...(Reprinted by permission of the authors) Note: After you have negotiated the Cartoon exercise, try to apply what you learned to the following case involving negotiations between a buyer and a supplier. In the fall of 1999, a group of managers met in Scandinavia for the first of three negotiations involving four companies from three different countries and a family of products. The situation was a common one: a buyer tells a supplier it wants prices reduced by 10 percent and, “Oh by the way, we’ll also be soliciting quotes from your major competitor.” At the heart of the meetings was the buyer’s corporate agenda to cut costs. Cost-cutting is a common theme among large corporations. Even in good times, they have been known to pressure their vendors to lower prices and to play vendors off against each other. This case illustrates what actions a supplier might take in this situation. Other vendors who may find themselves in similar situations can take these actions as well. Background FD is a Dutch manufacturer of filtration products. Rather than selling directly to end customers, throughout the 1970s and 1980s, FD sold oil filters and oil filter cartridges (replacements) to Swedish and Finnish heavy equipment manufacturers who, in turn, branded and sold the products to their own customers. In the late 1980s the Scandinavian market for oil filters began to change. The Finnish government consolidated many of the region’s heavy equipment manufacturers into one company, Conquip. About the...
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...Pacific Oil Company MGT470-2: Conflict Management and Negotiation Vimarie J. Negron, MBA September 23, 2012 Professor Susan Weese As part of this assignment I will discuss the negotiation between Pacific Oil Company and Reliant Chemical Company in early 1985. Negotiation is a process by which two or more parties attempt to resolve the opposing interests (Lewicki, 2011). This scenario is about the problems Pacific Oil Company faced as it reopened negotiations with Reliant Chemical Company in early 1985. Pacific Oil Company was founded in 1902 as the Sweetwater Oil Company of Oklahoma City, Oklahoma. The founder of Sweetwater Oil, E.M. Hutchinson, pioneered a major oil strike in north central Oklahoma that touched off the Oklahoma “black gold” rush. of the early 1900s. Through growth and acquisition in the 1920s and 1930s, Hutchinson expanded the company rapidly and renamed it Pacific Oil in 1932. After a period of consolidation in the 1940s and 1950s, Pacific expanded again. It developed extensive oil holdings in North Africa and the Middle East, as well as significant coal beds in the western United States. Much of Pacific’s oil production is sold under its own name as gasoline through service stations in the United States and Europe, but it is also distributed through several chains of independent gasoline stations. In addition, Pacific is also one of the largest and best-known worldwide producers of industrial petrochemicals. In 1979, Pacific Oil established...
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...The Pacific Oil Company “Look, you asked for my advice, and I gave it to you,” Frank Kelsey said. “If I were you, I wouldn’t make any more concessions! I really don’t think you ought to agree to their last demand! But you’re the one who has to live with the contract, not me!” Static on the transatlantic telephone connection obscured Jean Fontaine’s reply. Kelsey asked him to repeat what he had said. “OK, OK, calm down, Jean. I can see your point of view. I appreciate the pressures you’re under. But I sure don’t like the looks of it from this end. Keep in touch—I’ll talk to you early next week. In the meantime, I will see what others at the office think about this turn of events.” Frank Kelsey hung up the phone. He sat pensively, staring out at the rain pounding on the window. “Poor Fontaine,” he muttered to himself. “He’s so anxious to please the customer, he’d feel compelled to give them the whole pie without getting his fair share of the dessert!” Kelsey cleaned and lit his pipe as he mentally reviewed the history of the negotiations. “My word,” he thought to himself, “we are getting completely taken in with this Reliant deal! And I can’t make Fontaine see it!” Background Pacific Oil Company was founded in 1902 as the Sweetwater Oil Company of Oklahoma City, Oklahoma. The founder of Sweetwater Oil, E.M. Hutchinson, pioneered a major oil strike in north central Oklahoma that touched off the Oklahoma “black gold” rush Source: Case prepared by Roy J. Lewicki...
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...An Anatomy of the Crude Oil Pricing System Bassam Fattouh1 WPM 40 January 2011 1 Bassam Fattouh is the Director of the Oil and Middle East Programme at the Oxford Institute for Energy Studies; Research Fellow at St Antony‟s College, Oxford University; and Professor of Finance and Management at the School of Oriental and African Studies, University of London. I would like to express my gratitude to Argus for supplying me with much of the data that underlie this research. I would also like to thank Platts for providing me with the data for Figure 21 and CME Group for providing me with the data for Figure 13. The paper has benefited greatly from the helpful comments of Robert Mabro and Christopher Allsopp and many commentators who preferred to remain anonymous but whose comments provided a major source of information for this study. The paper also benefited from the comments received in seminars at the Department of Energy and Climate Change, UK, ENI, Milan and Oxford Institute for Energy Studies, Oxford. Finally, I would like to thank those individuals who have given their time for face-to-face and/or phone interviews and have been willing to share their views and expertise. Any remaining errors are my own. 1 The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2011 Oxford Institute for Energy Studies (Registered Charity, No. 286084) ...
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...Running head: BIG DRIVE AUTO Big Drive Auto Michelle International Economics August 29, 2011 Big Drive Auto In the automotive industry there is evidence that supports the future of economics within the automotive industry such as Big Drive Auto, a multi-manufacture of cars and trucks. Not only does the company conduct contributions in the coolant, tire replacement and motor oil industry, but Big Drive Auto, also, services parts for repairs and sales vehicles. Big Auto will have to forecast their prior records kept within the past ten years in order to remain successful as well as needing growth within the automotive industry if they are to stay ahead of the automotive industry. An evaluation, in spite of the fluctuations in the economy, of the revenue generated on service and auto sales and of the companies past sales of parts, this evaluation and/or information will assist Big Auto Drive’s management for the organization for future production plans. A future demonstration pricing strategy will be used from the data of previous years and in keeping the company moving forward, the management’s awareness of the economy in recent years will be considered in helping with product recommendations for Big Drive Auto. In moving forward, Big Drive Auto will need to assess in the upcoming years the mathematical equations and take into consideration operations, cost, economic analysis and productivity in order to create a strategy that is solid in dealing with the automotive...
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...62 million ($545) per tael compared to early 2013 – a record price drop for any one-year period ever recorded. The dramatic decrease of gold prices made the role of gold investment – usually a safe haven – fade away in 2013. After the sales of 26,000 taels of gold bullion, or around 0.98 ton in the first auction session held on March 28, 2013, SBV sold a total of 1.82 million taels, or almost 70 tons of gold bullion, during 76 sessions in which the central bank offered 1.932 million taels throughout the year. 3. Interest rates matching those of 2005-2006 4. Macroeconomic stability maintained, inflation under control. 5. Stock market makes strong recovery. 6. Ongoing negotiations for Trans-Pacific Partnership trade agreement. 7. FDI on a rise, investigation on transfer pricing at FDI firms launched. 2014 1. Record low inflation and beyond expectation GDP Vietnam’s inflation rate in 2014 was 4.09 percent, the lowest rate ever for the last 10 year and 2.91 percent lower than the NA norm of 7 percent. Several experts said the...
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...brief history of oil politics 3. Oil Politics and U.S. Militarism in the Middle East 4. Wars and disputes for oil 5. Oil and the Iraq War 6. Conclusion Introduction: The modern era of oil production began on August 27, 1859, when Edwin L. Drake drilled the first successful oil well 69 feet deep near Titusville in northwestern Pennsylvania. Just five years earlier, the invention of the kerosene lamp had ignited intense demand for oil. By drilling an oil well, Drake had hoped to meet the growing demand for oil for lighting and industrial lubrication. Drake's success inspired hundreds of small companies to explore for oil. In 1860, world oil production reached 500,000 barrels; by the 1870s production soared to 20 million barrels annually. In 1879, the first oil well was drilled in California; and in 1887, in Texas. But as production boomed, prices fell and oil industry profits declined. The energy source, which made the Industrial Revolution possible in England in the 18th century, was coal. Coal powered the steam engines which drove machinery in the factories, and the steamboats and railroads of the early industrial age. It has continued to power electric generation plants throughout the 19th and 20th centuries. Among the fossil fuels, coal is the most abundant in the earth, but it is also the most polluting. High sulphur and carbon content, and soot, cause coal to be the least desirable of the fossil fuels. A brief history of oil politics: Oil or petroleum...
