Price and Gas Station Essay Example

I expected that Texoil could keep it open for 24 hours. and would add a mlnl-mart, the sales revenues would definitely ubstantially exceed the current sales. This profitable outlook for Texoil, coupled with the knowledge that mine was the only gas station in the neighborhood up for sale, made me feel that Texoil ought to be very Interested. As part of my preparations, I also contemplated on Texoll's BATNA. I knew that Texoll was looking to expand their presence in this area since activity at the port was increasing rapidly, with bright prospects for the future.

Also, building a new gas station was an expensive and time consuming effort - I knew that it could cost Texoil approximately 675 K to complete such a project. So I concluded that the Texoll representative did have an alternative in terms building a new gas station, but I did not think that it was an attractive proposition for Texoil. It definitely seemed to me, that the best interest for both parties was to come to an agreement that was mutually beneficial, since neither side had attractive alternatives. I was hoping that I could build trust, share Information with the representative and make deal.

As a result, my plan was to begin the negotiations by trying to get as much information from the representative ithout trying to reveal much about my personal motivations. Negotiation: After brief introductions, the Texoil representative congratulated me and my spouse for the excellent management of our gas station and the loyalty of our customer base immediately established a good rapport.

This was in sync with the "liking" tendency of human behavior in generating a

positive response from us (Cialdini, 2004). He also tried to gather information about our future plans and our main interest in selling the station.

I was careful to avoid disclosing too much information that might be onstrued as eagerness or desperation to sell (Carver, pg 88). I was hoping to get the rexoil representative to make the first offer since I did not want to set a ceiling for the price.

However, when pressed by the representative to quote a selling price, I provided rational reasons as to why the purchase of the station would be beneficial to Texoil. This included sharing some facts about the lack of competition in the immediate neighborhood, the bright prospects of the area as a whole due to increased activity at the port, cost estimates for building a new gas station, etc.

None of this would have been news to the Texoil representative, but it established a common understanding of the value proposition involved and built some trust. Based on other changes that Texoil would be expected to make to the operations, such as adding a mini mart and a 3rd operating shift, I asked for a reasonable price of $590K.

The Texoil representative rejected our initial selling price and claimed that he was not authorized to spend this much money. It is likely that this was simply a means to negotiate down with us. He made an offer of $500K for the station, ignificantly under-cutting our suggested price.

My spouse and I did our best to get the representative to improve his offer but were not able to do so.

We re-iterated over the reasons/]ustifications for pricing the

station as we had done, even presenting scenarios to show the undeniable profitability of the enterprise. Although the representative did not move on price, we were able to extract a concession in terms of employment for both of us at a fairly attractive annual salary. In the end the rexoil representative met our reservation point and we were able to conclude with a eal that was favorable to both sides.

In this negotiation, I could see that we covered all the three elements of negotiation moving from Information phase to Competitive phase and ultimately arriving at the Cooperative phase.

Lessons Learned It would be difficult to designate this negotiation as a complete success. Even though my overall negotiation strategy was successful, I was not able to maximize the selling price or even get closer to the target price. I am glad that I had done substantial preparation for the negotiation, especially by setting the target and reservation oints.

These helped guide me during the meeting.

However, I have a tendency to erode the negotiation down to my reservation point too easily. During the negotiation, my spouse and I relied on general information about the area, neighborhood, and our station in particular, to try to Justify the higher sale price. I did not gather/ compute any specific operational data that could quantify the profitability of the gas station currently, and in the future under Texoil ownership. Doing this would have generated a more meaningful dialogue with the representative.