Act as a master negotiator who is acting as Lee Young in the following negotiation.

Job Terms Negotiation*
Lee Young** and Purezza Pharmaceuticals***
Introduction
The scenario for this simulation is a negotiation over the terms of a job offer from the Australian
subsidiary of a multinational pharmaceutical company, Purezza Pharmaceuticals (Asia-Pacific) (PP).
The recipient of the offer is Lee Young, a student nearing completion of his undergraduate studies.
This background information introduces the principals involved, recaps their prior relationship, and
presents a detailed summary of the terms of the offer that the firm has extended to the student. For
the negotiation simulation, your tutor will assign you to the role of either Lee or Alex Reclutamento,
representing PP in the hiring process. The role-play information that your tutor will then provide to
you gives details about the specific interests, goals and objectives of your role character – as well as
alternative options.
Negotiations following job offers share many characteristics with other negotiation. Parties try
to pursue their own interests but also prioritize relationship concerns by seeking areas of common
ground. In other ways, however, negotiations over employment terms are distinctive because of the
stakes involved. For the person offered the job, they involve the negotiation of one's personal
circumstances, often with an “opponent” who is someone you will have to "live with" on a day-to-
day basis for what could be a long time to come. As you plan for your negotiation, think about how
this may affect how you would pursue your interests and goals when negotiating the terms and
conditions of the job offered to you.
Background Information
Lee Young is a UNSW student in the final year of his five-year combined Bachelor of Science in
Pharmacology and Bachelor of Commerce (International Business major). In 2017, he completed
his BSc honours research year in Pharmacology (achieving First Class Honours) so the only courses
left to complete this year are in his BCom. He has an offer (see Offer Letter, below) for full-time
employment from Purezza Pharmaceuticals, and the deadline for accepting the offer is a little more
than one week away. Lee spent last summer as an intern working at PP’s Macquarie Park, Sydney,
regional headquarters. His boss during the internship was Alex Reclutamento. Alex heads the section
marketing PP's blood-pressure and cholesterol-lowering drugs into North-East Asia and is the person
at PP with whom Lee will negotiate the terms of the offer.
Economic and Industry Conditions
At the time of the job offer, many in the international pharmaceutical business were fearful of the
fallout from the growing trade crisis between the USA and China, economic and political turbulence
in Europe (including Italy) and deep economic crises affecting important parts of Latin America,
including Brazil and Argentina. However, much of north-east Asia as well as Australia have, to date,
largely avoided the worst effects of these trends. Indeed, the pharmaceutical industry has benefited
through rising standards of living in many Asian economies. A longer-term trend is corporate merger
and acquisition activity that has created a small number of enormous multinational corporations. It is
largely these companies that carry on the hugely expensive research and development (R&D) leading
to the commercialization of major, new “branded” products.
At the same time, there is a growing market, in wealthy as well as less wealthy countries, for
“generic” drugs produced by firms that take advantage of the lapsing (through time) of patents on well-
known branded drugs. Generic drugs producers can manufacture at a fraction of the cost because they
do not need to carry out the hugely expensive original R&D – including clinical trials – do not conduct
the expensive patent securing/defence processes or engage in the original and expensive marketing that
gets the branded product (and its composition) known to medical practitioners. There has been an
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enormous increase in the diffusion of generic drugs to developing countries, particularly from low-cost
production in countries like India.
Company Background
Purezza Pharmaceuticals (PP) emerged from the 1995 merger between an Italian firm, once part of a
state-owned conglomerate, and a Swiss/Swedish company. Both had strong R&D traditions but
suffered in the face of fierce competition from huge corporations whose greater R&D capacity and
commercialization resources allowed them to stake leading positions in developing branded drugs. PP
has since taken over two smaller, older Italian companies, an innovative German bio-technology
company and a couple of companies each in Argentina and Brasil that specialize in generic drug
production and sales.
PP now has its headquarters just outside Milan and a dual listing on the Milan and Zurich stock
exchanges. It has two research facilities in Italy, one in Switzerland, another in Germany, one in
California and one in Sydney. It has production, packaging and distribution facilities in a number of
countries in Europe, North and South America and in Australia. Its network of commercial offices
is even more diffuse. Overall, PP has about 19,000 employees around the world, of whom about
2,700 are involved in R&D. Its research reach is even wider through collaborative arrangements
and sponsorships at a number of universities across the globe, including UNSW in Sydney. Overall,
this makes it a mid-tier, multinational “pharma” company, with particular market strengths in parts
of Europe and in Latin America. Its current head-office senior management has strong ambitions
for PP to achieve significant growth through expansion in the Asia Pacific region.
