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The Pacific Oil Company Case Study

1097 words - 5 pages

Introduction
This paper will describe the problem that Pacific Oil Company faced as it reopened negotiations with Reliant Chemical Company in early 1985. Secondly I will identify and evaluate the styles and effectiveness of Messrs, Fonatine, Guadin, Hauptmann, and Zinnser as negotiations in this case. Finally I will outline what Frank Kelsey recommend to Jean Fontaine at the end of the case? Why?
Managing Conflict in Negotiation
The Pacific Oil Company went into negotiations with Reliant Manufacturing, and its goal was to sign a more long-term agreement prior to the contract ending in three years. Pacific anticipated that the new contract would be signed with no major obstacles or changes, and that the dominant point of negotiation would be price and potentially quantity. Jean Fontaine, who is the marketing vice president for Pacific Oil, went into a negotiation process with Reliant. Fontaine started the process several years before Reliant Manufacturing’s contract was up, positively hopeful to beat her competition to the lower price offers and leave with a contract extension of five years. Unfortunately, Pacific did not properly research and do their homework on her client’s needs or adequately analyze what the long-term outcome might be. Pacific Oil Company was not prepared to address the concerns and requests that Reliant brought up during the negotiation. Though both parties wanted to move quickly toward signing a contract, Pacific Oil Company lengthened this process because it did not have a well-planned negotiation strategy that included a contingency plan or best alternatives. It seemed like going into the negotiation phase it was a win situation for Pacific touting their long-term relationship in the past with Reliant and did not forecast what the potential market would look like in the near future or potential what each company would endure with competition heating up and the PVC industry changing with more competition and increase in demand globally.
Styles of the Negotiators
Both Fontaine and Gaudin seemed overzealous on getting Reliant to extend their contract although they had three years for the contract to be up for renewal. On the other hand, Hauptmann indicated that Reliant wanted to renegotiate the current agreement, but over stated their supply throughout the negotiation. Also, they communicated to Pacific they only wanted to make a commitment for a two-year contract renewable. But the style of Frederich Hauptmann’s, senior purchasing manager for Reliant Chemicals in Europe, negotiation tactics was that of power. He was only brought in four weeks prior to the Pacific and Reliant contract talks. Hauptmann stated that Reliant did not want to over extend their obligation and did not agree on Pacific’s analysis and minimum requirements. Zinnser communicated that they pleased with the current relationship with Pacific but was concern ed for about the Future. Reliant felt that Pacific’s basic formula price on...

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