Common Negotiation Terms and Concepts
Negotiations can get complicated. Understanding fundamental negotiating terms and concepts is a great way to prepare yourself for future negotiations. To help, we’ve put together a negotiation glossary covering terms that are commonly used during the negotiation process and have provided a definition of how that term is used in the context of negotiating.
The amount of time given to one side to accept or decline the offer. Taking control of the timeline by using “acceptance time” is a powerful tool that can produce leverage as well as clues about the other side’s position. Build acceptance time into your negotiating process.
Generally the first offer in a negotiation. Due to human cognitive bias, the anchor point typically has a significant impact on the final agreement.
A tactic used to take advantage of human cognitive bias by making the first offer in a negotiation. People tend to give significant weight to a first offer and thus it becomes an “anchor,” keeping the remain negotiations from straying too far from that position. TableForce advises, if you know the market well, make the first offer so you can “anchor” favorably to your side. If you don’t know the market well, have the other side make the first offer (so that you have more data and insight), but make sure you don’t allow it to be anchor.
A process to resolve a dispute between negotiating parties who have reached a deadlock in their negotiation. The parties in dispute are referred to a “third party”, which is one that is either agreed upon by the parties in dispute, or as provided by legislated law. The third party renders a judgement that is binding on the parties in dispute. Arbitration is often used in international negotiations and in collective bargaining.
An unbiased and objective person agreed to by the parties to decide the outcome of a dispute.
Setting the highest achievable position, significantly better than the BATNA. Studies prove negotiators who have more favorable aspiration values produce better results. Expect more get more!
Also known as name dropping. A Vice President of a large company has pictures that are often displayed of someone shaking hands with important people. This behavior plays upon the human tendency of wanting to do business with people who are well connected. Common sense says that a person should disassociate from those who make it harder to reach an agreement. The tactics of disassociation are as important as those of association. Good planning requires a person to search for the right partners. A good negotiator should ask, “Will any of my associates make it harder for me to reach a favorable settlement with the other party?” If so, do something about it.
Attitudinal Bargaining: Parties to a negotiation start the process with deep-rooted preconceptions about how they should act towards each other. Emotional and rational attitudes are hard to change and are generally consistent with beliefs, opinions, and biases. A satisfactory negotiation cannot occur until both the parties modify their attitudes sufficiently to engage in the share-bargaining and problem-solving processes encountered in all negotiations.
Also known as attitudinal structuring, the concept is a part of a larger net of bargaining processes and strategies used in negotiations. It’s a way to manage relationships and create a social aspect in the negotiation process. The relationship you are looking to create with another party can be structured through different types of attitudes or emotions. How you will proceed depends on the types of attitudes the other party is displaying like aggression, anger, accommodation, cooperation, etc.
An event where buyers (or sellers) compete against one another to “win” by having the best price. Today many companies use online “reverse auctions” to source (buy) products or services from sellers – a reverse auction will drive down the price of the product or service being purchased.
Your Bargaining Zone is the range or area in which an agreement is satisfactory to both negotiating parties. The bargaining zone is essentially the overlap area between walk away positions in a negotiation
BATNA is an acronym popularised by Roger Fisher and William Ury which stands for ‘Best Alternative to a Negotiated Agreement’. BATNA answers the question: ‘What would you do if you weren’t able to agree a deal with your negotiation counterparty?’ Your BATNA is the alternative action you’ll take should your proposed agreement fail to materialize. Most business people simply use the phrase: ‘Best Alternative’. Best alternative to a negotiated agreement. If the potential outcome of your negotiation only offers a value that is less than your BATNA, there is no point in proceeding with the negotiation. You should proceed with your BATNA.
When someone gives you a “last and final offer,” don’t accept it at face value. Test it. It could be they are simply asking you to play “chicken” to test your resolve. When you are given a last clear chance to take a final offer or risk the consequences, you are in this “chicken” situation. You can usually keep talking. But not always!
A seller suggests a superior grade product to test how much money the buyer has to spend.
When offered a price the buyer asks, “What if I double the order?” or, “What if I take all you have?” This sometimes helps identify the seller’s true cost, or the seller’s flexibility in reducing a quoted price.
A negotiator starts a negotiation by using a “big pot” filled with numerous issues—some real and some made of straw. This accomplishes several goals: it tends to reduce the other party’s aspirations; it builds trading room into the negotiation; it demonstrates to others in their own organization that they are good negotiators; and it makes it easier for the other party to sell their own organization on the value of a reduced package. The “big pot” approach gives a negotiator room to negotiate and compromise. In the absence of other concessions, it gives the other party something to take away (i.e. “Look at all the things that I got them to give up”).
A missed opportunity or idea that one is not open to, not because of a physical eyesight problem, but due to a lack of information, perspective, intellect or emotional appeal.
A tactic in which one side pretends that they may do or agree to something that they really have no intention of doing. To pretend to be in a better position than one is. Asserting things that are not true. Used like the “Decoy” to test the other party. Business bluffing is part of negotiating. However, standards need to be established that forbid and penalize outright lying, false claims, bribing, stealing secrets, or outright threats. Bluffing, while ethical, involves some risk. The bluffer who is called loses credibility and bluffing sometimes leads to exaggerations and threatens the viability of the negotiation.
Nonverbal cues into the emotional state and feelings of another person.
A buyer says, “I love to purchase your product but have only so much money to spend.” The buyer establishes an anchor, but in a friendly way that invites the seller to help solve this “budget” problem. The seller, who usually knows much more about the product than the buyer, then gets involved to see if there are ways the proposed product offering can be modified so it can fit within the required budget. The negotiation moves away from a competitive affair to one of cooperation. The Bogey may not necessarily lead to a lower price for the buyer, but the buyer will be better off by learning a lot more about the product offering and price flexibility than was known before the Bogey.
The bottom of the range of acceptable outcomes is called your Least Acceptable Result. The highest point in the whole range of potential outcomes at which you expect to meet all of your goals is called your Maximum Supportable Position.
Best Possible Agreement: A collection of those choices that best satisfy all stakeholders” interests.
Creative development of ideas to solve a problem without judging the merit of the ideas. A creativity technique generally attributed to Alex Osborn, an advertising executive in the 1950s. The goal of brainstorming is to create a pool of ideas prior to evaluating each idea. Thus the brainstorming process is a synergistic event that avoids the negative impact of critical evaluation until a number of potential solutions have been created by the group. The result is more ideas to choose from and better quality ideas.
To hold a high risk position in a negotiation where the margin between success and failure is slim.
To get “buy-in” is to influence another person to agree, have confidence in, or become vested in a particular strategy or solution.
To acquiesce to terms and conditions you previously resisted.
A temporary withdrawal from a negotiation into a private meeting where a group can discuss sensitive issues, confusing issues, and changes in negotiating strategy/tactics. Sometimes used to “buy time” or to let a heated negotiation “cool down.” Also used when new, unexpected information is introduced into a negotiation, and time is needed to evaluate or research the new information.
A tactic whereby the negotiator selects the parts of an offer that they like and rejects the parts they don’t like. Use words of dependency, like “contingent on,” in your proposals to defeat cherry picking.
Chicken Tactic
When someone gives you a “last and final offer,” don’t accept it at face value. Test it. It could be they are simply asking you to play “chicken” to test your resolve. When you are given a last clear chance to take a final offer or risk the consequences, you are in this “chicken” situation. You can usually keep talking.
Trade-offs that require each group member to offer another member a concession on one issue while receiving a concession from yet another group member on a different issue.
Usually a temporary agreement between two or more individuals or groups to help them reach a common goal. Sometimes found in multi-party negotiations to help the coalition gain an advantage.
A psychology theory that says if I like Joe and you like Joe, we are likely to find other things we both like. This principle applies to the attitudes of people towards other persons, objects, or ideas. It also works in reverse. If I like Joe and you don’t like Joe, we will have trouble getting together on other issues.
A negotiation process that occurs between employers (or their representatives) and the representatives of a union to negotiate issues that consists of wages, hours of work and other conditions of employment. Normally results in a written contract that is defined by specific time duration – “life of the contract”. Doesn’t necessarily comprise bargaining as the name suggests. Negotiations between employers and their unions to determine wages, hours of work, and other conditions of employment. Collective Bargaining usually results in a written employment contract that is put into force for a specific amount of time.
This term refers to the area of agreement or a basis for an understanding, that is mutually agreed upon by all parties to a negotiation. Having a shared enemy or a shared problem can unite people and build trust. Having a common goal or a common problem dilutes the perception that the interests of the parties are completely opposed and helps establish a higher-level relationship between the parties that motivates them to agree rather than disagree.
Used to lower expectations of the other party. “I can get this from your competition for $$$.” “If you don’t lower your price I need to go out to bid on this.” “Everyone else is offering this option at no extra cost.” “This is the last one available for three months, if you don’t want it I know someone who does.” Determine if you have real competition or just imaginary competition. don’t let the party using “competition” generalize with you. Ask for specifics. Do you really have “competition” for your proposal?
Each side concedes something of value. Trade-offs made during a negotiation that hopefully bring the parties closer to agreement and help bridge differences.
Giving into something in order to reach an agreement. Concession is sometimes used to indicate a one-sided move, whereas a “trade” or “exchange” describes that each side gave and received.
Your concession strategy is a plan of the goals / positions and sometimes the underlying interests that you will be trading with the other party. Before you enter the negotiations, at the very least you should have clarity on your and the other party’s goals, and a sequence of which goals you want to trade or exchange. Concession strategies vary in detail. ‘Concession Strategy’ is more accurately called the ‘Trading Plan’.
