$0.00 – $6.00
Abram Chayes and Antonia Handler Chayes
Two-party, four-issue negotiation between representatives of a Central American country and an international petroleum corporation over the terms of an offshore drilling project
The Federal Republic of Meridia, located in Central America, is negotiating to sell off-shore oil leasing rights along its Eastern coast. the capitol of Meridia, Quintaro, is on the Western coast. Its population is 500,000. Meridia's Western coast already has a number of off-shore drilling facilities, but this would be the first in the East. The Government has high hopes about the effect these newly discovered oil fields will have on that region. The city of Guaca, which dominates that region, was just involved in a six-year civil war. Meridia has many offers by contenders. Petrocentram, from Venezuela, is one of those three.
Negotiations between Meridia and Petrocam have been going on for about a month. A "final" negotiation session is about to begin. If a decision is not reached today, Meridia will begin negotiations with other companies.
- This exercise is an excellent vehicle for comparing principled negotiation and positional bargaining. Depending on the skill of the other negotiator, both approaches can do well. Both parties should be risk averse, however, and wary of an adversarial approach that might get out of hand.
- The knowledge that one's BATNA is weak often leads people to negotiate much less vigorously than they otherwise would. Is this ever justified? If so, under what conditions? The case presents a good opportunity to point out that any such analysis should be based on a consideration of the parties' relative BATNA's.
- Since the case does have a strong competitive element, there is ample opportunity to explore techniques for indirectly and directly extracting information from the other side. Likewise, techniques of protecting oneself from "giving up" the possibility for gains that were unforeseen can be explored and discussed.
Meridia and Petrocentram Attributes
|Time required:||1-2 hours|
|Number of participants:||2|
|Neutral third party present:||None|
|Teaching notes available:||No|