This Video Analysis Reviews
This video analysis reviews the “Texoil” negotiation between the Texoil representative / VP of Operations and the independent service station owner. I played the role of the Texoil representative looking to strike a deal with the station owner to acquire the gas station that he and his wife have owned for 12 years. We mainly found ourselves negotiating on sale price and no other issues, which was definitely the root of our inability to come to an agreement. Unfortunately, we were unable to come to an agreed price, but after watching the recording of our negotiation for this analysis, I am able to understand the reasons why we were unsuccessful.
Our initial introductions were amicable and we built a strong rapport from the start. The station owner told me about his wife, the hard work they’ve put into operating the station, and how excited they are to go sailing across the country. This humanized the station owner and made me like him as a person, which made me want to make a deal. When it was my turn to introduce myself, I continued building the rapport and did not bring up the issue of the sale or other monetary issues. I told the station owner I appreciated all the hard work he has put into this station over the years, that I was excited to buy the station and continue successfully operating it as a part of Texoil, and that with our expertise his station was in good hands (because I could discern from his introduction that the future success of the station was important to him).
Going into the negotiation I thought the owner wanted to simply sell the station and because I would be adding a minimart and replacing equipment, I could buy the station for a low price. I thought we’d make a deal and I would not even have to consider my BATNA of $675,000 to build a new station from scratch. However, settling on a price did not work out as planned. I wanted to go first to anchor with a lower price, thinking this would give me the leg up in the negotiation. I made my initial offer for $300,000, even though I knew my counterpart would not agree. He refused saying this amount would not allow him to go on his trip and come back and live comfortably. My partner revealed his offer of $575,000. This was higher than my reservation price of 500,000. I pushed back insisting that building the minimart, upgrading the equipment, and paying for six more hours of salaries per day would be a huge investment for Texoil. This would bring us to ~$800,000 if we bought and renovated the owner’s station and would not give us the freedom we would have if building one from scratch. We negotiated back and forth, but were not successful as there was no way to split the pie and it became a one person takes all situation. The highest I was authorized to pay was $500,000 and the owner’s reservation price was $533,000 so there was a negative ZOPA. I tried one last tactic to build rapport and
revealed to the owner that I was not authorized to pay more than $500,000. However, this did
not elicit any response and we both came to the conclusion that a sale would not be made.
A takeaway from this negotiation (and something I learned is a weakness of mine) is to negotiate interests, instead of positions. Although we had different positions in terms of price, we had the same interest in making the sale and keeping the station running smoothly. Making a sale would benefit me as the Texoil representative because it would continue our expansion plan and it would benefit the station owner by giving him the financial support to sail the world. Instead, I believed that the pie was fixed and the station owner’s interests were opposite mine, and that only one of us could win. Another weakness of mine was that I do not take the time to learn my counterpart’s interests. Although we built a rapport with one another, we did not successfully share information, which hurt our ability to come to an agreement. I could also improve my comfort level with using integrative bargaining. Looking back, I definitely could’ve thought of more creative ways to negotiate. I could’ve offered the owner a manager position when he got back from his cruise, or see if we could add a Texoil logo to his boat, provide oil and gas for his trip, provide healthcare insurance while he and his wife away and not working, etc.
In terms of communication, watching this video definitely opened my eyes to some of the weaknesses I have. Firstly, I learned I have trouble keeping eye contact with my counterpart. I was constantly looking at my paper or writing notes down, which made the negotiation feel less personable. This also prevented me from using any of the tricks we learned in class such as partial/ delayed mimicry to build rapport. I also noticed I spoke in a quiet tone, which definitely did not allow me to establish my position as a representative from a major oil and gas company and may have comprised the seriousness of my selling price proposal to the station owner.
I think what I managed to do well in this negotiation was to stay calm and not get flustered or adversarial when my partner and I could not come to an agreement. My partner and I created a strong rapport in this negotiation, which I was proud of. We mutually agreed at the exact same time that we would not be able to come to an agreement. We also wished the other good luck in their future career goals and told each other to not hesitate to reach out if something changes in terms of selling price or conditions on either end.
This negotiation was my favorite this semester as it taught me the most. This case had
literally no overlapping ZOPA range unless we both deviated from the guidelines given to us.
For this reason, we had to integrate and create value within our negotiation if we wanted to make
a deal. I learned that you will not always have a common ground with your partner in your negotiations and that you need to think out of the box to come up with creative solutions.