Case Analysis - Negotiations
Pacific Oil Company
I. Introduction
a. Summary of the Problem
• Pacific Oil Company, previously known as the Sweet Water Oil Company, started out in 1902 as a pioneering venture of an oil business in the north central Oklahoma, USA. It went through a series of expansion and acquisition first in 1920s and 1930s, Hutchinson renamed it Pacific Oil Company. Pacific is also a leading manufacturer of industrial petrochemical raw materials, with some of these products being made by very few companies around the world, making the market a supplier’s market through which Pacific had gained considerably over the years. One of Pacific’s major industrial chemical lines is the production of vinyl chloride monomer (VCM). Jean Fontaine, Pacific Oil’s marketing Vice President for Europe and Paul Gaudin the marketing manager for VCM have started the discussion of the renewal of the contract with Reliant. Their data according to them showed that there was a demand for VCM and that the demand was continuing to rise. They agreed to approach Reliant with an offer to renegotiate the current agreement. Suddenly a change perspective in December 1984 made them reconsider the contract with Reliant because it showed a less clear and long term relationship with them. As a result of the evaluation Guadin and Fontaine decided to contact Frederich Hauptmann the senior purchasing manager for Reliant Chemicals in Europe and Egon Zinnser the regional vice president of Reliant’s European operations. During the meeting Fontaine and Guadin stated that they appreciated the relationship that existed between Pacific and Reliant and that they would like to continue the relationship and start talking about the contract extension past December 31, 1987. Fontaine and Guadin realized that it was important to start the negotiation soon in order to deal with negative items that may come into effect.
b. Recommended Solution
• Guadin and Fontaine have to come to an agreement with Reliant in
I. Introduction
a. Summary of the Problem
• Pacific Oil Company, previously known as the Sweet Water Oil Company, started out in 1902 as a pioneering venture of an oil business in the north central Oklahoma, USA. It went through a series of expansion and acquisition first in 1920s and 1930s, Hutchinson renamed it Pacific Oil Company. Pacific is also a leading manufacturer of industrial petrochemical raw materials, with some of these products being made by very few companies around the world, making the market a supplier’s market through which Pacific had gained considerably over the years. One of Pacific’s major industrial chemical lines is the production of vinyl chloride monomer (VCM). Jean Fontaine, Pacific Oil’s marketing Vice President for Europe and Paul Gaudin the marketing manager for VCM have started the discussion of the renewal of the contract with Reliant. Their data according to them showed that there was a demand for VCM and that the demand was continuing to rise. They agreed to approach Reliant with an offer to renegotiate the current agreement. Suddenly a change perspective in December 1984 made them reconsider the contract with Reliant because it showed a less clear and long term relationship with them. As a result of the evaluation Guadin and Fontaine decided to contact Frederich Hauptmann the senior purchasing manager for Reliant Chemicals in Europe and Egon Zinnser the regional vice president of Reliant’s European operations. During the meeting Fontaine and Guadin stated that they appreciated the relationship that existed between Pacific and Reliant and that they would like to continue the relationship and start talking about the contract extension past December 31, 1987. Fontaine and Guadin realized that it was important to start the negotiation soon in order to deal with negative items that may come into effect.
b. Recommended Solution
• Guadin and Fontaine have to come to an agreement with Reliant in