases, a mediator will encourage both parties to focus on the important issues, and defer discussion of non-vital parts of the agreement until later in the negotiation process 27 If a mediator had been used in the negotiation between Pacific and Reliant, the core issues would have been discussed more quickly, and alternative options would have been discussed initially rather than having parties defer each new issue to another meeting This would have allowed Pacific to be more prepared during each meeting, rather than surprised with each new request It also may have helped Pacific view a better perspective of the situation so they could be more aware of the full scope of Reliant Manufacturing’s demands h Preparing contingency plan: Develop contingency plans to address unexpected market disruptions, supply chain issues, or changes in demand Outline specific steps to be taken in response to various scenarios, ensuring business continuity and risk mitigation i What should Pacific Oil next regarding the “resell” clause in contract and the remaining meetings of the negotiation? Pacific Oil should reject or set strict conditions for the “Resell” clause: Market analysis: Pacific Oil should thoroughly evaluate the reliability of Reliant's market analysis and projections before making a decision Potential financial impact: Reselling unused product could result in a financial loss for Pacific Oil if the resale price is lower than the contracted price, particularly if market conditions worsen Potential loss of customers: Reliant could essentially control the prices of the product, sell it to potential Pacific clients, thus eliminating any future revenue streams Precedent setting: Granting this concession might set a precedent for future contracts, leading other customers to request similar terms Loss of control: Allowing “resale” may lead to a loss of control over where the VCM ends up and how it's used, potentially affecting Pacific Oil's reputation or compliance with regulations 28 How Pacific Oil can negotiate the “Resell” clause: Understand Reliant's Concerns: - Begin by listening carefully to Reliant's concerns and the reasons behind their request to have the contractual right to resell unused products - Ask for detailed information on their sales projections, market conditions, and any potential challenges they foresee in using the minimum quantity Share Market Analysis: - Present the findings of Pacific Oil's comprehensive market analysis, including data on VCM supply and demand trends, price projections, and competitor actions - Use this analysis to demonstrate that Pacific Oil's position is based on a thorough understanding of the market dynamics Negotiate Resale amount: - Propose a compromise that allows for some flexibility in the contract regarding reselling unused products - Suggest the possibility of allowing Reliant to resell a portion of the unused product, up to a certain percentage or volume, or maximum resale amount within a defined timeframe Consider Pricing Adjustments: - Explore alternatives to address Reliant's concerns without compromising Pacific Oil's profitability - Discuss the potential for pricing adjustments or rebates based on actual purchase volumes and market conditions, ensuring fairness to both parties - For example, set conditions for Reliant to resell VCM with the same price as Pacific to avoid pushing the firms into competing positions Monitoring and Reporting: - Propose a mechanism for monitoring and reporting unused product quantities to ensure transparency and compliance - Establish procedures for tracking and verifying any resale activities undertaken by Reliant 29 3.2 Lesson learned: After a thorough analysis of the negotiation strategies employed by Pacific Oil and Reliant in the Pacific Oil and Reliant case, several valuable lessons can be gleaned from their experiences Pacific Oil demonstrated several strengths in its negotiation approach, including a clear understanding of its BATNA (Best Alternative to a Negotiated Agreement) and a willingness to explore creative options However, it also displayed certain weaknesses, such as inadequate preparation for the negotiation and a lack of effective communication throughout the process To improve negotiation outcomes, it is essential for parties to conduct comprehensive research and preparation, thoroughly understand their own and the other party's interests and constraints, and maintain open and transparent communication Other than that, parties should conduct thorough risk assessments and take into account various scenarios and contingencies, especially when negotiating complex deals Like in this case, Pacific Oil entered into negotiation expecting a similar turnout to the previous contract extension without preparing carefully to fight back to make it fair for both sides As a result, Pacific Oil always took a backseat and let Reliant win every available concession On the other hand, Reliant, when aware of