Describe the problem that Pacific Oil Company faced as it reopened negotiations with Reliant Chemical Company in early 1985.
- Change in the supply demand situation with regard to VCM products from high demand to excess supply.
Reason: massive increase in global manufacturing capacities for VCM
Competition up, price down
Pressure POC to lower the price
Evaluate the styles and effectiveness of Messrs. Fontaine, Gaudin, Hauptmann and Zinnser as negotiators in this case.
- Fontaine (Marketing VP Europe POC) & Gaudin (VCM Marketing Manager POC)
- Indirectly convey fear of losing an important customer (Reliant) by over-emphasizing the importance of a long-term business relationship during negotiations
- Easily give in to arguments of the counterparty without seriously challenging underlying assumptions
- Don`t take advantage of switching costs, etc. to put pressure on counterparty, too
- Fail to address the 24-30 months’ time horizon it takes until competitors can supply their products to Reliant
- Fail to achieve a compromise regarding the pipeline metering issue (no cost sharing