OVERVIEW OF PACIFIC OIL COMPANY CASE
Introduction of 2 parties involved
Founded in 1902 as Sweetwater Oil Company in Oklahoma City, Pacific Oil Company, originally led by E.M Hutchinson, played a pivotal role in the early 1900s Oklahoma oil rush Renamed in 1932, the company expanded significantly through growth and acquisitions during the 1920s and 1930s Following a consolidation phase in the 1940s and 1950s, Pacific Oil developed extensive oil holdings in North Africa and the Middle East, alongside significant coal resources in the western United States Today, Pacific Oil's production primarily supplies gasoline through various independent stations, and the company is recognized as one of the leading global producers of industrial petrochemicals.
Pacific's key industrial chemical product is vinyl chloride monomer (VCM), which is primarily made from ethylene and chloride VCM serves as the foundational element for a range of plastics collectively referred to as vinyl chlorides.
Polyvinyl chloride (PVC) is created through polymerization, where smaller vinyl chloride molecules are chemically bonded to form larger chains and networks This versatile material is then transformed into a wide range of consumer and industrial products, including flooring, wire insulation, electrical transformers, home furnishings, piping, toys, and containers.
In 1979, Pacific Oil established the first significant contract with the Reliant Corporation for the purchase of vinyl chloride monomer
Reliant is a leading industrial manufacturer specializing in wood and petrochemical products for the construction sector During negotiations, the company was focused on expanding its manufacturing capabilities for plastic pipes and fittings, especially in the European market This shift towards plastic is aimed at replacing traditional materials like iron and copper.
Reading 1.4 - Negotiation… Đàm phán vàQuản trị xun… None14 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
Jean Fontaine, the marketing vice president for Europe at Pacific Oil Company, and VCM marketing manager Paul Gaudin, played key roles in the contract renewal process, having developed a strong professional and personal rapport On the Reliant Chemicals side, Frederich Hauptmann, the senior purchasing manager for Europe, participated in the negotiations with Pacific Oil Company.
Initial contract
The Pacific Oil case, highlighted in Roy J Lewicki's "Negotiation: Readings, Exercises, and Cases," sixth edition, delves into a complex negotiation between Pacific Oil Company and Reliant Manufacturing This case study focuses on their discussions regarding a vinyl chloride monomer (VCM) contract during the early 1980s, illustrating the intricacies of corporate negotiations and strategic decision-making in the oil and manufacturing sectors.
In 1979, Pacific Oil secured a significant contract with Reliant Corporation for VCM, negotiated by senior executives from both companies' European offices This standard agreement, set to expire in December 1982, allowed Pacific Oil to leverage its strong position in the vinyl chloride market, enabling them to establish favorable terms with key customers like Reliant Manufacturing.
A renewal contract from 1982
As the initial contract approached its expiration date of December 31, 1982, discussions commenced to prolong the agreement Pacific Oil identified multiple reasons to support a price increase for their product, highlighting the need for a favorable adjustment in the contract terms.
Reliant was reportedly pleased with the quality and service from the initial contract, which enhanced Pacific Oil's position in negotiations Furthermore, global shortages in VCM supply have led to a surge in demand and escalating prices, a trend anticipated to persist in the coming years.
During the negotiation process, their strategy was about to focus on five main things
1 Concentrating on the value of successful long-term relationships they had built with Reliant
2 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
3 Highlighting all the instances in which Pacific made extra efforts in the past to guarantee delivery and service.
4 Determining a high formula price based on the past and future quality of the relationship
5 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
In 1985 and 1986, as the initial renewal contract approached its expiration, Pacific Oil sought to negotiate a new agreement to continue its partnership with Reliant Manufacturing, adopting a revised approach to ensure customer retention.
By December 1984, it was clear that earlier expectations about the supply and demand of VCM were incorrect, as supplies were projected to increase significantly rather than remain limited.
The introduction of VCM has diminished the value of existing contracts, prompting Pacific Oil to reassess its agreements with key clients like Reliant Corporation This reevaluation is crucial as several competitors are planning to build VCM manufacturing facilities expected to be operational within the next 20 to 30 months.
In light of the recent changes in supply and demand, Fontaine recognized the necessity of intensifying efforts to retain and re-sign their major clients They understood that nurturing relationships with high-demand customers, such as Reliant, is crucial for sustained success.
Pacific Oil is set to start manufacturing PVC and related products in the United States while maintaining its supply of raw materials However, the company must carefully consider its position, as supplying raw materials to a competitor could lead to conflicts of interest, especially unless the pricing is highly favorable To avoid potential issues, Gaudin and Fontaine need to act quickly.
