Wednesday, March 17, 2010

Negotiation - Why do we negotiate?

Negotiation occurs throughout your professional and personal life. It may be a formal affair that takes place across the proverbial bargaining table, in which you negotiate over price and performance, or the complex terms of a partnership venture. But it may just as easily involve a very simple deal or a very messy dispute. Given the money, issues, and emotions that are regularly involved in negotiations, even a modest improvement in your negotiating skill can yield a sizable payoff.

When you don’t have the power to force a certain outcome or behavior, you seek to negotiate in order to influence that outcome or behavior. You agree to negotiate because you believe it is to your advantage to do so. But a negotiated solution is advantageous to you only under certain conditions—that is, only if you don’t have a better option. Any successful negotiation, therefore, must have a fundamental framework established by each side knowing

  • what its best alternative to a negotiated deal is
  • what its minimum threshold for a negotiated deal is
  • how flexible it is willing to be, and precisely what tradeoffs it is willing to make.
Three concepts are especially important for establishing this framework: BATNA (Best Alternative to a Negotiated Agreement), reservation price, and ZOPA (Zone of Possible Agreement).

(More to come...)

No comments: