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Essay by   •  November 10, 2010  •  Essay  •  1,304 Words (6 Pages)  •  1,370 Views

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Reflection paper: Texoil (from the point of view of the sellers)

Planning for this negotiation was more difficult than the first negotiation in class. The first negotiation had a point system; therefore I knew what the maximum, minimum and average amount points were. Not only does the Texoil negotiation not have a point system, but there were two people on my side (sellers) and only one on the other side (buyer).

My partner and I played the roles of the sellers. Prior to the negotiation we discussed what our reservation point, our BATNA and our target point were going to be. The reservation point was basically given in the write up of the case. We needed $488,000 after taxes or $580,000 before taxes. If we received less than this we would not be able to continue our plans to sail around the world. At this point we had not discussed attempting to make the pie bigger and pursuing the option of working when we return.

We decided that we would not tell the buyer about my exhaustion (wife) or that we needed the money to sail around the world. We were afraid that he would use it against us.

Our BATNA was that we could continue working there, perhaps hire someone in place of me, since I am not supposed to work 16 hour days. This is not a strong BATNA, as I do not know that we could afford to hire a new person, as well as we already sold our condo, and put money down on the boat. Also we could try to negotiate with BP, who has offered $400,000.

Originally, the target point was set at $850,000. We decided that this would be a good starting price since it would cost them $650,000 to buy land and build, we had loyal customers

(especially if the station keeps its name), and the buyers could easily stay open 24 hours a day as well as open a convenience store. In addition, if they built a station they would be only adding to the competition, instead of three stations, there would be four.

We also decided that we wanted the buyers to make the offer first. We did not want to be an under aspiring negotiator and end up with the winners curse. On the other hand, we did not want to put a number that was so outrageous, that they would leave the negotiation immediately.

The beginning of the negotiation mostly consisted of the three of us getting to know each other. Oddly, the buyer asked several times about our plans for retirement. We told him that we were not sure what we were going to do, that we were going to wait to see the outcome of the sale. The more he asked the more I believed that he had an agenda, therefore the more we kept quiet. This was the reaction due to incompatibility bias. We did not believe that we could have common interests with the buyer. When in the end, the reason he was asking was to see if we would be willing to manage the station. The negotiation would have been settled a lot sooner if we would have disclosed that we wanted to sail for two years and return to possible start working.

Finally the buyer made an offer. The offer was $350,000. We were shocked. Solely based on the price to build a new station, I figured the offer would be around $500,000. That way they are not paying full price for used equipment, but they also are not going to add to the competition in the area. We told him that we had other offers higher than that offer.

I felt that this offer was too low. The discussions continued, and we stated our beginning price of $800,000. This is lower than our initial target, but I did not want to sound completely off base. When the anchor of $350,000 was set, I immediately adjusted my offer lower, towards his offer. The buyer said that he could not split the difference, as he was only authorized to offer a certain amount. Then my partner, seeming very frustrated, said that he did not think that the meeting was worth our time, since we could not accept his offer. I felt that we were beginning to argue over positions. Per Rodger Fisher and William Iry, arguing over positions is inefficient and could danger the relationship. I felt that if the discussion continued as it was going, we were going to walk out with no agreement.

After the negotiation, I wondered what the buyer's counteroffer would have been, if we would have made the first offer of $850,000. If we would have set the anchor, would the buyer have adjusted his first offer?

There

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