Biopharm-Seltek Negotiation Case Study

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On day two, we are assigned the “The Biopharm- Seltek Negotiation” role play. After the “Salary Negotiation” on the first day with a desirable outcome, we thought that we would perform better because we seemed to be more familiar with the negotiation process. The feeling of confidence then came into my mind, which made me believe that we would achieve a very favorable deal today. However, compared to other groups’ outcomes, we realized that it was not. Let us recall what had happened today and then analyse to find out why the outcome was not as good as we had expected and how to improve our shortcomings.
In the “Biopharm- Seltek Negotiation”, we played the role of the buyer – Biopharm, a profitable U.S.- based pharmaceutical company. In order to produce a genetically engineered antibiotic compound – Detox - a very promising pharmaceutical product, Biopharm needed a plant with special manufacturing equipment. There were two appropriate options for this decision making process: (i) Building a new plant or (ii) Buying an
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We started by using the real estate agent data of market value of the plant. The value was around $16 million. Adding up some possible tax lien on the property and considering the transportation cost we would have to pay (Seltek plan was 70 miles away from our Headquarter), we came up with the Target price of around $16 million. This was the Target price without Petrochek patent. Rearing Petrochek patent, although Seltek would like to sell it along with the plant as a full offering package, it was not valuable for us at all. Petrochek was just used to solve water pollution problem and was not related to our business. Besides, our top management team also did not want to buy Petrochek patent. Therefore, we did not intend to buy it unless they offered a appealing price, for example, half of market price. Then we might buy it and sell at the market price afterwards to obtain an additional
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