Cross-cultural conflicts are often influenced by self-serving, disparaging, and retaliatory actions derived from historical events that have occurred between the parties. Each party has a tendency to choose its own events to justify biased actions taken during the negotiation. At the same time each side to the negotiation will use its bias to exaggerate the differences between the parties, and overestimate the extremity and consistency of the view of the other side.
Discipline yourself not to provide quick responses. When the other side makes a demand or offer, be it acceptable or not, don’t respond to it with a quick “yes” or “no.” Just keep quiet and think about it for a while. Better yet, write down a few calculations that only you can see or ask for some time to do a little research. Then when you do provide an answer, be it a “yes” or “no,” or anything else, your considered response will give greater weight to your answer. Whatever it is. A considered response gives your answer more credibility and respect. It becomes a stronger “no.”
Humans have a fundamental need to be consistent in their beliefs, feelings, and behaviors. To contradict ourselves is a sign of irrationality. This is why skilled negotiators will often try to get verbal commitments from the other party as the negotiation progresses. If a person agrees to something they are motivated to behave in a fashion consistent with this verbal commitment. When negotiating, be careful of what you agree to during the negotiation. It is better to state that your agreement on a particular issue is contingent upon how the parties agree on the other issues.
A negotiator starts with a specific style of negotiating such as cooperative, competitive, or individualistic/personal. This style dictates the basis of their negotiating strategy. Research indicates that as a negotiation progresses, people often change their negotiating strategy in response to how the other party is negotiating. Styles tend to converge. When a cooperator negotiates with a competitor, the cooperator is likely to move into competitive mode.
Build “cooling off periods” into a negotiation when emotions and power struggles become apparent. Both parties are better served if each has time to reflect on their own needs, interests, and positions—outside of the negotiating room.
Seeks to obtain equality and to minimize the differences between negotiator’s outcomes.
A new offer with different terms made in response to an original offer, thereby rejecting the original offer.
An international trade arrangement with a foreign business partner. A barter system whereby the parties agree to exchange, or purchase (buy back) for resale, goods or services in exchange for another type of goods or services. Goods or services exchanged may be used in the primary product or service being sold.
A negotiator may act crazy or irrationally and make a big scene. Sometimes the other side will give in to their demands simply to get the crazy person to stop doing what they are doing.
Ideas, suggestions and offers that satisfy the interests of both parties to a negotiation. Any concession that has a relatively low cost to one side but a relatively high value to the other side. Creative concessions help you achieve a higher level of interest-based or value-based bargaining through knowledge of the other party’s business, concerns, challenges, and interests.
A response to an offer that does not come in the form of a counter offer. It is designed to encourage the other party to move off its current position, to make concessions, and ultimately generate creative solutions. You should challenge all Crunches with an equally assertive or greater Counter-Crunch.
Each participant in a negotiation is pre-conditioned by their respective culture. Willingness to take risk varies widely by culture. Where one culture may find it perfectly acceptable to ask for much more than they need (i.e. leave a lot of room to negotiate) another culture reacts to this approach negatively (i.e. they are lying to us, we do not trust them). Some cultures are very individualistic while other cultures are collective or group-oriented. Some cultures prefer a direct negotiating style while others prefer an indirect approach. In some cultures decisions are made by consensus so no single person takes responsibility. A wise negotiator will assemble knowledge and understanding of all the various cultural biases that may be present in a negotiation and prepare accordingly.
Uses “Time” as an element to put pressure on the other side. Often as a negotiation moves closer to a “Deadline,” concessions and the magnitude of concessions increase. Participants start making riskier, unstudied decisions. Some Deadlines are caused by circumstances (e.g. the last pickup for mail is 4PM, the latest we can wait to start production is tomorrow, the airline flight leaves tonight). Some Deadlines do pose real consequences. Other Deadlines may simply be a tactic to force a decision or deprive you of adequate planning/preparation time. Always ask, “What will happen if we don’t meet the deadline?” “Is the deadline being imposed by my organization or theirs?” “Can I change the deadline if it will help us craft a better agreement?”
Impasse in the negotiation. Both sides lose and must pursue their BATNA.
A negotiation process where the debtor negotiates the amount, timing and any other terms of a loan such as arrears, liability, or balance owed to the creditor(s).
Asserting things that are not true or taking positions or making an offer that is ultimately withdrawn after they have impacted the other side’s position. Used like the “Bluff” to test the other party. It works when you agree to forget about some of your real interests in exchange for the other party forgetting about some of their “decoys” or fictitious interests.
You are provided something you did not agree to (i.e. extra service, extra materials) along with correspondence that makes the assumption that you agree to accept these extras. This places the burden on you to formally reject these “extras.” If you fail to take action and accept them, your inaction indicates tacit agreement to the altered agreement.
Justifying deceit of the other party based on your expectation that they will do the same to you.
This tactic plays upon your ethics, or lack thereof. You may be baited with an agreement that is clearly to your advantage, but contrary to your discussions. The danger lies in you quickly signing the agreement before the other party realizes their error or omission. Later, after performance of the agreement has begun, and you cannot back out, the “mistake” is brought to your attention and corrected.
A surprise treat or concession provided at or near closing the agreement that has no strings attached. The Japanese call these bonuses “delight factors.” Wise negotiators save a few items to give away as delight factors. These raise the satisfaction of the other party far more than their cost to you.
You can do this mentally with yourself, but it generally works better if you can enlist the help of another person to play the role of the other side—the person or group you will be negotiating with (i.e. play the role of the Devil). Have your Devil’s Advocate plead the other side’s case; take their anticipated position; use their arguments and objections. You should try to estimate your Devil’s desired outcomes and goals (BATNA). Do this prior to your negotiation. It provides you an “inoculation” in advance of the negotiation and helps assure you appropriate responses and strategies in place. Remember, the other side may be more intent on frustrating your proposal than accommodating it.
Literal truthfulness and efficiency in communication are highly valued and are to some extent a higher priority than personal or political sensitivities, especially in a business setting. Saying “No” or “I don’t know” is considered both honest and respectful of the party. Examples of cultures that promote a direct communication style include U.S. Americans, Australians, Germans and Anglo Canadians.
Common sense says that a person should disassociate from those who make it harder to reach an agreement. The tactics of disassociation are as important as those of association. Good planning requires a person to search for the right partners. A good negotiator should ask, “Will any of my associates make it harder for me to reach a favorable settlement with the other party?” If so, do something about it.
A negotiator uses disorder to confuse the other side. This tactic deliberately mixes things up. It can be used to forestall a deadlock; make the other side work harder; force through a last-minute demand; or allow one to retreat from a prior concession. Sometimes it is used just to see how well the other person keeps their wits under pressure. Disorder complicates the negotiation and the person using the disorder tactic hopes to profit from this confusion. Examples: the introduction of new product-price schedules; new quality standards or revised specifications; some services that were bundled are now unbundled; new delivery dates; suddenly apples can’t be compared to apples and cost comparisons become almost impossible to make.
A negotiation in which the interests of each party is in complete conflict. A gain to one side results in a loss to the other. Also called Zero-Sum Negotiation or Win-Lose Negotiation.
Two quite different meanings. If referring to a multi-party negotiation, one side attempts to get the other side arguing with one another to cause a breakdown in their solidarity. This weakens their power and resolve. If referring to a complex, multi-issue negotiation, it is often helpful to divide up the negotiation into its various components; come to agreement on the simpler issues; and then tackle the tougher issues. This can help pave a way to agreement. During the course of coming to agreement on the simpler issue, relationships improve, and communication-understanding improves. This sets the stage for a more productive process when the tough issues are tackled.
When a negotiating goal can be tied to an important business principle or practice, it becomes hard to dislodge. This anchors beliefs to values. Like dominoes, if one falls, they all fall. A negotiator may use an equity or fairness approach in their business negotiations. However, fair-minded negotiators are themselves exploited when they encounter competitive opponents unless they also become competitive.
When a negotiator makes an outlandish initial request, they are more likely to secure agreements to subsequent, smaller requests. This is based upon principles of perceptual contrast. If a person lifts a heavy object, sets it down, and then lifts a light object, the person will perceive the light object to be much lighter than it actually is. An irrational negotiator who calms down following a wild display of emotion may get what they want.
Every concession implies a degree of commitment or willingness to stand firm. Using a “doorknob” price tells the other side that they have only two choices: accept the last offer or allow negotiations to break down. In either case the final decision becomes entirely their responsibility. The difficulty with a “doorknob” price is that the other side may not believe it. So how the message is delivered is of utmost importance.
A collection of documents, information, and data on a particular person or group. This information is used to gauge probable reactions to proposals put forth in the negotiation. Good negotiators compile a Dossier on the parties they negotiate with. Over time, this Dossier provides valuable information and provides guidance as to the potential behaviors of the negotiators. A good Dossier helps identify pathways that can lead to successful agreements.
Having a high degree of concern for the interests of others in the negotiation while maintaining a high degree of concern for your own interests.
Traditional negotiating powers such as organizational status, gender, age, race, and type of dress are present in face-to-face negotiations. A power shift occurs when email is used in a negotiation. Most, if not all, of these power elements are eliminated. Power and status differences are minimized and individuals who might have little power in face-to-face negotiations become more powerful in email negotiations because status cues are missing.
Some people try to get what they want by becoming emotional, by embarrassing the other person, or by becoming a nuisance. We tend to become defensive when we encounter such behavior. The best approach to emotional, harassing, bothersome, or embarrassing behavior is to stay in control. don’t respond by becoming emotional yourself—the negotiation will simply degrade into an argument. People have learned to use emotional outbursts because it has worked for them in the past. Be skeptical; don’t give in quickly; there are a lot of good actors around.