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...President of Rodamia Michael Jacobs wants to change the trading policies from being negligible. Lisa Drake is the Trade Commission of Rodamia; Lisa supports research on international trade issues and provides advice to help formulate international trade policies. Walter Barnes is the Deputy Trade Representative for Rodamia; Walter makes negotiations with neighboring countries in trades and handles any irregularities in trading. Rodamia’s advantage in the simulation was the ability to trade certain product with its neighbors in order to obtain the amount of product that was in demand. Rodamia also was able to effectively make trade with other countries, and monitor the rates of imports and exports in its country. The limitations that Rodamia had encountered were the amount of product that they were able to trade because of the demand from other countries. Rodamia had limited amounts of products that other countries wanted. Rodamia also encountered limitations on what countries they were able to trade with, this limited there negotiations with trading. If Rodamia was able to trade with other foreign countries they may have been able to negotiate better pricing for their trades. Absolute advantage when trading products is when any one person, firm or nation has to invest less than the other to produce a product. For example if a company in the Japan must use ten laborers to produce let’s say canned vegetables and canning vegetables takes twenty minutes from start to finish. Another business...
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...What implication do fluctuations in foreign exchange rates have on the pricing decisions of export marketing managers? Globalization is no longer an abstraction but a stark reality that virtually all firms, large and a small, face. Firms that want to survive in the 21st century must confront all encompassing force that pervades every aspect of business. However, exchange rate fluctuation is an issue that affects the decisions marketing managers make about pricing. Management faces different decision situations, depending on whether currencies in key markets have strengthened or weakened relative to the home country currency. If the home country currency is weakened this would be an opportunity as exchange would be in a favourable position. A producer in a weak-currency country can choose to cut export prices to increase market share or maintain its prices and reap healthier profit margins. When revenues are translated into home country, the returns would be substantial. On the other hand it is a different situation when a company’s home currency strengthens, management would see this as unfavorable for exportation as overseas revenues would be reduced when translated to home country currency. Management in making there decision must consider currency fluctuation even though the degree of exposure varies among companies. In an example, Honda is heavily dependent on the North American market, which accounts for more than half of its operating income. In trying to reduce currency...
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...shares of each member within the industry and is always less than one. One advantage is that the Herfindahl index gives a look at the larger groups in an industry, while concentration ratio just describes the level of concentration the largest members of a specific industry are presently holding. An advantage is that the larger members will have a greater influence on pricing, marketing and other key indicators that a smaller firm will not. A disadvantage is that the smaller members may be greatly influential, or positioned in a spectacular market, and the Herfindahl index will not be able to describe potential that key player small firms may hold. 8. In what way does OPEC resemble a cartel? How successful is it? OPEC, or The Organization of Petroleum Exporting Countries, which is essentially a cartel of oil exporting partners in order to dominate the market, can manipulate the supply of oil in order to keep prices, and profits, high. The 12 member-nations control nearly 80% of the world’s oil along with 44% of the world’s daily production. They have been accused of keeping oil prices high by producing less oil than the market needs. In essence, this is manipulating supply and demand. This not only resembles a cartel, it is in fact the essence of one. The gasoline prices at the pump tell us all we need to know about how successful they are. After Hurricane Katrina, gasoline prices doubled, and remain their today. This is the perfect example of how powerful and successful...
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...they’re working with these clients to make slight tweaks so as to appease them and formulate the best product possible for the customers given situation. Whilst the product itself may have not changed greatly, in 2012 and 2013 SafeBlend have been forced to have more of an approach whereby they sell the company, what they stand for and what they hope and believe they can achieve. This has resulted from the growth of the industry as a whole and the number of opportunistic suppliers whom have subsequently entered the market to supply environmentally friendly fracturing fluid. This increased competition for SafeBlend has forced them to market their business more in a way that highlights their long run dedication to this goal. As with any negotiation the parties have polar opposite objectives, and as such the aim is to...
