Pacific Oil Company Failed Negotiation

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Richard Paguirigan
National University/Law 402
Professor Hamlin
January 22, 2012

1. Identify the strengths and weaknesses of Fontaine's and Gaudin's negotiating strategy in their deliberations with Reliant Chemical Company. Fontaine and Gaudin started off with a competitive strategy, wherein the outcome of the negotiation was more important than the relationship. This is evidenced by the fact that the market for VCM would be oversupplied in a few years due to the building of new chemical plants and a drop in demand. Pacific only needed to secure an extension from Reliant to enable them to maintain operations for just a while longer or until they could come up with a new business strategy for the future. There is nothing to suggest that Pacific had any incentive to maintain a relationship with Reliant after that time. Although Pacific was considering becoming a producer of PVC products in order to minimize its dependence on external sales, no firm decision had yet been made so Pacific’s possible survival was still up in the air. Fontaine and Gaudin were aware that they had less than a three year window in which to extend the contract. They also knew that Reliant was probably aware that the market was going soft. Although Fontaine and Gaudin began their efforts with a sense of urgency to extend the contract with Reliant, they came into negotiation not having really developed their strategy and how they would attack it. They were unprepared for the issues that Reliant brought up and were essentially on the defensive throughout. The sense of urgency that exhibited coming into the negotiations was undermined by their failure to set time limits or deadlines. They were fair game for “entrapment” by the Reliant since they really had no information about Reliant’s situation and therefore could not counter or reverse the attack. Although Competitive Strategy was the intent, poor planning and unanticipated problems along the way caused their strategy to get flipped...
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