Going around someone to achieve that which they are resisting, and getting approval from another source with authority. Going around the person you are negotiating with to resolve the issue with someone else—generally someone of higher authority.
The more you get the more you require. Puts real pressure on the other side and tests their limits.
A sudden rise in the intensity of disagreement between negotiating parties; a sudden rise in the terms that was not expected.
Escalation is a very tough negotiating tactic. An agreement is reached between two people who have the apparent authority to make the deal. Then, one says that they need to show the agreement to someone else for “routine” approval. That’s when the first surprise occurs. The higher authority rejects the agreement unless further concessions are made. A renegotiation granting these concessions then follows to settle the almost closed deal. This can go on with multiple levels, where each level of authority demands and wins further concessions to reach final agreement. Each renegotiation “tests” the resolve and the limits of the other party.
Cultures with an expressive communication style regard emotion as a natural part of the communication process. A total lack of emotion in their counterparts may feel to them like a lack of sincerity and trust. Examples of such cultures include Mediterranean, Arab, and in some situations Russian and Latin America.
Face is the value a person places on his or her public image, reputation, and status relative to other people involved in the negotiation. Direct threats to face in a negotiation include making ultimatums, criticism, challenges, and insults. When negotiating in a group environment (i.e. there is an audience), “saving face” often becomes very important to a negotiator. This can result in the negotiator moving away from any cooperative efforts into competition to protect their position. Often an impasse or lose-lose outcome is the result. Saving face is an important cultural component in many negotiations.
Face negotiation theory explains how we manage conflict based on our culture or how we were brought up. The image or “face” we put on for the public correlates with our needs and wants. Individualistic societies like the United States tend to solve conflict through competition or more combative measures while collective societies found throughout Asia like China and Japan tend to solve conflict more passively and will avoid or oblige to opposition.
Both individualists and collectivists maintain a face to the public, but often for different reasons. An individualist will maintain a face in order to preserve one’s own desires while a collectivist will maintain a face to satisfy their group’s desires.
The other party will frame their appeal as being the “fair” or “right” way. When you disagree you run the risk of being “unfair” or “wrong.”
Literally, a thing finished; in slang, a done deal.
Someone takes a surprise action designed to place them in a favorable negotiating position. The “accomplished fact” affects the final outcome of the negotiation because it alters the balance of power. The strength of Fait Accompli rests in the fact that once a deed is done, it is difficult to undo.
Instead of “falling in love” with a single outcome to a negotiation (i.e. this car is the one I want), it is important to develop several optional outcomes that are acceptable.
Suggest a solution or option to see if the other side “bites.”
There is a fixed amount that must be shared by the parties involved in the negotiation. Whatever one party gets comes at the expense of the other party.
There is a fixed amount that must be shared by the parties involved in the negotiation. Whatever one party gets comes at the expense of the other party.
An emotional, physical, and verbal reaction to an offer, then silence to see how the other side may react and possibly modify their offer.
A negotiator is asked to agree to a small favor or statement. Later the negotiator is asked to commit to a larger request. The probability of them agreeing to the second, larger request increases if they have already established their agreement to the small request. People generally have a need to demonstrate consistent behavior.
The Forked Tail Effect: Once we form a negative impression of someone, we tend to view everything else about them in a negative fashion. It is hard to recover from a bad first impression.
Breaking down a problem into solvable parts and creating multiple-issue negotiations from what appear to be single-issue negotiations. This process generally leads to better agreements and more creative Both-Win® agreements where new value is created.
If involved in a complex, multi-issue negotiation, it is often helpful to divide up the negotiation into its various components; come to agreement on the simpler issues; and then tackle the tougher issues. This can help pave a way to agreement. During the course of coming to an agreement on the simpler issue, relationships improve, and communication-understanding improves. This sets the stage for a more productive process when the tough issues are tackled.
Organizing information, facts, issues, and potential outcomes so the negotiator can gain a better perspective of what the negotiation will involve and where boundaries should be established. Using a Framing process helps the negotiator gain a better understanding of the relationships between all the factors likely to emerge in the negotiation and consider a variety of outcomes, contingencies, potential gains, and potential losses prior to beginning the negotiation.
An ethical test. Would you be completely comfortable if your actions and statements during this negotiation were printed in full on the front page of the local newspaper or were reported on the news?
Using monetary components or percentages instead of real money. Things like price-per-pound, price-per-month/day/hour, 3% per year, man-hours-per-unit, etc. “Funny Money” is usually given less value than real money. Funny Money can work for you or against you. If you encounter Funny Money in a negotiation, translate for yourself what it means in real money or total cost before you make any decisions. You may find Funny Money useful to modify the other side’s viewpoint. “After all, it’s only 2 cents more per hour. That’s not much.”
Do unto others as you would have them do unto you. In negotiation it is wise to ask yourself, “How would I feel if the other party did this to me?” If you conclude that you would not like it, it means the behavior in question may be regarded as unethical.
Good Cop Bad Cop
When two participants play two “roles” in the negotiation. One plays an aggressive, demanding role; the other a more reasonable, friendly role. Sometimes the “Bad Cop” does not even have to be present. The “Bad Cop” could be your supervisor, or someone in authority in a distant office. Be aware of what is happening and realize the “Good Cop” is not really on your side.
Utilizing creative problem-solving techniques to match each party’s needs with the other party’s assets to find unique ways to optimize agreement and create more value for each side. There are generally several dimensions and several issues at play in any negotiation. Wise negotiators explore all the issues and dimensions of a negotiation to find trade-off areas and ways to enhance the ultimate agreement for all parties. Creative trade-offs between the different assets, needs, and preferences each party has are diligently examined to find ways to build new value. When the pie is successfully expanded, both parties leave with new value that was created purely from the process of negotiating.
A simple to use, repeatable, proven, proprietary process developed by TableForce which allows users to quickly and effectively prepare for any negotiation conversation regardless of value.
Relentless bargaining over an issue for the sole purpose of getting more/giving less, without concern for the relationship. A distributive negotiation where the parties barter about the terms of a business transaction.
The Hairy Hand technique is borrowed from Norman Rockwell. Flaws deliberately put into a proposition or presentation which can be easily detected by the other party. Designed to be discovered by one party to direct the discussion away from more vulnerable areas of the negotiation. Used to maintain greater control over the talks. Derived from portrait painter Norman Rockwell’s technique of putting too much hair on someone’s hand. His customers liked to find fault in his painting. The hairy hand would be discovered and he could correct it to make his customer happy. This technique kept them away from wanting numerous other changes to the painting.
Once we decide someone is trustworthy, other qualities about this person are perceived as consistent with this favorable impression. We tend to believe that people we trust and like are also intelligent and capable.
The Japanese pay more attention to long-term relationships than do Western businesspeople. An important part of their decision to do business with someone is whether they will be able to work harmoniously with them in the future. The Japanese have formalized the practice of building harmonious long-term relationships into their business culture. When a transaction is about to close, the Japanese use a technique called “Seeking Heavenly Approval.” After the facts are in and a written agreement is near, a period of time is set aside for achieving consensus as to whether they want to do business with the other party in the long run. In discussions marked by long periods of silence, members of the executive group reach mutual inner understanding and consensus. The Japanese call this moment of harmonious accord “KAN.” Having sought and achieved “heavenly approval,” they have given themselves a final chance to evaluate whether the agreement will satisfy their needs and give them peace of mind in the future.
An interest or goal that you want but that you don’t reveal to the other side, and in fact want to prevent the other side from learning.
Status and rank are important. Social power is not easily changed. Conflict is less frequent between members of different social ranks. Conflict is more likely to be handled in deference to a superior, rather than a direct confrontation and negotiation between social equals.
Start high with your demands to set the other side’s expectations. Sellers often start high knowing they can reduce the price.
Negotiators are generally better off if they don’t have full authority. There is greater negotiating strength in not having authority than in having it. Unfortunately, for many our egos get in the way. People like to demonstrate how much authority they have; it’s a sense of pride. Negotiating this can diminish your effectiveness as a negotiator.
The issues or ideas that are known to cause a person consternation and likely to produce an emotional reaction.
A technique whereby one party poses a fictional situation that could exist but doesn”t, as a way to explore options or better understand the limits of someone’s authority or willingness to offer concessions.
An argument where no agreement is possible. A deadlock. All progress is stopped.
In a multi-party negotiation, persuade one person at a time. Then use them as advocates to persuade the remaining people.
When attempts to solve a problem, or come to an agreement, have failed, it is often productive to set the work aside for a while to pursue other activities. Sometimes subconscious processes will help the participants come up with new ideas and solutions. Patience and thoughtful reflection are two powerful tools when negotiating.
Directly communicating negative information is seen as impolite and crude, even in a business setting. Instead polite excuses or evasions are given with recognition by both parties that a diplomatic strategy is being employed. Examples of cultures that employ an indirect communication style include Japanese, Chinese, Indians, and Saudi Arabians.
A means of negotiation decision making to conceptualise the actions, contingencies of all possible outcomes, options and scenarios. Applied to integrative negotiations with the intention of incorporating the goals and aims of all the negotiating parties to create maximum value through collaborative negotiation.
A negotiation in which the parties work together to achieve a mutually beneficial agreement. Also known as win-win, interest-based and value-based negotiation. Generally a more complex negotiation that involves multiple issues and multiple parties. A process that focuses on integrating the interests of all parties in a collaborative way to create new value for all participants. Ongoing relationships are an important factor vs. the one-time event found in simple haggling or bargaining.