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...1. Introduction Tourism is one of the world’s largest industries and the most fragmented. Within this industry, tour operators play an essential part, as they represent a central connection between tourists and tourism service provider. This report will examine the link between tour operators and other sector of the travel and tourism industry by identifying different products and services provided by tour operators for different target markets. Different factors influencing this sector will be explained as well as and the implication of vertical and horizontal integration within this sector. Finally a brief analysis of the future of tour operators will be given and this is based on research and finding. 2. The role tour operator According to Pro-Poor Tourism (2004) tour operators are businesses that mix two or more travel services such as transport, accommodation, catering, and entertainment, and sell them directly or through travel agencies to final consumers as a single product. A tour operator is thus a crucial link in the distribution chain, representing the central connection between customers and providers of tourism services, and thus has the power to influence both the demand and the supply side. 3. Different Type of Tour Operators a. The Domestic Operators They are companies that develop and sell the holiday within the country in which the tourist reside, they offer a variety of holiday products such as: coach holidays, city break, farm holiday,...
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...Lewicki−Barry−Saunders: Negotiation: Readings, Exercises, and Cases, Fifth Edition Cases 1. Capital Mortgage Insurance Corporation (A) © The McGraw−Hill Companies, 2007 Case 1 Capital Mortgage Insurance Corporation (A) Frank Randall hung up the telephone, leaned across his desk, and fixed a cold stare at Jim Dolan. OK, Jim. They’ve agreed to a meeting. We’ve got three days to resolve this thing. The question is, what approach should we take? How do we get them to accept our offer? Randall, president of Capital Mortgage Insurance Corporation (CMI), had called Dolan, his senior vice president and treasurer, into his office to help him plan their strategy for completing the acquisition of Corporate Transfer Services (CTS). The two men had begun informal discussions with the principal stockholders of the small employee relocation services company some four months earlier. Now, in late May 1979, they were developing the terms of a formal purchase offer and plotting their strategy for the final negotiations. The acquisition, if consummated, would be the first in CMI’s history. Furthermore, it represented a significant departure from the company’s present business. Randall and Dolan knew that the acquisition could have major implications, both for themselves and for the company they had revitalized over the past several years. Jim Dolan ignored Frank Randall’s intense look and gazed out the eighth-floor window overlooking Philadelphia’s Independence...
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...Petroleum refers to the hydrocarbon compounds of crude oil and natural gas that are found in the underground rock formations Reservoirs are generally thousands of feet below the surface and are made up of the remains of small marine plants and animals that lived millions of years ago. Petroleum may also seep to the earth’s surface along fault lines and cracks Petroleum refers to both crude oil and natural gas Modern uses of petroleum and its byproducts include: Transportation fuels (gasoline, diesel, jet fuel, and compresses natural gas) Heating Fuels (Propane, heating oil and natural gas) Electric Generation fuels such as natural gas and fuel oil Manufactured products such as plastics and building materials. Crude oil refers to unrefined hydrocarbon mixtures produced from underground reservoirs that are liquid at atmospheric pressure and temperature Classified as either light or heavy depending on the density of the mixture Density is measured in API gravity Heavy crude oil has more of the longer, larger hydrocarbon molecules (greater density) Difficult to produce and transport to market; more expensive to process; weighs more but sells for less Natural Gas refers to hydrocarbon mixtures that are NOT liquid but gaseous at normal atmospheric pressure and temperature. Natural Gas is largely methane, which is a clear, odorless gas. It has the smallest natural hydrocarbon molecule (CH4). Natural Gas mare also contain some of the larger hydrocarbon molecules commonly...
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...Sloman et al, (2010: 35) defines firms as ‘An economic organization that coordinates the process of production and distribution’. In addition, ‘Firms are arranged frameworks relating people, things, knowledge, and technologies, in a design intended to achieve specific goals’ (Clegg et al, 2011). The main concept behind firms is to transform the input into outputs (Sloman et al, 2013). To give out a few examples of firms in different production lines for instance as clothes, cars, phones and others such as Apple and Samsung, H&M and Gucci, BMW and General Motors. According to Coase (as cited in Formaini, R and Siems, T, 2003) the firms are responsible for production and distribution of goods and services and firms are of upmost importance because they reduce the transaction costs which would usually cost a lot more if carried out by an individual compared to the firm. We will discuss transaction costs in greater details; however, it’s also important to know how firms are organized and how they operate. Firms are organized and they operate in different manners and ways for instance, goods and services they produce, the industries they are located in, the size of the operating firm, and the legal structure of the firm. The legal framework of the firm is very important and will have an impact on its performance, production and operations and thus we will be concentrating on it in order to exemplify the classification of firms in different ways. In the UK, there are several...
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