Management at Pacific Oil Company - Essay Example

? Management Pacific Oil Company The Pacific Oil Company negotiation with Reliant Chemical Company case is a clear example of the qualities that are necessary to be successful in a negotiation. It also shows how a side can lose in a negotiation. From the very beginning we see that negotiators from Reliant Company were quite aggressive in their approach to the negotiations. On the other hand the Pacific Company’s major problem seems to be having poor negotiators who were willing to cede too much without asserting any power. This is especially so in the case of Fontaine who was willing to give in to almost every request Reliant Company asked for, just to get the company to sign a new contract. This fact is evident in the conversation that Fontaine had with Kesley. In this conversation Fontaine says he does not care and is not guided by any principles in the negotiations because it was his job that was at risk, meaning he just wanted the new contract signed despite the clauses the Reliant Company added just so that he can retain his job. This clearly shows that the man is a poor negotiator as stated by Michael, Wheeler and Gillian (2002). This is because it seems that he did not forecast the consequences of some clauses that Reliant Company wanted included in the new contract. Styles and Effectiveness of Fonatine, Guadin, Hauptmann, Zinnser and Messrs More evidence of Pacific Oil company’s poor negotiators can be seen in the conversation Gaudin and Fontaine had with Hauptmann at the Pacific office in Paris. In the conversation, both Fontaine and Gaudin were unable to convince Hauptmann of their future projections. It could have been that Reliant Company was making conservative projections as a strategy to water down prices and minimum quantity commitment of the new contract. The Pacific men should have provided enough data from their projections in order to convince Reliant Chemical Company to revise their projections upwards and consequently raise their minimum quantity commitment. Poor negotiation strategy can also be said to be a problem that Pacific Oil had and one which Reliant Company negotiators took advantage. This is evident in the way Pacific negotiators approach the Reliant Company for negotiations. They seem to be pleading and hence give Reliant Company negotiators an impression that they are desperate for renewal of the contract. The Pacific negotiators should have asserted some sense of power and control over the talks between the two companies. This way, the negotiations would have been balanced but instead they made Reliant Company negotiators feel superior by constantly saying that Reliant played a very important role in Pacific’s VCM product market and that they did not want to spoil the relationship between the two companies. Thompson (2012), states that a negotiation outcome is the result of the interaction with the partners. Poor negotiation strategy is also extensively seen in that Pacific Oil negotiators who did not define limits of the concessions they were willing to make. Negotiators should identify limits, set targets, develop supporting arguments and have analyzed the other party (Lewicki, Saunders and Barry, 2001). Jean Fontaine was the marketing department vice president for Pacific Oil Europe. He had just been promoted to that position just 16 months prior to start of negotiations for renewal of Reliant Chemical Company contract. His approach to the negotiations was to be laid back and let the other party give their suggestions for changes that they might need on the new contract. Together with his team, he collected data and made projections and used this as the base for his negotiations with Reliant Company negotiators. This strategy proves to be a weak strategy since it was used by the Reliant negotiators to counter the proposed contract and add new clauses that disadvantaged Pacific Oil Company. Clearly the strategy almost cost him job. His approach to the negotiation can be said to be an accommodating style whereby, a party cedes their interest to the benefit of the other party (Kleinman and Palmon 2000). Paul Gaudin had just been appointed as the marketing manager for VCM 8 months prior to the negotiations. Although this was the first job he had been handed at Pacific Oil Company, he had some experience in sales for at least half a decade from his former job of sales in an American firm that deals with computers. Together with Fontaine they planned the strategy with which they would approach the negotiations. His job as the marketing manager of VCM put him at the center of the negotiations. In my opinion, he was ill-prepared for the negotiations and could have the main reason why the new contract was skewed to Pacific Company disadvantage. This was because he did not advise the company and the executives appropriately. The issues that Reliant Chemical Company was raising should have been foreseen by the VCM marketing department and limits set appropriately. A clear negotiation strategy was the most important factor for successful international business relationships ( Zartman & Faure, 2005). Frederich Hauptmann held the position of the senior manager of the European purchasing department of Reliant Chemical. He had just been employed for about a month. He was the other key person in the negotiations since his department would be the most affected by the new contact. Although he had not been with Reliant Chemical Company for long he had brought in experience purchasing from his previous job in a German firm that dealt with steel products. His approach to the negotiations was rather unpredictable and this act was what enabled Reliant Company to make major changes to the contract that had been proposed by Pacific. The lack of existence of an already established relationship between him and the Pacific negotiators was advantageous to Reliant Chemical Company since the negotiators on Pacific side did not know how to counter his requests. He was also very aggressive and steadfast in that once he took a stand he could not easily be moved. This is evident in the conversations they had with Glaudin in most cases he took the upper hand and Glaudin had to shift position to accommodate his requests.