Interests are generally considered the motivating factors and underlying reasons a negotiator takes a certain “position.” A negotiator’s position may be reflected by a combination of factors: economic issues, control issues, security issues, need for recognition, ego, desires, fears, goals. All of these factors influence the negotiating process and the positions each negotiator takes. Interest Based Negotiating is generally a more complex negotiation that involves multiple issues and multiple parties. This is a process that focuses on integrating the interests of all parties in a collaborative way to create new value for all participants. Ongoing relationships are an important factor vs. the one-time event found in simple haggling or bargaining. See “Integrative Negotiating.”
A party’s goals, needs and desires, which underlie a party’s demands or positions.
Make an exchange during the negotiation that will not get into the final agreement.
A process that occurs between two or more members or colleagues of the same company, organization or constituency. Colleagues need to negotiate internally usually with their stakeholders – most especially when preparing for an external client, supplier, government, regulatory body or other negotiation. The word ‘preparation’ is often used interchangeably with the phrase ‘internal negotiation’. The differing reward structures, motivations and psychology play a major role in ensuring that internal negotiations are often as challenging as external negotiations. The most popular way to prepare with your colleagues or stakeholders is via a physical meeting or a conference call.
This technique seeks to tie existing and future contracts into the content of ongoing negotiations. In a large organization, two buyers can deal with the same supplier without knowing it. If negotiations can be made to intersect, the leverage of one may extend to the other.
How do you negotiate with an elephant? Very carefully. Intimidation can take many forms: physical appearance (mean, tall, big, unfriendly); environmental (fatigue and discomfort); use of outside experts or legal authorities; use of hostages (resources, issues, people); status (bring in the CEO, president, a senior manager); threats. Recognize these intimidation techniques for what they are—negotiating tactics. Respond accordingly. don’t simply reciprocate with intimidation of your own, negotiate.
The introduction of surprise issues, tangential to the negotiation, can act as a smokescreen and slow down a negotiation. They often provide one side to the negotiation more time to reconsider their position prior to making a final agreement.
A viewpoint, idea, matter, problem, topic, or concern that is to be discussed, disputed, decided, exchanged, traded, agreed to, or resolved.
Jū: gentle, supple, flexible, or yielding.
Jutsu: technique of manipulating an opponent’s force against themselves rather than confronting it with one’s own force.
One of the most common frustrations I hear from supply chain professionals across the globe is the practice of “back-door” selling to the purchaser’s internal clients. Specifically, sellers go around a buyer directly to an end-customer or Sr. Executive, who promptly gives away all the leverage the buyer has worked so hard to create by telling the seller everything they want to know about their position in a negotiation. The dreaded statement, “we decided to give you the business, now go negotiate with purchasing,” comes to mind.
Admission: I started my career as a seller, and I went around buyers to gather information as often as I could.
I say this because when I moved to the buy-side of negotiations one of the first things I did was develop a method to combat this powerful sell-side tactic. It’s worked very well over the years, regardless of functional group, company, industry, or region of the world. It not only mitigates back-door selling and protects buyer value but also builds strong internal relationships. The beauty, aside from its effectiveness, is the minimal effort required to do it well. The secret? Instead of fighting against the practice, use it to your advantage – jujutsu negotiations.
In other words, BEFORE the seller has a chance to go behind your back, go behind theirs. In the initial project kick-off meeting or in your first meeting with a new internal client, use these words: “I want to support you effectively, so I’m going to need your help. WHEN a supplier comes to you behind my back for information, I need for you to work with me. I will negotiate a great deal with the supplier you (we) want, but you have to follow the plan we’re going to create together.”
I’ve even gone so far as to tell my internal clients to go out with suppliers and gather information that would help us maximize value. To find out the supplier’s critical deal points and what else they’re willing to offer us. To find out what they won’t concede so I can move on to another point. I also grant my team explicit permission to complain about me and how difficult I can be to work with – so the supplier “better not play games and quickly offer us a great proposal.”
The typical outcome? Internal clients have consistently spoken highly of the method. They recognize the need to offset the sales-tactic and appreciate that not only is procurement actively looking out for their best interest, but also that we include them in the negotiation plan and don’t try to stop them from communicating with the suppliers they need to do their jobs. Oh, and some of them love to play a role in the negotiations. One even said they felt like James Bond – keeping their information secret while discovering the other side’s plan.
But it’s not all cloak & dagger “for us to win, the other side must lose.” Of course there’s a win-win in mind. And jujutsu negotiations play a role again.
Regardless of situation: a sole source (the only supplier in the world that can provide a solution), single source (your plan is to aggregate with just 1 of several suppliers), or a supplier who has discovered that “they have the business and now they’re just negotiating with purchasing…” Growing frustrated and fighting against the situation will most likely lead to a less-than-optimal result. I offer this alternative.
Embrace the entrenched supplier.
Consider this; if a supplier has a lock on your business need, chances are they also have an advantage with your competitors as well. So, in order to have an advantage with end-customers in your space, what you really need to have is a better deal in place than your competitors. But how do you do that?
You could use tactics and fight the supplier to show you’re not an easy target. But ultimately, they’re going to win and all you’ll have to show for it is sleeping well knowing you fought a good fight. OR you could use jujutsu negotiations and tell the supplier, who is used to confronting direct force: “Look, we both know you have an advantage in this negotiation, what will it take to ensure my company has an industry leading deal with your organization?”
Perhaps they need customers to test a new solution? Or there is a volume discount that incentivizes you to spend more rather than a minimal amount? Maybe they could provide additional products and services? What if a long-term deal (with someone you’re likely going to do business with anyway) will get your organization significantly more value? Even monopolies have needs beyond price – if you can find out what they are, you have an advantage over your competition.
Another way of maximizing value with entrenched suppliers is asking them to show you best practices using their products or services to improve your profitability. If 2 competitors have an identical solution and deal in place, the one that uses it better has an advantage.
My intention here is certainly not to make negotiations about combat with the other side. Rather it’s to help everyone understand that we must continue to find new ways to create real relative value and then claim it. As with most things in life, what separates us is the path we choose.
Least Acceptable Agreement. The minimal conditions that make it still worth it to move forward with the solution or agreement, but anything less than the LAA results in no agreement.
A question that is designed to generate only one possible answer.
Let the other side “discover” secret information that will change their perceptions or expectations. For some reason humans trust what we learn about the other party by coincidence more than what the other party actually is telling us about themselves.
People prefer to make their lives easier. There is nothing new or brilliant about this least effort principle, but it is quite useful in a negotiating context. People would rather say “yes” to a possible deal than complicate their lives by negotiating longer for a better deal. Buyers don’t really want to look for new sources if they can find reasons to stay with old sources. Neither party to a negotiation wants to endure the stress of further negotiation or the work it takes to start over again with someone else. What’s really important is the party that is willing to go beyond “least effort” gains significant negotiating power.
Both Buyers and Sellers often ask for more than they need. Their intention is to lower the expectations of the other party and gain a concession at the start of the negotiation without having to make a concession in return. Opening offers should always be justified with reasons and/or documentation. This initiates the dialogue of the negotiation that is essential to a satisfactory outcome. Understand that there are many cultural aspects to this issue. The cultural background of each participant often dictates how extreme opening offers are. Learn to adjust your negotiations accordingly.
A negotiation where the settlement is less optimal for both parties. Both parties fail to discover and maximize opportunities to capitalize on common interests.
That which is authoritative, official, authentic. Examples include written documents, standard terms and conditions, company policies, and price schedules that are perceived as more legitimate than the spoken word. They have a tendency to make things non-negotiable without you having to say “No.”
A negotiator suspects the other negotiator is lying and retaliates with lies of their own. A negative use of Quid-Pro-Quo.
An ethical test. Would you be completely comfortable if your actions and statements during this negotiation were printed in full on the front page of the local newspaper or were reported on the news?
Negotiators often find it useful to limit their own authority. This provides opportunities for a negotiator to gather information, test the other side’s positions, and explore potential concessions prior to being pressured into making a decision.
Limits can involve time, money, authority, capacity, or expertise. “I can’t agree to anything longer than 90 days.” “We only have $$$ to spend.” I don’t have the authority to sign this.” Limits provide opportunities for discovery. Options that might be available considering your limits. Limits can be real or imaginary.
Make your agreement contingent upon the other side agreeing to another, maybe unrelated issue.
A formalised legal process to resolve a dispute through legal action in the form of a lawsuit. It often entails a contractual issue. It is the act of either bringing or challenging a lawsuit.
don’t dwell on your own poor negotiating position—your pressures. Remind yourself that the other side also has pressures. Turn your attention to their pressures, not yours.
A negotiation result where all parties to a negotiation leave resources or gold on the table at the conclusion of a negotiation and fail to recognize or exploit more creative options that would lead to a “win-win” negotiated outcome. A term also used in “Game Theory” and Economics.
Lose-Win refers to a distributive negotiation where one negotiator’s loss is the other negotiator’s gain. Both negotiators are typically competing to claim the most value from a ‘fixed pie’ or value negotiation. The term ‘lose-win’ was popularized by “Game Theory”. This is a form of a zero-sum game.
A tactic used to make an offer that is unreasonably low or high for the purpose of seeing if the other side can be fooled into paying/doing more/less than an informed negotiator would agree to.
A negotiator needs to be aware of signs of deliberate lying. It helps to evaluate the other side by asking a few discovery questions where you already know the answers. You can learn a lot by their reaction to these probes and the accuracy of their responses.
A concept often employed in “Group” or “Multi Party” negotiations to achieve consensus or agreement. As the term implies, a decision or agreement is reached after having been voted upon and decided in favour by a majority of the parties present at the negotiating table.
