Impact of a Bad Negotiation

Negotiations: A phenomenon that will follow you no matter which walk of life you take. The reason for this is fairly simple and it’s because our society as a whole depends on it, which is why organisations offer negotiation courses to their employees. There are countless examples of how a single negotiation taking place between owners of two corporate giants may impact dozens of other industries. It’s a web of connections that make up the very foundations of the world that we live in.

There are some that are good at it. They know how to make the best out of any situation. Whether it takes them minutes, hours or even days, they always leave the table with what they planned to achieve. For corporations, these might be assets that they must retain at all costs. These are the people who ensure that a corporation never has to incur an excessive amount of loss in terms of negotiations.

However, it doesn’t always pan out that way. There have been real-world examples of huge corporations making mistakes in the boardroom. While their experiences may haunt the individuals for the rest of their career, it serves as an excellent example to others about the huge negative impact a small mistake could have on their company.

A specific example would be Pacific Oil. Pacific was one of the most respected and largest companies operating on American soil at the time and had just re-signed their largest client – Reliant.

However, it soon became clear that within a few months, Pacific would face competition offering the same service at nearly half the price. Pacific knew that they faced a real challenge. The person in-charge of Pacific’s dealings with Reliant was called Jean Fontaine.

Fontaine knew that the competition was about to heat up and although Pacific still had enough muscle to continue leading the industry, there were better and a lot cheaper alternatives available. So, he decided on a strategy that was admittedly bold but had the potential to be incredibly successful. He knew that Pacific relied heavily on Reliant, with whom they had signed a 4 year deal 2 years ago. He knew that the new competitors would definitely go after them and he had to do something to swing the balance in their favour. He decided that he would offer Reliant a 10 year deal.

He had his entire legal team present arguments, facts, past relationship data and projects completed. It all seemed like the perfect argument to convince Reliant. When Pacific called Reliant, they found out that the person Fontaine had dealt with in the past was gone. There was a new negotiations team and so Fontaine flew to Berlin for a fresh round of negotiations.

The negotiations lasted for nearly a year. Every time it seemed that Pacific had a done deal, Reliant would ask for something more. And this continued for the next month. Pacific gave Reliant lower prices and higher volume, it was a one-sided deal and Reliant knew it.

At the end, Reliant sought the right to resell the raw plastic that it received from Pacific. This would’ve meant that Reliant would’ve become Pacific’s own competitor. Resentfully, this demand was also met.

All of this happened because Fontaine was unprepared. He showed no initiative, no willingness to stand firm, no willingness to play hardball. The sad, almost sympathetic thing is that Fontaine thought he was prepared while in reality neither he nor Pacific were and they paid the consequences.

In the end, negotiations are all about getting the best for your side. Failure to abide by that rule can only lead to complete and utter failure.

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Melissa Thompson

Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of and writes about health, wellness, and business topics.