Reference no: EM133279056
Question - Turn Two Inc. is an oil company from the country Zurich which extracts crude oil from the earth. Turn Two Inc. signed a 10 year agreement with Proven Gasoline Inc. from the country of Caribs which stipulated that Turn Two Inc. would ship 400,000 barrels of crude oil per year to Proven Gasoline Inc. In return, Proven Gasoline Inc. would ship 200,000 barrels of refined gasoline to Turn Two Inc. Both companies are also the sole suppliers of gasoline products to their respective populations.
Proven Gasoline Inc. is the largest customer of Turn two Inc. and the sole supplier of refined gasoline. Turn two Inc. has the machinery to extract crude oil but lacks machinery to refine the oil for use.
On the other hand, Turn Two Inc. is the sole supplier of crude oil to Proven Gasoline Inc.
The agreement expires this year and due to increased operational and processing costs, Proven Gasoline Inc. is asking Turn Two Inc. to increase their shipment quota from 400,000 to 500,000 barrels per year and in return Proven Gasoline Inc. will continue shipping the same amount of refined gasoline (200,000 barrels) per year back to Turn Two Inc.
Turn Two Inc. has agreed to review the proposal only if Proven Gasoline Inc. also agrees to increase its shipping quota (from 200,000 to 300,000 barrels of refined oil). Proven Gasoline Inc. is adamant that this is not possible because the increased cost of production would affect them much more than Turn Two Inc.
The business culture in Zurich is very formal and male dominated. Additionally, it is believed that experience and age make for better business management. They value relationships and are more comfortable with long term associations.
Proven Gasoline Inc. is preparing a negotiation team to the 28 hour travel to Zurich to negotiate a deal.
Provide clear responses with use of example where necessary to articulate responses.
1. What are the interests of Turn Two Inc in this negotiation? (be sure to define interests and negotiation)
2. What are the interests of Proven Gasoline Inc. in this negotiation?
3. Discuss the factors that Proven Gasoline Inc. should take into consideration when selecting members of the negotiation team and suggest appropriate actions based on these factors.
4. Discuss how each company should approach the bargaining table and suggest steps for reaching a mutually beneficial outcome based on the underlying facts?