ANALYSIS OF NEGOTIATION STRATEGIES APPLIED BY
Case summary
Pacific Oil's marketing vice president for Europe, Mr Fontaine, and VCM marketing manager, Mr Gaudin, decided to propose a new contract on two fronts: first, to renegotiate and extend the VCM contract with Reliant for five additional years, and second, to consult Pacific's headquarters regarding product development strategies related to the Reliant contract In early January 1985, before finalizing product development strategies, Fontaine and Gaudin reached out to Reliant's representatives to express their desire for a contract extension, highlighting the value of their past relationship and their mutual interest in fostering a strong future partnership.
On March 10, 1985, a preliminary meeting in Brussels marked the beginning of discussions between Fontaine and Gaudin regarding potential renegotiations of VCM pricing and commitments The focus was on coefficients to determine the VCM formula price, with Reliant proposing a reduction of 2 cents per pound, translating to a $4 million annual savings, aimed at enhancing Pacific's long-term competitiveness amidst anticipated market oversupply In response, Fontaine reaffirmed Pacific's commitment to competitive pricing and suggested further analysis After two months of correspondence, both parties ultimately agreed on a nearly 1 cent per pound price adjustment.
2.1.2 Negotiation on contract renewal period
In early June 1985, Gaudin from Pacific met with Hauptman from Reliant to address remaining issues and finalize a new contract The primary focus was the duration of the contract renewal, with Pacific advocating for a five-year extension while offering adjustments for market fluctuations However, Reliant insisted on a two-year commitment, citing concerns over volatile demand and competition After two months of negotiations, they ultimately reached a consensus on a three-year contract renewal.
2.1.3 Negotiation on minimum quantity purchase
On September 10, 1985, a meeting in Pacific’s Paris office saw Fontaine and Hauptman expressing their eagerness to finalize contract negotiations The discussion centered on minimum quantity requirements, with Pacific anticipating Reliant would increase its commitments by at least 10% annually However, Reliant projected a decrease in their current year's purchases, potentially leading to nearly $1 million in debt to Pacific After negotiations, both parties reached an agreement on a minimum purchase schedule of 205 million pounds for the first year, 210 million pounds for the second, and 220 million pounds for the third Additionally, Pacific agreed to waive any underlifting charges associated with the existing contract upon signing the new agreement.
2.1.4 Internal decision on Pacific’s product development strategies
After nearly a year of delays, Pacific's senior executives decided against developing their own VCM derivatives, a move that faced opposition from Fontaine He argued that without proprietary product lines, Pacific would struggle to market its basic products effectively in a volatile VCM market Despite his concerns, Fontaine's input was largely dismissed, and he was instructed to concentrate on his primary role of expanding new markets and customer bases for the product This decision frustrated him, as he felt valuable time was being wasted in the market development process.
2.1.5 Negotiation on reinstallation of meters
Following a comprehensive overview of the product development strategies, Pacific executives became increasingly motivated to finalize negotiations promptly in their upcoming meeting with Reliant representatives on December 14, 1985.
In a recent meeting, Reliant's executives expressed their desire to reinstall meters at their manufacturing facility to ensure accurate measurement of VCM, as they suspected leaks in the delivery pipeline This feedback was unexpected for Pacific, highlighting potential issues that could lead to costly repairs and service interruptions Fontaine was initially unable to verify the existence of leaks due to communication issues with the operating manager in Antwerp and the third-party inspection firm After a month-long investigation, Pacific found only minor leaks, approximately 0.1 percent of daily consumption, which was significantly lower than Reliant's estimates Ultimately, Pacific agreed to remeter the pipeline at a cost of $20,000, which was more economical than repairing the leaks.
2.1.6 Negotiation on two additional clauses
In February 1986, as the contract neared completion, Pacific encountered a significant request from Reliant for two additional clauses The first, a “favored nation” clause, ensured that if Pacific provided lower prices to other buyers, Reliant would receive those same rates The second clause, known as “meet competition,” required Pacific to match any lower prices offered by competitors for VCM These proposals were based on the assumption that Pacific valued its relationship with Reliant enough to secure the best terms After consulting senior executives, Fontaine was empowered to decide on the necessary adjustments to finalize the contract.
