The Case Of Pacific Oil Company

1601 Words Feb 20th, 2016 7 Pages
When entering into contract negotiations, the objective of each side is to obtain a contract of greatest benefit to their organization. This desirable outcome never happens by chance; it is always the result of careful planning. A critical part of this planning is understainding the role of power. This includes determining who possesses the power in bargaining, and establishing strategies to bargain with individuals who have more power than you. This power is needed to obtain the advantage in negotiating which will increase the likelihood of obtaining the goal (Lewicki, Saunders & Barry, 2011). Once in the heat of negotiation, it can be too late to try to catch-up on planning which failed to occur before the negotiation process began.
The lack of detailed planning in the case of Pacific Oil Company’s (POC) negotiation of a new contract with Reliant had dire consequences for Pacific Oil. Pacific Oil did not plan sufficiently when they began negotiations. They lacked a clear strategy, failed to consider the major sources of power or correctly estimate the power possessed by Reliant. In addition, POC failed to account for Reliant’s negotiating style.
Problem Faced by Pacific Oil
As Pacific Oil began their negotiations to renew their existing contract, which was due to expire within the year, a major problem was surfacing. This problem: the availability and demand for VCM products. It was the old rule of supply and demand coming into play. Matching need, supply and…

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