Texoil Negotiation

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553,000- ($100,000 cost of land + $20,000 depreciation) = $433,000

15% capital gains were calculated on $433,000 = $64,950

Target Level

$570,000

Alternatives /Proposals

Seeking a job with Texoil upon my return.

Asking, if Texoil might have an access to sailboat.

Seeking for partnership and sharing revenues.

Asking for a loan upfront to cover my cash flow needs.

Reducing the price to avoid taxes and treating an amount of it as a bonus.

Strategy for Negotiation

1. Value creation strategy needs to be used in this situation.

Prime location: The service station is located on one of the main routes leading to the Port of Los Angeles and is growing due to consolidation that is occurring among west coast ports.

It is operating 24 hours per day, and all expectations are that it will continue to do so.There are several small shopping centers in this area and numerous warehouses.

Few competitors: There are only two other service stations in the vicinity, and neither is run by an owner-operator. Both of the other two stations in the area are owned by oil companies and neither is for sale.

Cost of building a new station: Given the property values in the area, which have been soaring due to the activity at the Port, I estimate it would cost Texoil at least $650,000 to buy land and build a comparable station.

Environmental requirements: My equipment, although not state-of-the-art, meets all environmental requirements and my station has never had any difficulty in passing its annual environmental inspection.

Loyal customer base: I have a loyal customer base who like the Texoil products, and who are unlikely to switch to another station if Texoil buys this one.

Increase profits: Texoil could easily increase the profits from the station by keeping it open 24 hours a day, 7 days a week. In addition, Texoil could add a mini mart. The night shift from the port is an untapped source of customers and the mini mart should appeal to them.

2. Emphasize on long term partnership and work towards mutual gain.

3. Make package deals and make multiple offers during the course of the negotiation. Don’t stick with one offer only.

4. Make multiple offers, and bilateral disclosures, not unilateral concessions/disclosures.

5. Usage of integrative tactics which can be done by determining my list of priorities, and by guessing the other party’s priorities as well.

6. Informing the other party about the lucrative offers I already have or alternatives to gain leverage.

7. As a seller, I will make the first move and the offer as well.