In March 1986, the negotiation process became more complex when Reliant sought the contractual right to resell its product if it could not meet the minimum usage requirements, potentially jeopardizing Pacific's position Reliant's offer stemmed from forecasts of significant declines in sales of its PVC products in Europe, raising concerns about its ability to utilize the minimum amount Despite Frank Kelsey, Pacific's strategic planning manager, advising against further concessions, Fontaine recognized the contract's importance and its potential impact on Pacific's performance He believed that the resale right was not a significant issue and empathized with Reliant's circumstances, yet acknowledged the need for immediate action to address the uncertainty surrounding the resale clause.
Factor analysis in the negotiation between pacific and reliant
There are several factors that affect the negotiation between 2 businesses as follows: a Companies position
Pacific Oil is recognized as one of the largest global producers of industrial petrochemicals, with a key focus on vinyl chloride monomer (VCM) VCM serves as the essential building block for a range of plastics known as vinyl chlorides The surge in demand for these chemicals has significantly contributed to the advancement of plastics, playing a vital role in global industrialization and everyday life.
Reliant Corporation was a key industrial manufacturer specializing in wood and petrochemical products for the construction sector The construction industry increasingly embraced plastic as a viable alternative to traditional materials like iron and copper pipes, particularly in more progressive European markets To capitalize on this trend, Reliant established a small polyvinyl chloride production facility in Abbeville, France, and Pacific constructed a pipeline linking its petrochemical plant in Antwerp to the Abbeville site.
Pacific Oil and Reliant have maintained a robust supply-demand relationship, with Pacific Oil supplying VCM to Reliant for several years Initially, Pacific held a strong position with favorable contract terms, including a high formula price and extended contract duration, due to a supplier shortage and high VCM demand However, market dynamics have shifted, creating challenges for Reliant as new competitors emerge If current contract terms remain unchanged, Reliant may consider alternative suppliers Conversely, Pacific Oil is struggling to find another buyer with demand comparable to Reliant's, placing them in a weaker position as they approach contract renewal negotiations.
Jean Fountain from Pacific Oil and Paul Gaudin from Reliant recognized the significant profitability and mutual benefits of their partnership, with both companies satisfied with the quality of service provided Their shared success fostered a desire for favorable renegotiation of their existing agreement The negotiations were facilitated by a mutual appreciation and acknowledgment of each other's roles, which cultivated a positive and collaborative attitude, demonstrating their commitment to adjusting terms for enhanced alignment.
Pacific Oil was contemplating entering the PVC manufacturing and distribution sector, positioning itself as a buyer in the VCM market and creating direct competition with Reliant Chemical This strategic decision was discussed in a meeting and was expected to become public knowledge To avoid complicating ongoing negotiations, Pacific Oil needed to make a timely corporate decision regarding PVC; any delay would risk being perceived as a competitor in the upcoming negotiations.
Pacific Oil and Reliant were eager to finalize negotiations swiftly to avoid disrupting their supply plans Pacific faced greater urgency due to its dependence on the contract with Reliant for revenue stability, compounded by the unpredictable future demand for VCM This urgency pushed Pacific to act quickly, fearing they might struggle to secure a favorable contract later In contrast, Reliant exhibited patience during negotiations, aiming to secure terms that would enhance their business benefits With agreements in place with two new potential suppliers, Reliant was well-prepared for any negotiation setbacks, positioning themselves favorably to negotiate optimal terms.
Extending the contract negotiation allowed Reliant to secure additional benefits, as Pacific was required to meet more conditions This strategy highlights the importance of thorough preparation to mitigate risks during contract discussions.
Both Reliant and Pacific Oil recognize the risks their businesses face and the potential losses associated with those risks, but they adopt different strategies in their preparations Reliant proactively seeks to amend contract terms and introduces new clauses to mitigate risks, exemplified by their insistence on remetering the pipeline to prevent potential losses from leaks In contrast, Pacific Oil tends to concede to unfavorable requests without negotiating better terms, illustrating a reactive rather than proactive approach to risk management This difference highlights Reliant's commitment to minimizing financial consequences, while Pacific Oil's willingness to compromise may expose them to greater risks.
The outcome of a negotiation is significantly influenced by the communicative style and emotional tone of the parties involved In the case study, both Pacific Oil and Reliant adopt a polite and patient approach; however, their tones differ Pacific Oil's gentle and accommodating tone reflects their weaker position, emphasizing the importance of a long-term relationship Conversely, Reliant's polite yet firmer language demonstrates their determination to secure favorable terms For instance, Pacific Oil states, “Gaudin said that if the changing market prices were a concern for Reliant, Pacific Oil would be happy to attempt to make adjustments,” showcasing their willingness to adapt.