Make them an Offer they Must Refuse: A negotiator starts off the negotiation by asking for a very large concession or favor from the other party—one that the other party is almost certain to refuse. When the request is refused, the negotiator makes a much smaller request, which was the option they wanted all along. Begin negotiations with high aspirations. A high aspiration creates a contrast effect so that the other party views any following request that is less extreme to be more reasonable.
Claiming that final approval can only be provided by a higher authority. Having “Mandated Authority” can be useful when there is a great deal of risk in the negotiation and you may discover reasons to try to delay or slow down the negotiation process.
Most Desired Outcome. Often called the “ideal situation” you want to achieve in a negotiation.
Mediation usually consists of a negotiation process that employs a “mutually agreed” upon third party to settle a dispute between negotiating parties to find a compatible agreement to resolve disputes.
Multiple Economically Equivalent Proposals: Presented simultaneously as offers with different terms, but which have equal economic value to you from which the other party can choose. They get to feel good about choosing, you get to feel good about protecting value.
Messages can be sent in a variety of ways and, if not careful, can lead to message distortion. Message tuning refers to modifying the message for each specific recipient to best suit the new recipient.
We tend to like people whom we perceive to be similar to ourselves. Negotiators are more likely to make concessions with people they know and like. Some negotiators get positive results by purposely making themselves “similar” to the other party: body posture, mood, verbal style, and dress.
The person with final authority disappears just as the parties reach agreement. Nothing can be done until he or she returns, and nobody is quite sure when that will be. The side that uses the “missing person” maneuver is buying time to see if they can get a better deal from someone else before they finalize the agreement. Meanwhile you wait for the missing person to return.
A negotiation that involves more than two negotiating parties in a negotiation.A negotiation that involves more than two individuals.
A technique sometimes employed to offset the possibility of anchoring in an integrative negotiation. Multiple offers are two or more offers or proposals of relatively equal value that are presented simultaneously to invite greater discussion of the issues under negotiation.
Also referred to as “Association.” We do business with a VIP in an important company. Pictures often are displayed of them shaking hands with important people. Plays upon the human tendency of wanting to do business with people who are well connected.
The distribution determined by the negotiation should be proportional to the needs of each negotiator.
The most a buyer is willing to pay is less than the least the seller will accept. There is no “overlap” of acceptable outcomes. Each party’s BATNA (best alternative to a negotiated agreement) provides a better result than reaching agreement.
One or both parties will have to adjust or compromise their view for this to be resolved. Otherwise, a deal cannot be agreed upon.
Negative bargaining zone is one of the Zone of Possible Agreement (ZOPA) options in which two or more parties can find common ground. Essentially, a negative bargaining zone occurs when the parties cannot reach a zone of possible agreement.
A formal agreed upon list of goals to be achieved or items to be discussed in a particular order during a meeting or negotiation. Agendas can be formal and obvious, or informal and subtle in negotiations. A negotiation agenda can be used to control the negotiation meeting.
A person who acts for or in place of another individual or entity as their representative in a negotiation with a third party. An agent, sometimes referred to as a third party agent, has full or limited authority to act on the behalf of the party they represent.
A temporary union between two or more individuals or groups for a common aim or goal. A relatively common practice utilized in multi-party negotiations, used to gain advantage in the negotiation. Coalitions are more common when negotiators’ stand to gain more through collaboration than through competing.
A constituent is someone or a group on the same side of the negotiating party but who exerts an independent influence on the outcome through the principal negotiator, or to whom the principal negotiator is accountable. For example, a union negotiator must have an agreement voted upon by the union members (constituents) before it can be ratified as an agreement.
Negotiation is an interactive process between two or more negotiators or parties seeking to find common ground on issues of mutual interest, where the negotiators or parties seek to make a mutually acceptable agreement that will be honoured by all.
This is usually a mutually agreed upon neutral third party to lead a complex meeting of two or more parties involved in a negotiation. Often employed in “multi party” negotiations. Their purpose is to organize, aid, and offer assistance in helping the negotiating parties find their own solutions on the issues under discussion.
A means to process and organise information. A frame provides a perspective of the problems or issues for a decision maker. One can use a frame to understand the importance of facts or issues in relation to each other. One can use this understanding of the facts or issues to then determine possible outcomes and consider contingency actions to solve a problem. Using a framework can allow you to consider all potential gains and losses and available options for any situation.
Negotiators’ positions are the things they demand you give them and also the things that they refuse to provide you with. Negotiation positions are typically communicated in meetings, emails, and proposals. Inexperienced negotiators too often take the positions of the other side at face value and don’t probe with questions or challenge sufficiently.
The primary decision making authority in a negotiation. Third party agents will often represent the interests or objectives of a principal in a negotiation.
Rapport happens across a number of levels. In business, most people associate rapport with matching and mirroring body language. Rapport brings you and the other party you’re seeking to influence into sync. When done well, rapport is undetectable, and works at the unconscious level. Rapport is more difficult to detect on the auditory level. So if you adjust your volume, cadence, inflection, pitch, resonance, length of sentences to that of the person or people you’re seeking to influence, you’ll be more likely to be listened to and enjoy more understanding and agreements.Rapport can also occur at the level of beliefs and values. When you discuss similarities in your beliefs and values, you’re more likely to enjoy a deeper sense of rapport. Storytelling is powerful for this reason.
The act of making a similar or like exchange of something in return for something given by one party to another party. In a negotiation, this could entail an exchange of information and/or an exchange of concessions between the negotiating parties.
Negotiation skills are required to secure better agreements in our personal and business lives.
A predetermined approach or prepared plan of action to achieve a goal or objective to make an agreement or contract.
The desired negotiation outcome or goal decided at the start of the negotiation. This is best set across each and every aspect of a negotiation (e.g. price, term, volume etc). Some organisations set an ambitious negotiation aspiration or opening offer, and a less ambitious negotiation target, while for others these are one in the same. The level of negotiation aspiration is heavily influenced by a country’s culture, with the Germans setting lower aspirations and the Chinese higher.
Also sometimes referred to as a “Concession” where one or more parties to a negotiation engage in conceding, yielding, or compromising on issues under negotiation and do so either willingly or unwillingly.
A negotiation trading plan is a table or spreadsheet that sets out which goals / positions / tradables you are going to exchange or trade with the other party. A trading plan is an essential part of negotiation preparation, especially for complex negotiations. Trading plans should not only identify the goals of each party, trading plans should also rank these goals for each party and set out which goals you want to trade together. The Negotiation Experts clients are trained to use a trading plan after having prepared a SWOT analysis, and to plan a negotiation agenda using your trading plan. A trading plan is often referred to by the less accurate name of a Concession Strategy.
Bringing new information, new benchmarks, or new specifications into the negotiation—can sometimes help bring the parties closer together and can create better outcomes.
The introduction of a new issue that has not been discussed. Sometimes used to throw the other side off balance.
New people are introduced into the negotiation that then change the rules or modify what has already been agreed to. Can also be used to help break a Deadlock or Impasse.
A small concession, maybe 1 or 2% of the total solution, which you get from the other side in return for concluding the negotiations with an agreement. Nibbles come at the very end of negotiations. If you get Nibbled, be sure to Nibble back.
Asking for “just one more thing” after both parties are presumed to be in agreement.
Refusing to make a decision or come to an agreement because you are not allowed to. When you limit your own authority you gain flexibility in the negotiating process.
Much research has been done that demonstrates that nonverbal communication may be more significant than verbal communication. In one study, 35% of the message in conversations was conveyed by the spoken word while the other 65% was communicated nonverbally. In the Albert Mehrabian study, conducted at UCLA, the breakdown was as follows: 7% of the meaning is derived from the words spoken; 38% from tone of voice, loudness, and other aspects of how things are said; and 55% from facial expressions and body language. There is much debate on this subject and the percentages, but most agree that how things are said is often more important than what is said.
Provide a term or condition for agreement and commitment that you are willing to be bound by and implement.
A negotiator must be realistic, but should be optimistic, regarding what they want to achieve in a negotiation. It helps to have documented evidence that supports your aspiration level. Always set your aspirations high enough to provide you “room to negotiate.” Begin negotiations with high aspirations. A high aspiration creates a contrast effect so that the other party views any following request that is less extreme to be more reasonable.
Organizational Mode of Negotiating: Seldom is there a negotiation where only two parties influence the outcome. Each participant in a negotiation has a host of “organizational” stakeholders who, while not physically at the negotiating table, impact the outcome of the negotiation. They include work associates, executives, managers, the finance and legal departments, engineers, manufacturing, etc. etc. etc. Anyone that is impacted by the results of the negotiation is a stakeholder that must be considered. A skilled negotiator will address the organizational needs and organizational pressures on both sides of the negotiation. They impact the outcome of the negotiation and have a large part to play on the long-term success of any agreements.
Provide the other side with too much information or make too many requests.
It is a mistake to negotiate issues one at a time or focus your negotiation on a single issue. There are generally several dimensions and several issues at play in any negotiation. Wise negotiators explore all the issues and dimensions of a negotiation to find trade-off areas and ways to enhance the ultimate agreement for all parties. Creative trade-offs between the different assets, needs, and preferences each party has are diligently examined to find ways to build new value.
Insert items/issues that are relatively unimportant to you into the negotiation and treat them as “essential.” Use these items as trade-off concessions to gain agreement on items you really do value.
When two parties do not trust each other enough to agree on all issues, they have an alternative. They can settle on a “peace by piece” strategy. The two reach agreement on low-risk matters, leaving difficult issues to simmer. If, over time, things work out satisfactorily, they tackle the tougher issues. “Peace by piece” gives each party a chance to test the intentions and performance of the other without getting hurt too much. This strategy is often used by buyers dealing with new vendors. Instead of giving them a large order, the buyer gives them a series of smaller ones. If all goes well, the buyer expands the order. Each success serves to broaden the base of future agreement.