(Shell 2001) states that the negotiation style a person adopts can be the determining factor in a negotiation. The other negotiator from Reliant chemical Company was Egon Zinnser who was Hauptmann’s supervisor and also Reliant’s regional vice president in Europe. It is evident from the negotiation that he was aggressive, a hardliner and was very unwilling to change his position in order to arrive at a favorable position. He had a domination style of approach to the negotiation where he had little regard for the interest of Pacific Company in the new contract. A person who uses such a domination style will most probably use tactics that may cause contention, rather provide solutions in a negotiation (Shell, 2001). He was the one who initiated the proposal to revise the prices down and also the issues of metering whereby, he claimed that the pipelines were not delivering the full products. He also seems to be the source of delay to the conclusion of the negotiation and signing of a new contract. Recommendations from Frank Kesley Having heard the way the negotiations were progressing it is obvious that Kesley who is a strategist and also a manager was not impressed and was fearful that in the end the Pacific Company would sign a deal to their disadvantage. The recommendation would have involved the three key factors that had derailed the successful completion of the negotiations. These three critical issues in negotiation are time, power and information (Dreu and Kwon, 2000). In this negotiation first issue that required review is the timeline for start and completion of the negotiations and signing of the new contract. He could recommend that the timeline should not exceed 1 and half years since a year and a quarter had already expired. Another recommendation would have been that Fontaine and any other negotiators to strengthen their stance in the negotiations but not have hard line positions. The negotiators should be advised to adopt an obliging style of negotiation whereby they should go into the negotiation with a balanced level of concern for their organization as well as for the other party. However they should try and show some power and not agree to all the terms that the other party without countering them (Hofsommer, 2009). This confirms that power exercised by a negotiator is a critical ingredient for the quality of the success of his or her success and can also influence the rewards that are arrived at in a negotiation. The Pacific negotiators should have some form of self-protectiveness while promoting some sense of cooperation in their response. One example where they can show some power is by not allowing the clause on resale of products. Kesley should also recommend that Fontaine should setup a team that will assist him during the negotiation period. The team would help him review the current negotiation, define the issues at hand, define the mix for the bargain and create and also define limits for the negotiation. In addition to this, the team can set targets for the negotiation, come up with support material to support their argument and also to analyze the party that they are negotiating with. The information by the team would have enabled him to able to push for the fast completion of the negotiations. The team should be creative and come up with good strategies to tackle the current negotiation situation. Creativity is a key element in negotiations involving high stakes (Michael and Morris 2002). Lastly Kesley can recommend that when the negotiations are taking place, that each of the negotiator from both sides should be present. This is so as to ensure that once a decision is made there is quick agreement and one does not have to travel to their headquarters to meet their immediate superior so as to make a decision on an issue. This is also a sure way to get all the issues that may arise so that if they have to be deliberated on they can be done with without some issues having to come up in each meeting. As Kleinman and Palmon (2000), states frequent meetings should also be held between the parties most preferably at least once every two months to iron out issues that would have come up in previous meetings. References Dreu W. and S. Kwon. (2000). Influence of Social Motives on Integrative Negotiation: A meta-analytic review and test of two theories. Journal of Personality and Social Psychology. 78:1, 889-905. Hofsommer, D. (2009). The Southern Pacific, 1901-1985.Texas: A&M University Press Kleinman, G., and D. Palmon. (2000). A Negotiation-Oriented Model of Auditor-Client. New York: SAGE publishers Lewicki, R., Saunders, D. Minton, J. & Lewicki, R. (2001).Essentials of negotiation. Boston, Mass: Irwin/McGraw-Hill. Michael A. Wheeler, Morris Gillian (2002). Complexity Theory and Negotiation. New York: Harvard Business School. Shell, G. R. (2001). Bargaining Styles and Negotiation: The Thomas-Kilmann Conflict Mode Instrument in Negotiation Training. Journal of Negotiation. 80-100. Thompson. L. (2012). The Mind and Heart of the Negotiator. New York: Pearson Education Zartman D. & Faure, G. (2005). Escalation and negotiation in international conflicts. New York: Cambridge University Press. Read More