Hauptmann insisted on discussing the terms with Fontaine and others in Paris before committing to a two-year contract Meanwhile, Pacific Oil demonstrated its commitment to a long-term partnership by frequently visiting Reliant's headquarters in Brussels.
Strategies analysis
2.3.1 General strategy employed by both parties throughout the negotiation:
The Compromising strategy entails both parties making concessions to find a balanced solution, making it effective when neither side can attain their ideal outcome This approach is particularly beneficial in situations that require a swift resolution, especially when time constraints are present.
Both parties highlighted their longstanding cooperation and expressed a desire for a long-term commitment, although the relationship is not absolute At that time, Pacific Oil was considering entering the PVC manufacturing and distribution sector, which would position them as a buyer in the VCM market and create direct competition with Reliant Chemical This decision could significantly impact Pacific Oil's relationship with Reliant, depending on the company's internal strategy Additionally, Reliant revealed discussions with two major chemical firms planning new VCM manufacturing facilities, suggesting they are ready to switch suppliers if the terms with Pacific become less favorable.
Despite potential conflicts with the company's headquarters, the outcome of the plans remains uncertain, making it essential to prioritize retaining Reliant as a customer due to their significant contribution to revenue Fontaine and Gaudin must continue negotiations with Reliant while awaiting updates from headquarters Both companies are eager to finalize the contract, with the Pacific side aiming for a swift process and Reliant seeking to modify contract terms Ultimately, both parties are willing to compromise on certain benefits during negotiations to achieve a mutually beneficial agreement, highlighting compromise as the key strategy in their discussions.
In every negotiated term, a subtle distinction in strategic preferences emerges between Pacific Oil and Reliant, with Pacific Oil favoring an accommodating approach while Reliant adopts a more competitive strategy.
2.3.2 Negotiating Strategy that Pacific Company mainly used: Accommodating (Lose - Win)
An accommodating negotiation strategy prioritizes the needs and preferences of the other party over one's own interests This approach is particularly effective when maintaining a positive relationship is deemed more important than achieving immediate outcomes.
The relationship between Pacific Company and Reliant Company is crucial, as Reliant is one of Pacific's key partners To strengthen this partnership, Fontaine and Gaudin have made significant efforts, including agreeing to remeter Reliant's pipeline despite incurring substantial losses for Pacific This ongoing concession can be attributed to Pacific Oil Company's weaker position compared to Reliant Chemical Company and the lack of thorough research and preparation for the negotiation process.
2.3.3 Negotiating Strategy that Reliant Company mainly used: Competitive (Win - Lose)
Competitive strategy is a proactive approach aimed at maximizing one’s own benefits, often at the expense of the other party This strategy proves effective when one side possesses significant bargaining power or when the stakes are particularly high However, excessive reliance on competitive tactics can jeopardize long-term relationships.
During the renegotiation process, Reliant Company made some concessions to Pacific Company, agreeing to a reduced formula adjustment of 1 cent per pound instead of the initially proposed 2 cents, and accepting a 3-year contract renewal instead of 2 years However, Reliant entered discussions with a strong understanding of the market, negotiating confidently without conceding beyond their initial offers They successfully amended key contract terms, including minimum quality, price, and duration, and even threatened to change suppliers if Pacific Oil did not agree to a more favorable price Additionally, they proposed two advantageous clauses: “favored nation” and “meet competition.”
2.3.4 Negotiation Tactics Pacific Company used
Harvard Business School Online Professor Mike Wheeler emphasizes the importance of transparency in negotiations, stating that revealing one's cards can lead to mutually beneficial outcomes By sharing goals, constraints, and priorities, parties can build rapport and promote an open, honest negotiating environment This approach was exemplified in December 1984 during the VCM contract review, where Pacific clearly communicated its desire to maintain a long-term partnership with Reliant, highlighting the significance of collaboration in successful negotiations.
Be prepared: Pacific made some careful preparations before the negotiation.
Fontaine and Gaudin conducted a thorough review of the background of their negotiating counterparts at Reliant Chemical Company, ensuring a deep understanding of the other party's business operations They also examined similar deals and prior agreements made between the two parties to inform their negotiation strategy.
Taking a time out during negotiations allows both parties to pause and regroup, enabling them to reflect on their positions When faced with intense pressure, Pacific strategically requests a break to alleviate tension, gather more information, consult with superiors or experts, and reassess their goals This brief intermission can help identify potential areas for concessions or lead to the development of new proposals.
