At the start of 1985, the Pacific Oil Company experienced some key difficulties as they began to regenerate discussions with Reliant Chemical Company. Both companies- Pacific Oil Company and Reliant Company formerly had a fruitful business agreement and the corporations also had a healthy affiliation that they wished to uphold. Jean Fontaine, the marketing vice president for Pacific Oil Company, and Paul Gaudin the marketing manager for Vinyl chloride monomer (VCM), both recognized that having a long-standing predetermined settlement and a good association with Reliant Company in the forthcoming days was fundamental for the success of their companies. Upon reviewing the existing contracts of the companies at the end of 1984, Gaudin and Fontaine realized that they had some problems that would require them to give an account in the impending year concerning the Reliant agreement. Fontaine, Gaudin, Hauptmann and Zinnser used some styles in their negotiations that proved to be effective, as discussed in this paper.
The biggest problem that Pacific Oil Company faced was the variation in the supply-demand state on the VCM merchandise. The alteration in the projections of the supply and demand of the VCM product was depended on the data from Pacific Oil’s company head office but also chiefly unprinted forecasts. This destined that Reliant Company would most probably be conscious of the market state and the increase in supply, which was a major concern for the Pacific Oil Company and to Fontaine and Gaudin. The change presented them with various difficulties connected. After studying statistics from their company headquarters and numerous printed forecasts, Fontaine and Gaudin undoubtedly recognized that the stream of VCM was anticipated to speedily increase over the forthcoming years. The situation in the market was tight in the previous years but the fresh forecasts would considerably adjust the value that Pacific Oil had to get for their product. Furthermore, Fontaine and Gaudin discovered that some of their challengers in the VCM industry had publicized strategies to create facilities for manufacturing the VCM, which would be in operation in the subsequent few years. The forecasts of a greater quantity and increased rivalry evidently posed a key difficulty and danger to Pacific Oil’s business agreement with Reliant.
Fontaine, the Marketing Vice President, and Gaudin-VCM’s Marketing Manager ultimately conveyed distress of dropping a significant client (Reliant) by over- accentuating the significance of a continuing business connection during consultations. They effortlessly gave in to the opinions of the other party without thoroughly stimulating underlying conventions. They also did not take advantage of the varying prices to avoid putting pressure on the counterparty. From their decisions, they failed to consider the one-year time lapse required for the competitors to supply their goods the Reliant Company. Additionally, they did not attain a concession concerning the issue of metering of the pipeline, which meant there was no sharing of costs.
Hauptmann, the Senior Acquisition Manager and Zinnser, the Regional Vice President of Operations in Reliant company began to request for adjustments of the major agreement terms which comprised of price, least amount, and duration. They managed to achieve negotiation as regards to all the three features. They competently turned to most significant facts by affirming that merely a few minor issues needed to be deliberated. They also asked for a modification of the price, duration and the minimum amount to achieve comprise concerning all the three features. Hauptmann and Zinnser dominated the dialogues by determining order of ideas deliberated and set the pace which leads to them achieving their objectives gradually.
At the end of the case, Frank Kelsey had some recommendations to Jean Fontaine at the conclusion of the case. One was not to give permission to re-sell the product. Additionally, if Reliant insisted on re-selling the facility, then it would be wise to include an extra provision that would forbid Reliant to re-vend above or below the contract price.
Reference
Lewicki, R. & Saunders, D., 2010. Negotiations: Readings, Exercises and Cases. 6th ed. New York: Mc-Grill Hill Press.
