Pacific Oil Case Study

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Critical Thinking – PACIFIC OIL CASE STUDY

Brian Crummy

MGT 470-1: Conflict Management and Negotiation

August 31, 2014

The Pacific Oil Company, known for touching off the “black gold” rush began working with the Reliant Corporation in 1979. The first contract between the two was for the purchase of vinyl chloride monomer. As the end of the contract drew close in 1982, the companies worked together to broaden the contract from 1983 to 1987. In 1984 Jean Fontaine, the marketing vice president in Europe for Pacific Oil, and Paul Gaudin began to re-examine the company’s chemical contracts. Upon examination of the Reliant contract, they realized the demand for VCM was rising, and that a new contract could be re-negotiated for a better price. Gaudin contacted Frederich Hauptmann, the senior purchasing manager for Reliant in Europe. From this point, negotiations began.

When they first found out about the increased demand for VCM, Fontaine and Gaudin decided to use the two company’s long history together as a leverage point. This point ended up hurting them because Hauptmann asked for a little more concession wise each time the parties met based off the history the two companies had together. Each time, Fontaine and Gaudin agreed to provide these while thinking the negotiation would end with a contract extension like the previous deal with the company. Because of inadequate planning, Fontaine and Gaudin did little to use the power they had over Reliant to secure a more beneficial outcome for Pacific Oil. Because Fontaine and Gaudin were so concerned with the future, they were ready to accept any terms presented by Reliant in order to keep and expand a contract long before the time for negotiation was at hand. Hauptmann and Zinnser approached the contract wanting to win by getting exactly what they wanted. Reliant knew of the changes in supply and demand of…...

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