Pacific Oil Case Study

1256 WordsApr 19, 20126 Pages
Pacific Oil Company is a Sweetwater Oil company of Oklahoma City, Oklahoma. It was founded in 1902. One of the major chemical lines of Pacific's is the production of vinyl chloride monomer (VCM). “VCM is subjected to the process of polymerization, in which smaller molecules of vinyl chloride are chemically bonded together to form larger molecular chains and networks.” Pacific Oil's first major contract with the Reliant Corporation was in 1979. The contract between Pacific Oil and Reliant was a standard one for the industry and due to expire in December of 1982. The contract was negotiated by the purchasing managers in Europe then it was reported to the vice presidents in the states. In February 1982, Jean Fontaine marketing vice…show more content…
This would be a net reduction $4 million per year. The proposal went back to Paris for further discussion. By of May 15, they had agreed on a revision of the formula price that would adjust the price downward by alsmot one cent per pound. May 27 Hauptman contacted Gaudin to talk about the remaining issues in the contract. Gaudin hoped that Reliant would be willing to agree to extend the contract five years from the point of singing. Reliant had serious reservations about committing the company to a five-year contract extension. Reliant wanted to make a commitment for only a two-year contract renewal. After several phone discussions on August , 17, Gaudin and Hauptman agreed to a three-year contract renewal. Remaining contract issues will be discussed in September. September 10 Remaining important issues before signing the contract was the minimum quantity requirements should be raised to 10 percent each year. Hauptman's minimums were too low. No meetings were held until late October. In November the agreement consisted of 205 million pounds of minimum quantity purchases in the first year, 210 million in the second year, and 220 million in the third year. October 24 Pacific had decided not to develop its own product lines for either PVC or fabricated products. December 14 A year had passed in deliberations, but still few technical issues remained, such as delivery pipeline being metered. Pacific was in charge of maintaining the

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