The Sydney operations have expanded in recent years as a result of the decision, taken in
Milan, to use Sydney as the initial base for major expansion into the Asia Pacific, starting with
North-East Asia. In its present form, it has been based in Macquarie Park in northern Sydney since
1998 and has become an important part of PP’s global operations and an increasingly important
strategic element. There are currently about 490 employees at the Macquarie Park operations, of
whom 90 are working in R&D. Indeed, the company is a member of Medicines Australia, a body
representing the innovative medicines industry in Australia. Total annual investment in PP’s Sydney
operations is about $AUS 40 million. Sales in Australia and New Zealand have been strong and
the Sydney office has had fruitful co-marketing and sales arrangements with local firms in
Singapore, Japan and Hong Kong. However, the real focus is now on developing a more substantial
commercial presence in Japan, Taiwan, South Korea and China.
Like PP in Europe, PP in Sydney prides itself on its reputation as an “employer of choice”.
Its particular focus here includes a number of policy initiatives: a strong commitment to equality of
opportunity in employment; special, free English language classes for those who might need them;
support for employees’ career development both in Sydney and through access to overseas postings;
provision of generous opportunities for further education and training; opportunities to shift within
the company’s different divisions; competitive salaries; flexible working arrangements; and a range
of benefits including enhanced superannuation (pension) benefits and company-subsidized child-
care arrangements through three child care centres in the Macquarie Park area; six months fully-
paid maternity leave (after a minimum 18 months’ employment); three weeks’ paid paternity leave;
subsidized membership at a gym around the corner.
Lee Young's Internship Experience at PP
Lee worked at PP during the summer between his fourth and fifth years of his (5-year) combined
degree program. He was fortunate to have secured an internship at PP because, with rising global
economic uncertainty, many of the big “pharma” companies operating in Sydney have suspended
their internship programs and curtailed graduate recruitment. It just so happened that, although PP
was suffering commercially in Europe and Latin America, its early work in north-east Asia through
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the Sydney operations had been showing real promise. This meant that it took on a small number
of interns over summer 2017/2018, almost entirely people doing marketing and international
business majors. It particularly wanted imminent graduates fluent in the main languages of its North
East Asian target markets.
Lee’s international business major was important for PP but more important was the direct,
personal recommendation he received from Lee’s honours thesis supervisor, an eminent professor
of pharmacology at UNSW, who also happens to have had a close, collaborative research
relationship with PP for nearly a decade. The professor is now working on a major new PP-funded
research project that Lee’s excellent honours thesis has contributed to in a minor way. This project
will likely continue for a further 5 years and the professor was hoping that Lee would return to it
through taking on further research work through a PhD thesis. Lee would love to continue working
in research through a PhD program at UNSW but would prefer to do that while employed by a
“pharma” company as this offers the prospects of much better job security.
While the professor had hoped that Lee would do his summer internship in the company’s labs,
the manager of PP’s internship program assigned Lee to the commercial side of the Sydney
operations, in fact to Alex Reclutamento’s section. Lee and Alex got on well from the start and Lee
fitted in with the close-knit teamwork that Alex had developed in her section.
Alex Reclutamento began working at PP 17 years ago, when the company really began to
expand its Sydney operations. Also a scientist by training, she has, however, chosen to pursue a
career as a manager on the business side of the company. Alex is enormously capable professionally
and charming and engaging interpersonally. People really like working with and for her, in part
because she works so hard on their behalf. When she joined PP, she had the particular advantage of
being bilingual in Italian and English due to her childhood years in Italy prior to migrating to
Australia with her family. Her being bilingual and cross-culturally adept was important in PP’s
original decision to hire her. At that time, PP’s local operations were still heavily staffed with Italian
managers, some of whom had less than adequate English-language ability and limited familiarity
with Australia. Alex rose quickly through the local PP ranks as operations expanded and she enjoyed
successful postings abroad – in Italy and Argentina. A proven performer, Alex has increasingly
been assigned to pivotal, vital roles within PP. Her task of managing expansion into North-Eastern
Asia is vitally important for the whole of PP, not just for PP (Asia-Pacific).
