Answers to the Arbitrage challenge

If you have not yet watched the film clip, watch the ‘Arbitrage Challenge’ before reading the answers.

Positive Negotiating Behaviours:

• Seller is well prepared. He is fluent on the details of the Buyer’s current challenges and all the relevant numbers.

• Seller structures the Buyer’s expectations.

• Seller has a wish list.

• Buyer remains calm in the face of very competitive (very red) even bullying behaviour, as well as the potential sanction.

• Seller summarises and writes up the agreed deal.

Poor Negotiating Behaviours

• Buyer doesn’t have a wish list.

• Seller's use of very competitive/bullying behaviour and use in a heavy handed manner - including threatening a sanction he can’t impose because he has to sell.

• The main element being negotiated is price - little else is used to create additional value. 

• Lack of constructive questions.

• The dominant feature was persuasion and haggling as opposed to any trading behaviour.

Did the two negotiate?

Not really. Whilst the ultimate outcome was a trade (companies for cash and two jobs), the process by which this deal was reached included no trading in differential value. Instead, the two negotiators persuaded, asked, imposed, haggled, walked away and conceded their way to a deal, whilst missing the opportunity to negotiate (i.e. to trade) to create additional value.