Negotiation Case Essay

Texoil negotiation case

The Batna for the station owners is an offer of $400,000 from British Petroleum. Other oil companies have looked at the station but the owners do not have any other offers. No terms for a deal with British Pertoleum have been woked out. British Petroleum is not budging on their offer of $400,000 for the service station. The Batna is not acceptable to the owners. In order to fulfil their dreams and secure future finances, the owners must not accept anything below $580,000 for the station. The reservation point is $580,000 because this is the lowest that the owners should accept. A good target point would be around $600,000.

The case initially seems like both parties are equally dependent on getting a deal. The owners want to sell so they can live their dreams. No current offer stands that will allow their dream to be fulfilled except for Texoil's. The service station could be a good location for Texoil. Some of their concerns could involve the amount of traffic, customer loyalty, maintenance and upkeep of the station, and growth of the surrounding areas. The location would be great because the station already has a customer base that is loyal to Texoil products.

It is estimated that it will cost Texoil $650,000 to build a comaparable station in the area. Knowing this estimate the owners should start off with an intial offer of $625,000. This amount is less than what British Petroleum would need to build the station. It also gives the owners a lot of room to lower any offers if need be. The owners should make the first offer in attempts to set an anchor above $600,000. It seems to be a one topic negiotiation.