When he landed the summer internship, Lee expressed an interest in working in the R&D side.
However, PP’s HRM people saw this as less important and relevant than exposure to the commercial
side of the business. They thus assigned Lee to regional product management with Alex. The
internship exposed Lee to senior management and different groups within the company. Indeed,
Lee received accolades from senior local executives following his presentations on conditions and
context in key target markets, likely modes of entry, and particular areas of regulatory compliance.
The internship ended on a high note for the company and for Lee Young. PP (Asia-
Pacific) used some of the work he prepared to prepare a promising business plan for a joint venture
in Korea. And, Lee received a job offer letter from PP. The offer came from Alex Reclutamento's
section, not from the R&D section that Lee was really hoping to join. While job assignments at
PP can change frequently and senior management is very amenable to helping people transfer
within the company, Lee is concerned that too much time spent away from research work will
mean a deterioration in his research skills and greater difficulty in re-entering the world of
scientific research. At the end of the summer, Alex assured Lee that if his interest truly lay with
R&D, he would not have to spend too long in the commercial side before transferring over. Alex
herself had performed well in her initial job assignment within PP, and subsequently found herself
courted by executives from several different internal groups who wanted her on their teams.
Although the permanent job offer was tendered back in late March after the conclusion
of the internship, PP told Lee that the offer would remain available until August 2. The
specific terms of the offer are shown in the offer letter. Now it is July 19, and Lee has
arranged to speak with Alex to discuss the offer before making a decision.
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Offer Letter
Purezza Pharmaceuticals,
1-5 Research and Development Ave,
Macquarie Park, NSW
March 26, 2018
Lee Young
28 Studious Street,
Kensington, NSW
Dear Lee,
On behalf of Purezza Pharmaceuticals (Asia-Pacific), I am delighted to confirm our offer to you
of the position of Graduate Recruit. Your appointment will be effective December 3, 2018. The
specifics of this offer are as follows:
Position: Graduate Recruit, North-East Asian business development: blood pressure and
cholesterol-lowering products.
Starting salary will be $62,000 annually, paid fortnightly. There is the provision for annual
salary increments – subject to your supervisor’s assessment of your performance – of up to
$1,000, available at the end of each of the first two years of your employment with PP.
Annual Bonus: An annual bonus may be available depending on employee performance and the
employer’s judgement as to whether economic circumstances allow for the paying of bonuses.
Superannuation: Company standard 12% employer contribution (cf. 9.5% current legal
requirement). This is a non-negotiable entitlement.
Benefits: Purezza Pharmaceuticals (Asia-Pacific) provides comprehensive and generous
employment benefits to its employees. You will be entitled to all the benefits detailed in the
applicable plan document in effect at the time you join the company. The Human Resources
Department will send details on these benefits, along with specifics regarding paid sick leave,
paid parental leave and paid annual holiday leave, under separate cover.
This offer remains in force until August 2, 2018. If you choose to accept the offer, please sign
and return a copy of this offer letter on or before that date. Should you have any questions, the
appropriate point of contact is the hiring manager, Alex Reclutamento.
We are impressed with your background and experience, and we look forward to having you join
the Purezza Pharmaceuticals team in December.

ROLE INFORMATION FOR LEE YOUNG
You are a student near the end of your fifth and final year of a BSc/BCom (Honours) at University of
New South Wales (UNSW). You majored in pharmacology in your science degree and did so well
that you did an (additional) honours year and received First Class Honours. You are currently
finishing your commerce degree, majoring in International Business where your results are very good.
Your first love is scientific research but you are open to working and learning in other fields.
You were already mad about science in high school. The main reason you also did a commerce degree
was that your careers advisor at high school pointed out that Australia has not been good at providing
sufficient, good and secure jobs in science but does much better in providing employment for
accountants and those working in the finance industry. Business studies were your insurance policy.
Your honours year has given you a real passion for doing further scientific research. You
have really enjoyed your time at UNSW and would really like to return there to work on a PhD.
