Negotiation Strategies PaperBiopharm-Seltek In the Biopharm-Seltek negotiation, we equally controlled the negotiation as we didn’t put the pressure on each other side. That was mainly because the Zone of Possible Agreements are quite large. Also, we tried to use Interest-Based Approach. we start the negotiation by asking the other interest first, so that we can know the truly need and come up with the solution that maximize the resources we have on the table. We tended to use the procedural types of interest; How the other side think issues should be addressed. We asked and answers the question frankly. For example, the Biopharm beginning the negotiation by asking the most three concerns that Seltek have in mind. The most critical factor that affected this negotiation outcome in this case was the person who do the anchoring first. Biophram started the negotiation by proposing $11M, and we negotiate from that point. In general, we should make a first offer only when you have sufficient information about your own and the other party’s aspirations and walk away points. We want to make it strong, then allow for moderation late. In this negotiation, as the Zone of Possible Agreement is quite large (Exhibit1), when the Biophram made the first offer, Seltek seetms to be interested in that number immediately. Another one important factor is that we didn’t let our emotion interfere the negotiation. We relied much on the information and do rational negotiating.
Because this is the first negotiation exercise, we did learn a lot from the case. The main factors this context highlight are the bargaining power of both the seller and buyer. Biophram want to buy a new specific kind of plant as soon as possible to gain the benefit of being a first mover for a new product. On the other hand, Seltek’s plant that Biophram is kind of interested in it is not in that good location. All in all, this case give us the opportunity to do negotiation whereas we have quite equal bargaining power and Biophram do have some other good alternatives on hands. We both satisfied with the outcome since it is in the Zone of Possible Agreement. However, I would say that Biophram got more benefit from the sliding the pie than Seltek ( the final price of $11M is more closed to Seltek Reservation price of $7M) as Biophram is the one who anchored with the first offer. After that, Seltek tended to have the offered number in their head and we negotiated from that point, with gave us the result closed to the first offer. Biophram negotiator was a little more aggressive in the negotiation than Seltek’s. This could be the case that Seltkek did not expect the Zone of Possible Agreement would be this large. That is to say, They thought Biophram had lower reservation price than it actually was ($25K).
In the Biopharm-Seltek negotiation, both parties had equal control over the negotiation process, as neither side applied pressure on the other. This was possible because the Zone of Possible Agreements (ZOPA) was quite large, meaning there was a wide range of potential agreement points. To approach the negotiation, an Interest-Based Approach was employed. This involved starting the negotiation by asking the other party about their interests, allowing for a better understanding of their true needs and enabling the development of solutions that maximized the available resources. Procedural types of interest, such as how the other side believed issues should be addressed, were emphasized. Both parties engaged in open and honest communication, asking and answering questions frankly. For instance, Biopharm initiated the negotiation by asking Seltek about their top three concerns.
The most crucial factor influencing the outcome of this negotiation was the person who made the initial anchoring offer. Biopharm took the initiative by proposing a starting offer of $11 million, which set the tone for the negotiation. It is generally recommended to make a first offer only when there is sufficient information about both parties’ aspirations and walk-away points. Biopharm’s strong initial offer captured Seltek’s interest immediately, likely because the ZOPA was large. Another important element was the ability to keep emotions in check and rely on information and rationality throughout the negotiation process.
This negotiation exercise provided valuable insights, particularly regarding the bargaining power of the buyer and the seller. Biopharm was motivated to purchase a specific type of plant quickly to gain the advantage of being an early adopter of a new product. On the other hand, Seltek’s plant, which interested Biopharm, was not ideally located. Overall, this case presented an opportunity for negotiation where both parties had relatively equal bargaining power, and Biopharm had alternative options available. The outcome was satisfactory for both parties, as it fell within the ZOPA. However, it can be argued that Biopharm benefited more from the negotiation, as the final price of $11 million was closer to their reservation price compared to Seltek’s ($7 million). This was due to Biopharm anchoring with the first offer and Seltek negotiating from that point. Additionally, the negotiator from Biopharm displayed a slightly more aggressive approach than Seltek’s negotiator. This may have been because Seltek underestimated the size of the ZOPA and believed that Biopharm had a lower reservation price than was actually the case ($25,000).