Managerial Negotiations

As I mentioned in an earlier blog entry, I am taking an elective called Managerial Negotiations. First year MBA students who have a GPA above 3.25 are allowed to take one elective during their second quarter. I figured Managerial Negotiations was a great choice because it is not only applicable to business, but also to everyday life.

The class is designed to allow us to practice different negotiation tactics each day in small groups. This safe environment allows us to get out of our comfort zone and really test different theories and strategies. Today’s class involved a negotiation between two companies: one interested in selling a manufacturing plant and the other interested in buying a manufacturing plant. The buyer and seller each knew several common facts such as the appraisal value of the plant and the selling price of a slightly newer manufacturing plant in the same area.  Although this common knowledge allowed us to get the conversation started, there were other areas that we had to consider such as: the building’s depreciation, falling land value, synergies between the companies manufacturing process, and the time it would take to build a new plant if an agreement couldn’t be reached.

I left my negotiation very happy with the deal I made.  I purchased the plant in the lower part of my target range which I developed before entering the discussion.  As it turned out, my price was right in the middle of the class’ purchasing prices: five individuals bought the plant for less, six individuals bought the plant for more, and two groups were unable to reach a deal.  Not too bad.