Biopharm-Seltek Negotiation Reflection

Running Head: BIOPHARM-SELTEK NEGOTIATION 1

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BIOPHARM-SELTEK NEGOTIATION 2

Biopharm-Seltek Negotiation Reflection

I was the CFO of Biopharm in the case simulation. After our negotiations, the CEO of

Seltek and I settled on a price of $12.2 million. Looking back on the negotiations, I was able to

secure a good deal for Biopharm within a relatively short time. I initially expected that it would

take tremendous periods of intense negotiations but we were able to conclude negotiations fast

enough, and this was a positive thing for me.

I believe that one thing that aided the negotiation was a clear understanding about both

organizations, and setting a clear reservation price. It was critical for both of us to have

information on each other’s company. Thus, we were both clear about what to expect from one

another and these expectations were fulfilled. Not only was I aware of my reservation price, I

also had a rough estimate of Seltek’s reservation price. My initial target price was $15 million,

but I did not move to make the first offer. Making the first offer usually has the advantage of

providing the offerer with anchoring bias. Nonetheless, I opted not to provide the first offer since

I felt I had the advantage of a good knowledge base. Knowledge is also significant in

negotiations as it provides power. In this case, allowing the Seltek CEO to make the first offer

provided an opportunity to see how they positioned the company and assess this against my own

expectations. My decision paid off since I received an offer that was below my target price. This

allowed me to readjust and make a counteroffer.

I believe that the lower initial offer is what contributed to the quick resolution of the

negotiations. Indeed, I was tempted to accept this offer but I was aware that accepting the first

offer might leave my partner with regret. I had initially adopted a competitive approach but a

realigned it to a more integrative one. We began to work through the issues at hand, which

allowed us to focus less on the issue of money and more on intangibles. I think I felt that I had

BIOPHARM-SELTEK NEGOTIATION 3

already won the negotiation since whatever price I obtained would still be below my target price.

By beating my target price, I felt it was now more essential to focus on other factors.

Furthermore, working through a negotiation process was important as it facilitated the buildup of

trust between the Seltek CEO and myself. An important part of this negotiation process was

discussing issues related to the workforce. I was able to discuss with the Seltek CEO the values

of Biopharm, and the type of employee culture that we were targeting. In return, he acquainted

me with the Seltek culture and this improved my own understanding of the current workforce.

Consequently, I was able to understand how it might best be handled. In line with this, it

emerged that perhaps some level of minimal training would be required to realign the workforce

to Biopharm. This allowed me to gain concessions related to the workforce. In return, Biopharm

offered to address the tax lien issue.

Through this exercise, I learnt that making the first offer might not always be

advantageous. This is especially the case where the opposing party has more information on you.

Making the first offer is especially advantageous where one has the benefit of having important

information obscured. Alternatively, if one has very good information on an opposing party, like

a pressing need for something, then they can allow the other party to make the first offer. This

provides some additional piece of information that can be used for evaluative purposes, after

which one can come up with a compelling counteroffer.

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