When a negotiator makes an outlandish initial request, they are more likely to secure agreement to a subsequent, smaller request. This is based upon principles of perceptual contrast. If a person lifts a heavy object, sets it down, and then lifts a light object, the person will perceive the light object to be much lighter than it actually is. An irrational negotiator who calms down following a wild display of emotion may get what they want.
Negotiators often approach a negotiation with their focus on dollars, goods, or services—the tangible aspects of the bargain. Good negotiators realize there are intangible factors, personal in nature, that also impact a negotiation. These personal factors are sometimes hard to identify, unless your relationship with the other party is very good. You will have a more productive negotiation if you invest some time to get to know the other person better and understand some of their personal motivations.
Used to refer to a negotiation where the resulting agreement “divides the pie” with each participant taking their share. Since there is a fixed “pie” what one party gets comes at the expense of the other party. In a broader perspective, every negotiation has a distributive component. Negotiations referred to as a Win-Win Negotiation create new value (i.e. a larger pie), but each ultimately ends up with a distributive event that determines how the pie is sliced. Generally it is not 50-50.
One party tells the other that, for planning purposes, “just give me a rough idea of what this will cost.” They emphasize that the estimate need not be exact. “don’t worry, we won’t hold you to it but we must have some idea of what we are getting into.” Trying to be helpful, you fall into the trap. Instead of being careful in your calculations, you make a quick estimate, generally on the low side because that is what they think they want to hear. Then, later when a formal quote is requested, you suddenly realize that the “planning purpose” number has become an anchor point in the negotiation. Recognize that a “planning purpose estimate” is likely to be more binding than it looks.
Let the other side “discover” secret information that will change their perceptions or expectations. For some reason humans trust what we learn about the other party by coincidence more than what the other party actually is telling us about themselves.
Not using your face to show the emotion you feel inside, whether it be anger, surprise, elation, fear, etc.
A party’s demands – what they say they want — that are supported by interests.
The most a buyer is willing to pay is greater than the least the seller will accept. This overlapbecomes the positive bargaining zone where agreement is possible because each party can achieve a result that is better than their BATNA.
Information regarding yourself and the other party(s) provide power to a negotiator. Collect and assemble information based upon what you know about each party’s BATNA, positions, interests, needs, priorities, and key facts.
Knowledge regarding yourself and the other party(s) provide power to a negotiator. Collect and assemble information based upon what you know about each party’s BATNA, positions, interests, needs, priorities, and key facts. The more you know about the other person’s costs, organization, business standing, and product the better you can negotiate. The more you know about the negotiating process the more power you have.
Support your negotiating position with verifiable information, documents, policies, regulations, and standard terms and conditions. This is a source of negotiating power and tends to hypnotize the other party into compliance. If you find legitimacy being used against you, test it. These things are more negotiable than they appear to be.
If you have something printed (i.e. price sheet, purchasing policy, employment policy, discount policy, rental documents, regulations, legislation, etc.) it appears to be more legitimate than if you only talk about the policy. This gives you more negotiating power.
Humans cherish security. We have a desire to avoid risk wherever possible. A negotiator who is willing to accept a greater burden of uncertainty with respect to reward or punishment enhances their negotiating power.
People talk too much. The less the other person knows about you, the better off you are. The more you know about them, the stronger your bargaining power. What you say and what you show may be used against you if it reveals your weaknesses. How much you choose to reveal is a matter of business judgment. Less is better than more in most cases.
Time and patience are sources of negotiating power. The party most constrained by time limits provides their opponent with a base of strength. The party most willing to work hard gains power.
Information given to another party that tends to modify their expectations prior to entering the actual negotiation. A salesperson sends a news report on price increases to pre-condition a buyer. The buyer, having read the news report, prepares themselves for a big jump in price. The buyer is relieved to see only a minor price increase. “It could have been a lot worse.”
Formal agreements that address specific issues and obligations, but are intended to be replaced by a final agreement because they do not address or resolve all of the issues being negotiated. Often used as an interim agreement to keep the talks moving, and show the resolve and commitment of the parties to continue to work towards full agreement.
People are generally predictable animals. For most of us there is a very good chance we will do tomorrow what we did yesterday. Look at a person’s history. When negotiating with someone, a careful study of their habits, temperament, opinions, and values will reveal useful patterns. The personality traits of a person tend to guide their behavior. People react to frustration and stress in recognizable patterns. Some behave with patience, humor, and creativity. Others are defensive and unrealistic and make excuses, bury facts, forget, blame others, become hostile, withdraw, or become emotional under stress. If we know what they did yesterday, we can make good assumptions about the defense they will use tomorrow. Values do not change from day-to-day. A person with a reputation for taking risks will be predisposed in that direction in the future. A person who places great value on status will go on searching for status. People act in accordance with what they believe to be in their own self-interest. They generally believe their behavior to be rational and wish to protect their self-image. As an outsider, you may think certain people wrong, but recognize that their behavior makes sense from their viewpoint. Ask questions, listen, speak rarely, observe, and be nonjudgmental. If you have the patience to listen, they will reveal their self-image to you. In negotiating knowledge is power.
Sellers should never give price breakdowns. Buyers should always try to get price breakdowns. The less a seller tells the buyer about their costs the better off they are. The more the buyer knows about the seller’s costs and profits, the better their negotiating position. With respect to cost data, what is good for one is generally bad for the other. Sellers should start their negotiation on the basis that cost and pricing methods are nobody’s business but their own. A buyer is well advised to insist that part of the price paid is access to full cost and production visibility. They have the right to know what they are buying and why the price is right.
Principled negotiation is an interest-based approach to negotiation that focuses primarily on conflict management and conflict resolution. Principled negotiation uses an integrative approach to finding a mutually shared outcome. This approach is primarily used by mediation practitioners and academics, although there is some attempt to apply this approach to commercial or business negotiations.
This negotiation approach is closely related to and often a synonym with the phrase “win-win,” meaning that both parties have reached an agreement in consideration of both sides’ interests. In other words, the deal or agreement cannot be improved any further as both parties are happy with the outcome.
An open-ended question used to generate discussion and explore options. Used in the Information Exchange Stage to learn more about the other side, their interests and positions, to test assumptions, and see the opportunities to create value. Used in the Bargaining Stage to develop creative solutions that capture value.
In every negotiation the potential exists for the parties to improve their joint satisfaction at no loss to either. The more intense the search for joint improvement, the more likely people will be to find superior solutions. This process of joint improvement is called problem-solving bargaining.
Business services provided by internal specialists or external vendors or consultants. Procurement Solutions includes skills development ranging from purchasing or procurement training, coaching, consulting or other education services, as well as input on any procurement procedure as it relates to any aspect of the supply chain. Three main areas include sourcing costs, logistics management and aspects of manufacturing. Typical focal areas include achieving price reductions, technology, reverse auctions, information systems, transport and shipping, working capital (e.g. inventory and payment terms), and automation.
One party to a negotiation declares that certain issues are sacred and are not negotiable. If the issues really are not sacred, but are only positioned as such for strategic purposes, these issues are called pseudo-sacred issues.
The assignment of purchase orders by a business to a third party who accepts responsibility for billing and collecting from buyers of the company’s products and services. It is a form of expensive financing used to purchase materials required to produce products needed to fulfil a purchase order already received from a buyer.
A Chinese term that means “goodwill.” A person accumulates Quanxi by networking with people, doing favors for associates, and performing well in their business relationships. Quanxi can be thought of as a “savings account of goodwill” accumulated from all of your business relationships. When a favor or introduction is needed, you can spend some of your Quanxi to accomplish what you need. Quanxi is a valuable asset that needs to be protected.
An arrangement where one company (the seller), agrees to sell products or services to a foreign purchaser, but also simultaneously agrees to purchase specified products or services from the foreign partner. Also known as parallel bartering and is the most commonly used form in a countertrade agreement in international business interactions.
A phrase that is simple to remember, mirroring confirmed research that shows, where one sets their opening position for any and all terms and conditions involved in a negotiation, that open will subsequently directly impact the outcome of the negotiation. One must “Raise the Bar” in order to do better upon completion. Often paraphrased as “Aiming High.”
A negotiator may act crazy or irrationally and make a big scene. Sometimes the other side will give in to their demands simply to get the crazy person to stop doing what they are doing.
When the parties to a negotiation establish a climate of trust, mutual understanding, and friendship. With rapport generally comes a willingness to share information. Via this information-sharing process more creative agreements are developed.
Once the other party establishes an offer, or anchor point, it is wise to immediately make a counter-offer. This minimizes the importance of the initial anchor point. This also signals your desire to negotiate in that you do not accept the initial offer. Do not adjust your BATNA or target based on this initial anchor. Instead focus on what information you have that might shed light on the other party’s BATNA or desired target.
Using reverse psychology to get someone to agree to move from a firm position. This technique is based upon the human need to assert one’s individual freedom when it is challenged. A negotiator achieves the desired “reaction” from the other party by paraphrasing their negotiating position in a way that makes it sound more extreme than it actually is; then inferring that they do not personally have the power to change their position. This negotiating approach sometimes results in a compromised position. The other party needs to prove they have the power to modify their position and that their position is not fixed in stone.
Making similar or like exchanges of information, concessions, introductions, money, or something else of value that are given by one party to another party. Think of: “Tit-for-Tat,” or “You scratch my back and I”ll scratch your back,” “I did this for you now you owe me.” In general we feel obligated to return in kind what others have offered or given to us.
Red Herring or Garbage on the Lawn: A tactic used to divert a party’s attention from the real issue to something tangential or unrelated, allowing the diverting party to gain some advantage.