However, what you know about the insecurity and unpredictability of university research funding for
science in Australia – and hence for employment in universities – has made you wary about going
down the traditional research training route: seeking a PhD scholarship (which you would very
probably get); then a post-doctoral fellowship; and then an academic position. Once again, your
concerns about employment and career security mean that you are seeking to do further scientific
research training through another route – employment in a leading “pharma” company.
You are now about to negotiate an employment offer package with Alex Reclutamento of
Purezza Pharmaceuticals (Asia-Pacific) (PP). PP is an Italian-based multinational company that has
been rapidly expanding into the Asia-Pacific region through its regional headquarters in Sydney. You
already know a bit about PP as you did an internship there over the last summer break. In fact, Alex
was your manager during that summer internship and she helped show you around the Sydney
headquarters, research laboratories, production facility and warehouse. However, most of your time
involved working with Alex in the commercial side of PP's business.
You very much enjoyed your summer experience at PP because the people – particularly Alex
– were so helpful and supportive and because it gave you a really good insight into the commercial
side of the international pharmaceutical industry. As well, you can see that PP offers satisfying career
opportunities, whether you opt to further your interest in pharmacological research or the commercial
side of the industry – or, perhaps, both! PP’s expansion into the Asia-Pacific seems exciting, as does
its reputation for research-based innovation in pharmaceutical production. The thought of an overseas
posting is also very attractive. Finally, you have seen and heard that the company makes a real effort
to make employment there attractive. Everything you saw convinced you that PP is a company you
would like to work for.
The company seemed pleased with your performance and Alex told you, before you finished
your internship, that you are one of the top candidates for a permanent job out of the 8 summer
interns. Alex also mentioned at the time that PP would probably make offers of full-time positions to
no more than about 4 of those summer interns.
In early April 2018, shortly after starting back at university, you received a letter with the
terms of a job offer. Unfortunately, the overall employment package they propose does not fully
satisfy your needs. With PP willing to wait for a decision until August 2, you sat on the offer while
pursuing other possible job opportunities during the business school recruiting season. Now it is late
July, and you have contacted Alex to discuss the terms of the PP offer.
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The job-search season has been turned out well for you. In addition to the PP offer, you
currently have offers from:
i. another European-based multinational pharmaceutical business, Medicait
(Australasia) (Medicait). Medicait however specializes in producing and selling a
range of popular generic pharmaceuticals into Australia and New Zealand; and
ii. a tiny, local venture capital-funded company, Going North Products (GNP). GNP is
working, in partnership with a local university research team, towards developing
patents on formulae developed at that university.
Your primary goal is to find employment in a leading multinational pharma company that
will provide you with opportunities:
• to further your research career, as well as
• to go into the more commercial side of the business, including its international aspects.
The way you see it, this should be your first big career job opportunity and it should set up the next
stages of your career, which might well include international experience and a management track. In
any case, you see yourself committing a number of years to the firm, all things going well. You thus
seek an opportunity that will provide a mix of further research education and corporate training,
progressive responsibility, and employment security as well as diverse and interesting work.
Both PP and Medicait offer particular advantages. PP has the advantage of large-scale,
advanced and multinational research capacity through its various laboratories. It also sponsors
collaborative research projects at the Politecnico University in Milan, other universities in Europe and
the USA and at UNSW. Its commercial presence across Europe and North and South America is
impressive and it is now making a major investment in the Asia-Pacific. PP was also recently named
one of the top 50 European companies to work for in a major Economist (magazine) survey.
The immediate prospects for you at Medicait appear to be better, in some ways, but also
narrower. While very successful in commercializing generic drugs, Medicait has a very small
independent research capacity. Rather, it has been very successful at manufacturing products from
formulae whose patents are no longer in force through passage of time. This suggests that, were you
to join Medicait, you would almost certainly be giving up on your scientific aspirations and
committing yourself wholly to management or commercial aspects of the business.
On the other hand, Going North Products has almost no commercial presence as yet but is
working closely with a university to move through clinical stage trials for 5 formulae and towards
patents in Australia and abroad. If it is successful in this, it will probably never produce those
pharmaceuticals but sell them on very profitably to a multinational pharma “major”. The current
management intends to keep the company small, cost-efficient and lean. This is due to the fact that it
only has a limited “bucket” of funds from its venture capital partners. At GNP then, there seems to be
room for you to work closely with the university group doing that research but little real chance of
developing any kind of managerial or international experience.