VCM supply’s rapid growth, has prepared a number of solutions to minimize risks on their sides such as suggesting two new clauses in the contract protecting them in the event of further slippage in the VCM market Additionally, one critical lesson is the value of relationship building in negotiations Pacific Oil's initial focus on securing a long-term partnership with Reliant allowed for a more cooperative approach It can be seen that embracing a collaborative approach rather than a competitive one can foster more positive and mutually beneficial outcomes and future opportunities for collaboration At the same time, firms should define their BATNA (Best Alternative to a Negotiated Agreement), which represents the minimum acceptable outcome you are willing to 30 accept if the negotiation doesn't reach a favorable agreement Once the other party's offers fall below your BATNA, it may be time to stop making concessions and consider other options In this case, Pacific Oil does not identify their BATNA clearly and takes no firm actions in response to proposals made by Reliant, which leads to their big loss in the contract Therefore, while most firms use win-win strategies when negotiating and prioritize collaborative relationships, it is extremely essential for every firm to set a clear BATNA and learn to say “no” when the terms proposed by the other party exceed your BATNA and find other alternatives Last but not least, being adaptable and flexible is quite important when it comes to negotiation Negotiations rarely follow a predefined script, requiring both parties to be prepared to adjust their strategies and explore alternative solutions as the negotiation evolves For example, in this case, In response to the change in the supply - demand of VCM, both Pacific Oil and Reliant demonstrated flexibility Pacific Oil recognized that the original terms of the contract were no longer favorable due to the increased oil prices, which would have made their deal less profitable They adjusted their strategy and were open to renegotiating the terms of the contract to reflect the new market conditions On the other side, Reliant also showed flexibility by understanding the predicament of Pacific Oil and being willing to adapt their pricing structure to accommodate the changing circumstances In conclusion, flexibility and adaptability in negotiations are essential for firms to navigate the complexities of the business world successfully They enable firms to respond effectively to changing conditions, build strong relationships, and maximize the value of their negotiations while managing risks and upholding ethical standards 31 CONCLUSION The negotiation case between Pacific Oil Company and Reliant might have ended with or without leaving either side at an overwhelmingly advantageous situation, illustrating how each strategy applied, each approach taken by both parties can have a massive influence on the outcome of the negotiation The Pacific Oil Company case is a prime instance of how negotiation is applied in business, brimming with opportunities and threats which require careful consideration and preparation, evaluation of existing relationships and resources, and much more, in order to achieve the desired outcome The lessons learned from this negotiation case will benefit not only aspiring business students, but also students of any major requiring communication and social interactions on a daily basis For business students, understanding thoroughly the way Pacific Oil and Reliant negotiated for the supply contract can provide invaluable real-life negotiating experience, helping them come a long way in future professions This report could not have been completed without assistance in the making The authors of the report would like to thank Mrs Vu Thi Bich Hai for providing necessary explanations and aiding the group in constructing the report’s outline, as well as supplying the authors with sufficient knowledge in negotiation Finally, the authors hope that other students studying negotiation can gain a deeper understanding of the case, have an easier and more effective time studying, and benefit from reading this report in general REFERENCE 32 Lewicki, Roy J, et al New York, Ny, Mcgraw-Hill Education, 2020 Proc 5840 Pacific Oil Case Study - Term Paper Pacific Oil and Reliant: a good example of negotiating without the 7-step process 33 More from: Đàm phán Quản trị xung đột KDOE302 Trường Đại học… 11 documents Go to course Negotiation - đàm tài 28 192 liệu Đàm phán Quản trị xun… None 2011 Getting to Yes Negotiating… Đàm phán Quản trị xun… None Đàm phán ck - tổng 33 hợp Đàm phán Quản trị xun… None Sách giáo trình 49 Đàm phán Quản trị xun… Recommended for you None 124 Tieng anh a2 20cau full - Quy trình luân… Báo cáo khoa học 100% (1) KLE - BIG4 Practice 23 TEST accounting 100% (2) BÀI TẬP PBI CƠ BẢN 64 113 - Bài tập PBI bản… Báo cáo khoa học 100% (2) Luận văn kế toán học viện tài bằng… accounting 100% (4)