Negotiators can use reinforcement to shape the behavior of the party they are negotiating with. Reinforce behavior immediately after it occurs—don’t delay reinforcement. Withhold reinforcement from any behavior you do not want the other side to use—just don’t respond. Forms of social reinforcement are simple, nonverbal gestures such as nodding, smiling, and eye contact. More direct reinforcements are statements such as: “I like that.” “This could work.” “That is interesting.”
A negotiator starts off the negotiation by asking for a very large concession or favor from the other party—one that the other party is almost certain to refuse. When the request is refused, the negotiator makes a much smaller request, which was the option they wanted all along. Begin negotiations with high aspirations. A high aspiration creates a contrast effect so that the other party views any following request that is less extreme to be more reasonable.
A cultural trait where emphasis is on group opinions and not on one or two expert opinions. Mature judgment, social skills, political acumen, and loyalty to the team are of high importance. Examples of relationship-oriented cultures include most of Latin America, eastern and southern Europe, Africa and the Middle East, and nearly all of Asia.
Once agreement has been reached, time, performance, and environment become critical components impacting the agreement. Negotiators must continually review agreements in light of what has happened since the agreement was struck. As time passes, performance progresses, and the environment in which the agreement was originally made changes, so should the agreement. This is the time to renegotiate the agreement to bring it back into balance with the original intent.
The price that is the least favorable point at which one will accept a negotiated agreement. For a seller it is the least amount they would be willing to accept. For a buyer it is the maximum amount they would be willing to pay. Also known as the walk away point in the negotiation.
The final agreement will fall somewhere between each party’s reservation point.
Cultures with a reserved communication style feel that the open expression of emotion, even at a point of great frustration or elation, is foolish, inappropriate, and immature. Examples of such cultures include Chinese, Japanese, and to a degree the English and northwestern Europeans.
The reservation price is the least favourable point at which you will accept a negotiated agreement. For example, for a seller this means the least amount (minimum) or bottom line they would be prepared to accept. For a buyer, it would mean the most (maximum) or bottom line that they would be prepared to pay. It is also sometimes referred to as the walk-away point.
Set up sellers or buyers to compete against one another. In a reverse auction most participants can see the latest price they need to beat. Today many companies use Internet-based reverse auctions.
In negotiation it is wise to ask yourself, “How would I feel if the other party did this to me?” If you conclude that you would not like it, it means the behavior in question may be regarded as unethical.
Request for Information. Typically sent out by an organization when it wants to buy a product or service but first needs to learn more about what is available in the marketplace and which suppliers can best meet its needs.
Request for Proposals. Typically sent out by an organization that knows the marketplace for the product or service it wishes to buy, using this more formal process to learn how suppliers will respond to a specific set of requirements.
Request for Quotation. Often used by buyers and other purchasing professionals when acquiring commodities where price will be the main determining factor.
The process of using formal requests for information, proposals and price quotes.
A low level or approach in the amount of risk that a negotiator is prepared to accept in a negotiation. A negotiator who decides to accept the “sure thing” where a result is certain to be achieved is said to be “risk-averse”, and is not willing to gamble further on a potential negotiated result.
A high level or approach in the amount of risk that a negotiator is prepared to accept in a negotiation.. A negotiator who decides to gamble rather than accept the sure thing, and who has the expectation that they will gain more in a negotiation is said to be risk-seeking.
A few negotiation training courses make use of negotiation simulation exercises delivered using online negotiation training games. In this way, technology can be leveraged to teach participants essential principles of negotiation, psychology or influence in a fun and interactive environment. Some games are played between pairs, whilst others involve a room full of people. The purpose of most negotiation training games is to win, and sometimes to avoid losing. Many negotiation games leave the decision of what ‘winning’ or ‘losing’ means to the players. Negotiation role-play exercises prevalent in most courses should not be confused with negotiation games.
Also sometimes referred to as the “salami-slice strategy.” Much like the “Divide and Conquer” process. Uses threats and alliances to overcome opposition. Using this tactic, an aggressive negotiator can eventually politically dominate the entire negotiation, piece by piece. In this fashion, the “salami” is taken in “slices” until the other side realizes (too late) that it is gone in its entirety. In political negotiations it includes the creation of several factions within the opposing political party and then dismantling that party from the inside, without causing the “sliced” sides to protest. In business negotiations this tactic is used to present problems or solutions in pieces so it is hard for the other side to get the big picture.
Salary negotiation is a process where one party (usually the employee) negotiates the amount of their pay, income, earnings, commission, salary, wages, wage remuneration, annual review, or salary raise with another party (usually a representative of the employer, such as their manager).
Face is the value a person places on his or her public image, reputation, and status relative to other people involved in the negotiation. Direct threats to face in a negotiation include making ultimatums, criticism, challenges, and insults. When negotiating in a group environment (i.e. there is an audience), “saving face” often becomes very important to a negotiator. This can result in the negotiator moving away from any cooperative efforts into competition to protect their position. Often an impasse or lose-lose outcome is the result. Saving face is an important cultural component in many negotiations.
Small talk, the development of personal, social connections unrelated to the negotiation. This results in better rapport, trust, and friendship with the other person. Non-task related contact with others involved in the negotiation helps establish stronger relationships which in turn has a positive effect on the negotiation process and builds a foundation for future negotiations. Research shows that schmoozing results in more profitable business as compared to deals when people simply get down to business. Parties are less likely to reach an impasse, more alternatives are created, and the parties become more optimistic about future work together. Schmoozing is a wise investment in the relationship that can pay off big.
In business negotiations this tactic is used to present problems or solutions in pieces so it is hard for the other side to get the big picture.
All negotiations reach a point where the gains of one party are won at the loss of the other. This rationing process is called share bargaining.
Having a shared enemy or a shared problem can unite people and build trust. Having a common goal or a common problem dilutes the perception that the interests of the parties are completely opposed and helps establish a higher-level relationship between the parties that motivates them to agree rather than disagree.
This is someone who works for one side of the negotiation and is used to artificially stimulate interest, support a price, create competition, to test a low offer, or to demonstrate demand and interest. The other side is not aware of the Shill’s function and they use this false information and observations of the Shill’s actions to modify their negotiating approach.
When you make an offer, take a position, express an opinion, or ask for something the next thing you should do is “Shut Up.” It is human nature to expect a reaction, but if the other party remains silent, there is a tendency to offer more information, make a concession, or fill in the void the silence makes by talking more. This permits the silent participant to discover more information, and understand more of the other party’s negotiating strategy or negotiating parameters without revealing information regarding their position.
Sometimes side deals can increase the size of the pie for negotiators. Multi-party, multi-issue negotiations provide opportunities for side deals between various participants that act to create new value or resolve issues that pose threats to the main agreement.
We all like responses (either verbal or non-verbal) when we make an offer. When we take a position, express an opinion, or ask for something we expect a reaction. If the other party remains silent, there is a tendency to offer more information, make a concession, or fill in the void the silence makes by talking more. This permits the silent participant to discover more information, and understand more of the other party’s negotiating strategy or negotiating parameters without revealing information regarding their position.
We tend to like people whom we perceive to be similar to ourselves. Negotiators are more likely to make concessions with people they know and like. Some negotiators get positive results by purposely making themselves “similar” to the other party: body posture, mood, verbal style, and dress.
This term originated from analysis of negotiations conducted via email. There is a tendency for people involved in email negotiations to attribute sinister motives to people whom they have not formed any social relationships with. Participants in email negotiations are more likely to suspect the other person of lying or deceiving them, relative to negotiations that are conducted face-to-face where some degree of trust can be developed. This is why schmoozing is important when one is conducting an email-based negotiation. Attempt to form some social connections as a way to overcome this sinister attribution bias that may be impacting your e-negotiation.
Used for complex, multi-issue negotiations, it is often helpful to divide up the negotiation into its various components; come to agreement on the simpler issues; and then tackle the tougher issues. This can help pave a way to agreement. During the course of coming to agreement on the simpler issue, relationships improve, and communication-understanding improves. This sets the stage for a more productive process when the tough issues are tackled.
Schmoozing, the development of personal, social connections unrelated to the negotiation. This results in better rapport, trust, and friendship with the other person. Non-task related contact with others involved in the negotiation helps establish stronger relationships which in turn has a positive effect on the negotiation process and builds a foundation for future negotiations. Research shows that schmoozing results in more profitable business as compared to deals when people simply get down to business. Parties are less likely to reach an impasse, more alternatives are created, and the parties become more optimistic about future work together. Schmoozing is a wise investment in the relationship that can pay off big.
Used to change the subject, cloud an issue, or delay a decision. A new person may be temporarily introduced into the negotiation. A new issue is brought up that must be investigated. Suddenly the scope of issues is expanded to include broader issues. Significant new information is introduced that must be analyzed.
The more opposing parties develop intersecting spheres of mutual interest and interdependence, the more bargaining power they are likely to exert. The range of possible outcomes where both parties are satisfied with the agreement. This generally is the overlap area between each party’s acceptable low and high range. It also encompasses interdependency created by personal relationships and shared respect—a blending of personal and business relationships.
To put a positive spin on your communications with another party by aligning the topic being discussed with the other party’s particular interests or needs.
Taking the distance on an issue that stands between the latest positions and giving each side half. Can be a tactic to make you think you are getting an equitable result when in fact where the negotiation began was to the advantage of the other side. Offer to agree on a halfway position. Make equal concessions to settle the difference.
Adopting a negative, demanding emotional style of negotiating. Using hostility and threats to demonstrate an unwillingness to move away from a stated position. A negotiator often is compelled to concede or give in just to stop an irritating squeaky wheel. It’s just not worth it to hold their position.