2.3.5 Negotiation Tactics Reliant Company used
Making the first offer in negotiations, known as "anchoring," sets the stage by proposing favorable terms, conditions, or prices Reliant, having conducted thorough research before the March 10 negotiation, confidently presented offers aligned with key aspects of the previous contract, effectively framing the discussion to their advantage Despite this strategic positioning, they maintained flexibility and openness to adjustments for the Pacific Oil Company, ensuring a collaborative negotiation process.
In negotiation, the highball tactic involves one party presenting an initial offer that is much higher or more advantageous than their actual expectations This strategy is often employed to create room for concessions later in the negotiation process, allowing the party to adjust their demands while still aiming for a favorable outcome.
Reliant Chemical Company initially sought a price reduction of 2 cents per pound and a two-year contract renewal They also requested to purchase less than the current minimum due to future uncertainties, potentially leading to a $1 million debt for Pacific These demands placed Pacific in a challenging position, making it crucial that the outcomes of their next negotiation do not adversely impact Reliant Chemical Company.
Hauptman and Zinnser adopted a decisive "take it or leave it" strategy, demonstrating their confidence by threatening to switch suppliers if Pacific failed to meet their requirements Their readiness for this stance was rooted in a strong foundation of trust and assurance, particularly considering that Pacific acknowledged RCC as a significant partner in its history and future.
Evaluating the strength and weakness in the strategies applied by both parties
Taking quick, proactive steps based on supply and demand forecasts:
Pacific has proactively reviewed existing contracts and conducted market research ahead of negotiations Noticing a shift in the supply-demand balance, Fontaine and Gaudin approached Reliant for a timely contract extension, showcasing their proactive approach by consistently updating the contract status and anticipating Reliant's next moves Furthermore, prior to the meeting with Reliant, two Pacific representatives exchanged ideas to anticipate the terms for renegotiation and prepared effectively for the discussions.
Collaborative spirit and consideration for the other party's interests:
Fontaine and Gaudin engaged in active communication with Reliant through letters, phone calls, and in-person meetings during the persuasion process Pacific demonstrated a genuine concern for Reliant’s interests and made a concerted effort to comprehend the rationale behind Reliant's suggested changes to the terms.
Efforts to minimize loss for the company:
Fontaine and Gaudin consistently employed logical reasoning and evidence to address changes proposed by Reliant Company In a notable instance, they negotiated a reduction from Reliant's initial request of 2 cents down to just 1 cent This approach not only facilitated necessary adjustments but also ensured that Fontaine's decisions prioritized minimizing adverse effects on Pacific Company and safeguarding it against future fluctuations in PVC product prices.
Failure to acknowledge, resolve and or reconcile the changing interests of Reliant Chemical:
The market dynamics shifted, prompting Reliant to approach negotiations with thorough preparation to enhance their benefits, even considering partnerships with new suppliers for better terms In contrast, Pacific Oil mistakenly viewed the contract renewal as a simple renegotiation rather than a fresh negotiation, failing to foresee Reliant's new proposals like "favored nation" and "meet competition" clauses This oversight led to a passive response from Pacific, resulting in substantial concessions that jeopardized their position Additionally, Pacific miscalculated Reliant's expectations regarding the minimum quantity; instead of seeking an increase, Reliant aimed for a decrease, complicating the finalization of terms.
Collaboration with consultant Kelsey was minimal, resulting in insufficient information sharing that hindered her ability to understand the case and provide effective support Decision-making was centralized, with Fontaine and Gaudin deferring to their superiors, who then consulted Kelsey This lack of openness and teamwork within the company became particularly evident during negotiations, ultimately leading to the superiors allowing Fontaine to independently decide on the inclusion of two clauses.
Not clearly define their BATNA (Best Alternative to a Negotiated Agreement)
Pacific Oil's lack of a clearly defined BATNA (Best Alternative to a Negotiated Agreement) resulted in them making excessive concessions and adopting a weak negotiating position Despite feeling uncomfortable and surprised by Reliant's demands, Pacific Oil failed to assertively defend their proposals or establish clear boundaries against Reliant's requests, ultimately opting for easier concessions instead.
Lack of alignment with the internal strategy
The headquarters' delay in aligning the product development strategy with internal goals has significantly impacted Pacific Oil Company's market position Initially, there was a plan to develop VCM derivative products that could have positioned Reliant as a competitor However, the decision to halt this development after almost a year of research left Fontaine dissatisfied and resulted in wasted resources without any tangible outcomes.