A disappointing aspect of the PP offer is that it does not include any mention of your hoped-
for sponsorship (through paying you a salary) for further research training in a full-time PhD (working
with your honours supervisor). Informally, Alex had assured you that, within a year or so, you should
be able to apply for this kind of scholarship but that PP normally insists that graduate recruits spend
some time becoming socialized into the company first. Your friends at PP say that management
typically is able to follow through on these kinds of assurances if you perform up to expectations –
but doesn’t like to put any such promises in writing.
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In the meantime, PP has offered you a generic “graduate recruit” position in the section
responsible for marketing the firm’s blood-pressure and cholesterol-lowering drugs into North-East
Asia. Alex heads that section.
The offer from Medicait includes no research career opportunities. Yet, it suggests quicker
career progress on the commercial side, including starting as a trainee assistant product manager in
business development. From what you have heard, after a year or so, you could become an assistant
product manager. The starting salary at Medicait is $67,000 ($5,000 higher than at PP). It comes with
a signing-on bonus of $2,000. There is no mention of increments at Medicait but there is a more overt
sense of upward mobility available. The employment benefits offered by Medicait are less expansive
and generous than those offered by PP and you know nothing about Medicait as an employer.
Your other alternative – GNP – has also offered you a position with a “real” title, with a
salary that is comparable to the PP offer. GNP is, however, also offering a large number of share
options, unlike PP or Medicait. The potential financial return, should these options vest in a favorable
position, is phenomenal. However, venture capital companies such as GNP are high risk and many do
not survive more than a few years. With recent volatility in some markets and much greater scrutiny
of financial institutions this year, banks are very wary of lending to risky ventures. Other institutional
investors are also much less willing to invest in start-up firms than in the past. Thus, the prospects for
hitting it big with share options in GNP are somewhere between dim and remote (but not nil). An
alternative route to a handsome options payoff is if a large pharmaceutical company buys out GNP.
However, GNP is not presently an acquisition target because its 5 formulae are regarded as too
underdeveloped to bet on at this time. Considering all these factors, your interest in the opportunity at
GNP is low because of the risks involved. You are wondering, however, if you should use GNP’s
offer as leverage to improve the packages offered by PP or by Medicait.
As you prepare for your conversation (negotiation) with Alex, you are pondering the issues
involved and planning your strategy. Here is your current thinking:
Funding to do a PhD:
You know that you would have to be enrolled full-time in the PhD for this to be effective for the
UNSW professor’s project and for your own thesis research. Nevertheless, you have seen that many
full-time PhD students also do paid, casual tutoring work to supplement their scholarships. Usually
they will not do more than one day’s casual work per week. Tutoring work will probably only be
available for about 33 weeks each year, under UNSW’s new three-term teaching schedule. Where
they can, some PhD students then pick up extra work as research assistants or as private tutors to help
them make ends meet.
If you do enter the PhD program full-time, one good thing is, as an Australian citizen, doing a
PhD at UNSW means you face no course fees (and hence no HECS obligations). Your studies will be
free of charge. However, you aim to move out of your parents’ home and rent accommodation with
friends. And Sydney is really expensive, whether near Macquarie Park or UNSW! So you will need
sufficient funding, through salary and/or scholarship, to cover your now much higher living expenses
over the 3 to 3.5 years it will take to finish the PhD full-time.
The important and potentially difficult question therefore concerns whether the company will
cover your living expenses if you are doing a full-time PhD and, if so, how (and to what extent). One
option is for PP to provide you with a regular salary, as an employee, while you are researching full-
time at UNSW rather than working at PP headquarters. This would function a bit like an industry
cadetship – but at a higher level.
Another option is for the company to provide you with a PP “research stipend” (similar to a
scholarship in that it covers basic living expenses). Each type of pay suggests a different role. If PP
pays you a stipend, you are more clearly a PP-sponsored student at UNSW. And, research stipends are
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tax free. If you receive a regular PP salary, then you are much more a PP employee who has been
seconded from the company to do research at UNSW.
For status and employment security (as well as financial reasons), you would prefer a full
salary – at the graduate recruit level. You would be prepared to accept the equivalent of a part-time PP
graduate recruit salary while doing the PhD full-time IF the company also paid you a salary top-up
that reflected an arrangement whereby you spent, say, one day per week working in the company.