People and organizations that have a vested interest in the outcome of the negotiation. They are rarely at the negotiating table, and are often not directly involved at all.
A tactic that avoids reaching agreement by claiming without justification the need for more time.
Demonstrating by your actions or words that you are not open to new solutions. Some negotiators stonewall to see if the other side will capitulate.
Sometimes walking out or forcing an impasse can be done for strategic purposes. When used as a strategy to test the other side’s resolve, or to buy yourself more time, it is important to plan in advance how you will reopen the negotiation at a later date.
Imbed items or issues that are relatively unimportant to you into the negotiation and treat them as “essential.” Use these items as trade-off concessions to gain agreement on items you really do value. Asserting things that are not true or taking positions or making an offer that is ultimately withdrawn after the introduction of the issue has impacted the other side’s position. Used like the “Bluff” to test the other party. It works when you agree to forget about some of your real interests in exchange for the other party forgetting about some of their “straw issues” or fictitious interests.
Economic principles assert only future costs and benefits should be used to make decisions. Every negotiator should be aware that humans tend to remember past costs that have been spent or invested. This history and memory creates a bias and influences behaviors during a negotiation.
The introduction of surprise issues, tangential to the negotiation, can act as a smokescreen and slow down a negotiation. They often provide one side to the negotiation more time to reconsider their position prior to making a final agreement.
One party to a negotiation adds items to a negotiated package or deal to enhance satisfaction of the other party. Sometimes used as a deal closer (e.g. and we will toss this in at no charge).
An assessment of yours or the other side’s strengths, weaknesses, opportunities and threats.
Gives the other party only two options—accept this or end the negotiation. This is a very tough negotiating tactic and often leads to resentment and hostility. This approach certainly removes any opportunity for Both-Win® value creation. When confronted with a Take-It-Or-Leave-It, a good negotiator will ask for consideration. This tests the resolve of the party and explores opportunities to move away from this firm position. Techniques such as—”What if?” “Would you consider it?” “How much better?” “It shouldn’t apply in this case.” “Who can change the policy?”—often open a pathway into a more productive negotiation.
Separate the person from the problem. Task conflicts are depersonalized. The analysis and problem-solving process aimed at a task can enhance relationships and lead to better solutions. On the other hand, personal conflict often threatens relationships as individuals become defensive and resentful. Creativity is stymied when personal conflict is present.
One party to a negotiation adds items to a negotiated package or deal to enhance satisfaction of the other party. Sometimes used as a deal closer (e.g. we will toss this in at no charge).
Threatens extreme action if the other side does not agree. Threat is implicit in every negotiation, whether it is expressed openly or not. There is always a possibility of deadlock and if talks fail both parties expect to lose something. Threats also create hostility and may have unexpected consequences.
There is a tendency to focus on your own time pressures rather than on the pressures the other side also has. It could be that you have common time pressures, or that your time pressure is actually transferred to the other side because if you don’t come to an agreement before time is up, they also lose out on the opportunity to make a deal. Be careful as the deadline approaches. Negotiators tend to make more concessions and bigger concessions the closer the deadline. If you find time pressures working against you, find out what can be done to relieve the time pressure. Many time pressures are self-imposed.
Making similar or like exchanges of information, concessions, introductions, money, or something else of value that are given by one party to another party. Think of: “You scratch my back and I”ll scratch your back,” “I did this for you now you owe me.”
The total cost approach is a powerful negotiating tool for any seller under price pressure. Use the total cost approach to defend a firm price. If price appears to be the sticking point, do what Albert Einstein suggested when he said, “No problem can be solved at its own level.” Direct your negotiation towards total cost instead of price. The price of what is being sold is only one component in the total cost of ownership. The process of identifying all of the components that go into “total cost” provides a fertile environment for relationships to build between the negotiators and for each side to uncover potential Win-Win opportunities that are not focused on the single issue of price.
One party concedes or yields on issues. While it would appear a concession by one party would bring the participants closer to agreement, sometimes a concession can do just the opposite. Developing a concession strategy is an important part of any negotiation.
A negotiation exchange that involves making negotiation concessions or the “trading-off” of issues so as to maximise on each sides’ value. So you will offer the other side something that they value more than you, in exchange for gaining something from them that you value more than they do.
Suggest a solution or option to see if the other side bites. Exploring potential opportunities or alternatives.
Determining if a person is lying by asking a variety of questions, all designed to validate the same information or fact. When inconsistencies surface you can infer the person is lying. Liars find it very hard to remain perfectly consistent in all aspects of a lie.
A tendency for negotiators in multi-issue negotiations to underestimate the number of options that are available.
Make your agreement contingent upon the other side agreeing to another, maybe unrelated issue.
A threat of no agreement used to force closure, often expressed as “take it or leave it.”
A process often employed in “Group” or “Multi Party” negotiations to reach a decision or agreement by the involved negotiating parties. A unanimous decision is only achieved when all the negotiating parties are in total accord in making a decision or an agreement. Requires a group’s decision to be unanimous—as opposed to a majority vote decision. Unanimity forces a group to consider a broader range of alternatives to expand the pie and create mutually beneficial trade-offs and assure the interests of all group members are satisfied. Studies indicate that groups operating under a unanimity rule reach more efficient outcomes than groups operating under majority rule.
One reason some negotiations fail is because they get stuck on a single issue. Having flexibility to remove a troublesome issue from a negotiation can pave the way to agreement.
Letting individuals express their frustrations, disappointment, anger, or feelings regarding an issue or event helps relieve tension in a negotiation and helps create a bridge to agreement. When a negotiation becomes heated, allow time for participants to vent. This often helps get a negotiation back on track.
What you need – as opposed to what you want. The least beneficial terms upon which a party could enter into an agreement. Also referred to as the LAA (Least Acceptable Alternative). the alternative that a negotiator will act on if they are not successful in a negotiation. A walk away may be an alternative supplier or buyer, to manufacture the product or deliver the service in-house, to wait or simply do nothing i.e. to go without.
Literally the situation where a party abruptly leaves the negotiating room or table and refuses to return. An example of an aggressive Crunch.
Sometimes walking out or forcing an impasse (deadlock) can be done for strategic purposes. When used as a strategy to test the other side’s resolve, or to buy yourself more time, it is important to plan in advance how you will reopen the negotiation at a later date.
People don’t like to waste their energy. Once they have worked on something, they want the effort to pay off. The more work they have done in a negotiation, the more they want agreement. Once a negotiator has invested a great deal of time, effort, emotional equity, and money in a negotiation, the more desperate they are to close a deal.
Suggest a solution or option to see how the other side responds. Exploring potential opportunities or alternatives. This technique is a way to get information from the other party that ordinarily might not be given. Good “What If?” questions provide insights into the other party’s business practices and motivations. These questions can open up new avenues of thought for both parties and create opportunities for agreement.
Win-Lose refers to a distributive negotiation where one negotiator gains the other negotiator’s loss. Both negotiators are typically competing to take away or claim the most value from their negotiation. Also called the fixed-pie scenario, in that there is only a limited amount to be distributed. The term ‘win-lose’ was popularized by “game theory”. Also called distributive or concessional bargaining.
Win-Lose refers to a distributive negotiation where one negotiator gains the other negotiator’s loss. Both negotiators are typically competing to take away or claim the most value from their negotiation. Also called the fixed-pie scenario, in that there is only a limited amount to be distributed. The term ‘win-lose’ was popularized by “game theory”. Also called distributive or concessional bargaining.
A negotiation in which both parties strive to reach an agreement that satisfies everyone. Also called interest-based, value-based, and mutual gain negotiating.
An emotional, physical, and verbal reaction to an offer, then silence to see how the other side may modify their offer.
Remorse after reaching agreement that you could have gotten better terms. For buyers and sellers, often referred to as buyer’s remorse and seller’s remorse. Occurs when an under aspiring negotiator sets their target or aspirations too low at the outset of a negotiation and is granted an immediate agreement by their negotiating counterpart.
Persistent wooing pays off in negotiations—provided it is done without conveying a sense of desperation. People prefer to do business with others who demonstrate that they want and appreciate the business. Tell the other party again and again how much you want to please them. Tell them how much you want to do business with them and how it will benefit them. Quantify the benefits for them. Woo them. Tell them why their decision to do business with you will be a wise one. Address their interests, not yours.
A buyer finds out what a seller will take by offering to consider a somewhat lower quality item, and then tries to buy the higher quality item for the lower price.
Part of planning your negotiation strategy. Worth analysis is different from cost analysis. In worth analysis, all economic and psychological factors are considered. Worth is the power to satisfy wants. Its value depends upon what is considered useful or desirable to a person in a particular situation. Cost is only one of the many elements that are considered in assigning worth. If a special component is required to keep a manufacturing line running, and a one-day delay costs $2,000, a buyer is justified in paying up to, but not more than, $2,000 for the component if the buyer can save a single day of operations. It makes no difference if the part costs $300 or $1.
The idea of trading lower value items for those of higher value is universal in all negotiations. TableForce has labeled these negotiable items as “Yields” (low value, willing to give up, let go, concede) and “Shields” (must have, cannot conceded, the boss says “never”)
See definition for Distributive Negotiation.
Zone of Possible Agreement (also called the “bargaining range”) exists if there is a potential agreement that would benefit all parties more than their alternative options. It is the range or area in which an agreement is satisfactory to both parties involved in the negotiation process. Often also referred to as the “Contracting Zone”. Negotiation ZOPA or the Contracting Zone is the range between each party Walk Away or Real Base or Bottom Lines, and is the overlap area that each party is willing to pay or find acceptable in a negotiation.
