Texoil Negotiation Exercise
Reflection Paper - Texoil
For the Texoil negotiation, I was in the role of the Service Station Owner. As such, my main objective was to sell the station and get the best possible agreement. My BATNA was $400,000, which represented an offer from British Petroleum and my resistance point was $413,000 after tax, which represented the cost of my trip. My target was $488,000, which included an additional $75,000 to help tie me over until I found a job upon my return. This resistance point represents a purely financial alternative. However, there were several other criteria or interests other than strictly financial which could have been satisfied through non-financial means. My underlying interest or reason for selling the station was to realize my life’s dream of sailing around the world. My wife and I were planning to take a two-year trip and needed the money to buy a sailing boat and cover our costs. Furthermore, I was concerned about having a job when I returned, and concerned with tax issues because of the capital gain on the sale. The final agreement included a purchase price of $210,000, covering $86,000 to get my boat ready, a Texoil gas card for a 25% discount worth $10,000 of my maintenance costs, a job at $85,000 for less hours upon my return, and a loan to cover the rest of my cashflow needs not payable for two years. Towards the end of the negotiation I was still concerned about the size of the loan I would still have outstanding. But since I would be making an additional $10,000/year for less hours and have about 13 years before retirement made this agreement very attractive. I was satisfied that I could pay off the loan with my increased salary or sell the boat upon my return. In this respect, although I did not achieve my target price in terms of cash, the agreement was worth $553,000 or $535,000 after-tax. This was well above my target of $488,000. Although the agreement did not meet my expected financial requirements, it more than
For the Texoil negotiation, I was in the role of the Service Station Owner. As such, my main objective was to sell the station and get the best possible agreement. My BATNA was $400,000, which represented an offer from British Petroleum and my resistance point was $413,000 after tax, which represented the cost of my trip. My target was $488,000, which included an additional $75,000 to help tie me over until I found a job upon my return. This resistance point represents a purely financial alternative. However, there were several other criteria or interests other than strictly financial which could have been satisfied through non-financial means. My underlying interest or reason for selling the station was to realize my life’s dream of sailing around the world. My wife and I were planning to take a two-year trip and needed the money to buy a sailing boat and cover our costs. Furthermore, I was concerned about having a job when I returned, and concerned with tax issues because of the capital gain on the sale. The final agreement included a purchase price of $210,000, covering $86,000 to get my boat ready, a Texoil gas card for a 25% discount worth $10,000 of my maintenance costs, a job at $85,000 for less hours upon my return, and a loan to cover the rest of my cashflow needs not payable for two years. Towards the end of the negotiation I was still concerned about the size of the loan I would still have outstanding. But since I would be making an additional $10,000/year for less hours and have about 13 years before retirement made this agreement very attractive. I was satisfied that I could pay off the loan with my increased salary or sell the boat upon my return. In this respect, although I did not achieve my target price in terms of cash, the agreement was worth $553,000 or $535,000 after-tax. This was well above my target of $488,000. Although the agreement did not meet my expected financial requirements, it more than