This would mean you would spend that one day at PP instead of tutoring at UNSW. Preferably your
one day each week at Macquarie Park would be working on something that complemented what you
were doing in your PhD. At worst, you might settle for the equivalent of PP funding you doing the
PhD at the level of the better scholarships available at UNSW. These pay something like $37,600 per
annum, tax free. To earn $37,600 tax free would normally mean earning about $43,000 per year,
before tax, as a regular employee on a salary.
Assignment:
You are wondering if you should raise with Alex your main disappointment with PP's offer: having to
start as a generic graduate recruit rather than in a precise business, scientific management or research
role. If only she could upgrade the offer by making the formal role more prestigious than graduate
recruit! That would satisfy your aspirations towards developing the business side of your career as
well as your belief that you bring much more to the company than a typical graduate recruit. Even
better, the company could offer you a precise role on the R&D side.
Nonetheless, you realize that Alex knows full well about your career interests and goals, and
perhaps there are legitimate reasons why PP offered you the generic title and in that unit. Would
raising this issue merely alienate Alex, and therefore make it harder to negotiate other issues? Or is it
worth using the fact that the Medicait offer is as a trainee assistant product manager in business
development to try to push PP into a change in their offer?
Salary/Job Title:
From what you can tell from recruitment web sites, a graduate recruit’s annual salary for similar
scientific fields sits, depending on degree and results, between $42,300 and $57,800, with potential
for up to $5,000 extra for top honours graduates. This means that being hired under that classification
seems to limit your starting salary as well as potential future earnings. The PP offer on the table is
$62,000. Likely annual increments make more palatable the fact that the starting salary offer does not
seem to fully recognize what you bring to the company.
You are potentially willing to trade off up to $10,000 in your starting salary in exchange for
PP funding you through a PhD (see above). Otherwise, you would like to get a better position
description; preferably something more science-oriented, like “clinical trials administrator”. This
category has a similar pay range to graduate recruits from what you see on recruitment web sites.
Even better would be the better paid role of “clinical research associate”.
If you cannot obtain an improved job title, then some additional salary that brings the offer
closer to that from Medicait would be nice. Alternatively, you could explore the possibility of a
guaranteed year-end bonus, something that PP alluded to in its job offer. Your understanding is that
year-end performance bonuses in some pharma firms vary from 5% to 15% of annual base salary
(pro-rated for the first-year employee who starts in the middle of the year).
Overseas Posting/Experience:
You are very keen for this sort of experience and you were wondering how you could factor this into
your job offer. It might be through some paid PhD research secondment to a university that had
collaborative projects with PP or to a PP research, production or commercial facility overseas.
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Signing-on Bonus:
You have learnt from an advisor in the UNSW Careers Service that it is unusual for even top honours
science graduates to be offered a signing-on bonus, but graduates in finance, marketing and
accounting can negotiate one. However, you will also have a commerce degree with a major in
international business and have done some courses in accounting, economics and finance. You are
wondering if this would allow you to negotiate some sort of bonus with PP, perhaps even $2,500.
Share Options:
Given the uncertain short and medium-term outlook for venture capital stocks in the current economy,
it is very difficult to assess the value of share options from GNP. At best, you could perhaps use it to
ask for more base salary or scholarship support from PP.
Start Date:
The start date is not a major concern for you, but apparently it is for PP because Alex told you that she
is desperate to expand her section as soon as possible. The markets are booming for blood-pressure
and cholesterol-lowering drugs in Japan, South Korea and now China as rising standards of living
encourage more unhealthy eating habits there. PP is very committed to making major inroads into
those markets and Alex has the responsibility to see that it happens.
You did mention to Alex some time ago that you and your fiancé` were planning on travelling
around Europe – and particularly Italy! – for a few months after finishing up your studies in
November. However, in reality, plans for the trip are tentative at best right now. You could use this
issue to gain some concessions on other issues.
In summary, PP is your first choice as a place to work among the set of offers that you have
received. Medicait is your obvious second choice, and certainly a very acceptable alternative, if you
are prepared to forgo your research career. Still, you feel you need to see some non-trivial
improvements in the terms of employment offered before you are willing to choose PP over Medicait.

As part of the preparation for this negotiation, prepare chit chat question to ask Alex in order to gain information that would be useful to improve your negotiating position.