Lack of control in technical issue
Pacific faced challenges in managing a technical issue, as the pipeline maintenance was outsourced to a third party This limited their ability to promptly assess any potential leaks and their severity Efforts to reach out to the third party or the operating manager were unsuccessful due to communication barriers.
The careful preparation and understanding of the market
Hauptman and Zinnser effectively analyzed PVC market trends, demonstrating a strong understanding of their negotiating position They identified potential new suppliers entering the market, which could provide PVC raw materials at lower prices This oversupply situation prompted Hauptman and Zinnser to request that Pacific Oil include favored nations and meet competition clauses in their contract, ensuring Reliant Company is protected against competitive pressures.
Hauptman and Zinnser, representatives of Reliant Chemical Company, demonstrated their meticulous approach by thoroughly questioning all key contract clauses during negotiations They successfully negotiated favorable changes, including a reduction in the formula price by 1 cent per pound and a decrease in the contract duration from 5 years to 3 years Additionally, their proactive stance was evident as they expressed concerns about potential leakages in the pipeline, highlighting their diligence and preparedness throughout the process.
Hauptman and Zinnser possess exceptional contract negotiation skills that effectively pressure other parties, enabling Reliant Company to maximize contract benefits Their unwavering stance in negotiations with Pacific Oil Company showcases their commitment to their proposals, regardless of persuasive attempts from the opposing side Additionally, they raised concerns about Pacific Oil Company's integrity and market fluctuations, prompting discussions about the costs incurred by Reliant Chemical Company in maintaining the tunnel that supplies raw materials between the two companies (Jung and Krebs, 2019).
Posing a potential risk to the long-term relationship
Hauptman and Zinnser have prioritized immediate contractual benefits, focusing on favorable price and timing terms Their insistence on discussions that could elevate Pacific's manufacturing operational costs, alongside demands for meter point transfers and piping system inspections before extending the contract, has created rigidity in negotiations This approach has placed Pacific Oil Company in a challenging position, potentially jeopardizing their long-term relationship.
RECOMMENDATIONS & LESSONS LEARNED
Lesson learned
The negotiation strategies of Pacific Oil and Reliant reveal key insights into effective negotiation practices Pacific Oil showcased strengths such as a solid grasp of its BATNA and an openness to innovative solutions However, the company also faced challenges, including insufficient preparation and ineffective communication during negotiations.
To achieve successful negotiation outcomes, thorough research and preparation are crucial, along with a clear understanding of both parties' interests and constraints Pacific Oil's lack of preparation led to unfavorable concessions, while Reliant's proactive risk management strategies, including new contract clauses, showcased their readiness to adapt Building strong relationships through a collaborative approach can yield mutually beneficial results, emphasizing the importance of defining a clear BATNA (Best Alternative to a Negotiated Agreement) Pacific Oil's failure to establish their BATNA resulted in significant losses, highlighting the necessity for firms to recognize when to say "no" and seek alternatives Finally, adaptability and flexibility are vital in negotiations, as both parties must be willing to adjust their strategies in response to evolving market conditions, as demonstrated by Pacific Oil and Reliant's willingness to renegotiate terms amid changing supply and demand dynamics.
In summary, flexibility and adaptability are crucial for businesses to successfully navigate the complexities of the corporate landscape These qualities allow firms to effectively respond to evolving conditions, foster strong relationships, and enhance the value of their negotiations while managing risks and maintaining ethical standards.
The negotiation case between Pacific Oil Company and Reliant highlights the significant impact of strategic approaches on negotiation outcomes This case exemplifies the complexities of business negotiations, emphasizing the need for careful preparation, evaluation of existing relationships, and resource assessment to achieve successful results The insights gained from this negotiation are beneficial not only for aspiring business students but also for individuals in any field that requires effective communication and social interaction By studying the negotiation tactics employed by Pacific Oil and Reliant, business students can acquire valuable real-world experience that will enhance their future career prospects.
The authors express their gratitude to Mrs Vu Thi Bich Hai for her invaluable support in developing the report's outline and enhancing their understanding of negotiation They hope that this report will provide fellow students with deeper insights into the case, facilitating a more effective and enriching study experience.
1 Lewicki, Roy J, et al New York, Ny, Mcgraw-Hill Education, 2020.
2 Proc 5840 Pacific Oil Case Study - Term Paper
3 Pacific Oil and Reliant: a good example of negotiating without the 7-step process.
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