PacificOil Company: A Case Study
Forthe PacificOil Company,there are a number of recommendations that would not only improve thecompany’s performance, but also align its operations forcompetitive advantage. One of the recommendations is that the companyshould neither accept nor make any concessions with Reliant ChemicalCompany. PacificOil Companyshould not establish any agreements with the chemical company becausetheir interest in the contract may not add strategic value to the oilfirm. It is important that a company seeks a contractual relationshipwith a firm that adds strategic value to its operations. In thiscase, PacificOil Company has not evaluated those values based on the intereststhat Reliant Chemical Company has expressed in the contract.
Atthe same time, Pacific Oil Company should find an arbitrator toevaluate the contracts with any company, including Reliant ChemicalCompany. The advantage with this choice is that the company will beable to evaluate problems before they become realities of thecompany. The company will be able to identify the clauses that maynot work with its business strategy and iron out before entering intoa contract. The use of mediators is also important as the companyseeks to focus on the primary role of its business, yet exploringstrategic partnerships. Mediators will be focused on the interest ofboth companies with a view of balancing them both for the benefit ofthe contractual parties.
Inaddition, PacificOil Company should find new alternatives to improve the competitiveadvantage. The competitive advantage of the company is importantbecause of the current performance and future position in the market.As the company seeks to improve its operations, it should also focuson edging out competitors through competitive and efficient services.Therefore, an alternative that solves both goals is desirable for thecompany in the current circumstances. To select the new alternatives,the company should evaluate the available suppliers with a view ofmaking a contractual agreement. The company that solves the currentproblems and sets at a future position in the oil markets is the bestoption for the Pacific Oil Company.
Thenext recommendation is that PacificOil Company should merge all the small companies into a singlecompetitive firm. This will improve the market share of the companyand the market position as an oil firm. However, the process ofmerging the small companies should be done with consideration of thecontribution that each company makes in the market. At the same time,the management of Pacific Oil Company should evaluate the strategicvalue that each small company makes in order to decide on whichcompany to take which position in the merged unit.
Asthe firm enters into negotiations, PacificOil Company, the management should have contingency plans. Theadvantage with contingencies is that the firm will have a plan toimplement if the initial strategy of contracts with other companiesfails. In this case, Pacific Oil Company could have made negotiationswith other companies that serve the interests it sought in ReliantChemical Company. In the contingency plans, the firm should considerthe best strategy for each and evaluate the possible outcomes. Withthese recommendations the company will make contractual agreementsthat improve its strategic interests and competitive advantage