How to negotiate effectively

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1. What is negotiation

Negotiation is an essential part of the every-day business life. It can take place at any time and in any place. Negotiation is a kind of meeting, but contrary to the latter it may be held in some unexpected and uncomfortable place such as the street or on the stairs.

There are several definitions of negotiation. It is said to be the process for resolving conflict between two or more parties whereby both or all modify their demands to achieve a mutually acceptable compromise. Thus, it is the process of changing both parties views of their ideal outcome into an attainable outcome.

The need of negotiation arises when we are not fully in control of events. Negotiations take place to handle mutual differences or conflict of:

interests (wages, hours, work conditions, prices: seller vs buyer)

rights (different interpretations of an agreement)

The aim of a negotiation is to come to an agreement which is acceptable to both sides, and to preserve the overall relationships. While specific issues are to be negotiated, common interest are yet still to be maintained. Negotiations do not mean war. Negotiators can still be friends and partners.

2. The negotiation continuum


The situations of negotiation can be shown diagrammatically in terms of ideals and limits.

Ideal Limit


Bargaining area

Limit Ideal YOU

The limit may be the limit of negotiators authority, such as a minimum (e.g. price) acceptable. If there is overlap it is possible to settle. The final position within the bargaining area, where settlement takes place, depends on the negotiators relative strength and skill.

No overlap

The aim of the negotiator is to achieve a result, i.e. to find a solution, within the bargaining area. However, it is possible that both parties set limits which do not provide overlap. In this case the negotiators have to move their limits, otherwise the negotiation will be broken down.

Ideal Limit

HIM No deal


Limit Ideal

Too much overlap

The opposite case is also possible. When one is careless and settles for less than he could. In this case the limit of the opposite side should be found and the ideal should be revised.

Ideal Limit



Limit Ideal Revised Ideal

3. The approach

There are four main stages of negotiation:

Preparing objectives, information, strategy

Discussing (argue) and signalling willingness to move

Propose and bargain

Close and agree

While preparing to the negotiation it is important not only to prepare supporting arguments but also to define objectives. Objectives should be realistic and attainable and have certain priorities. It is also necessary to investigate the opponents plans and priorities, which can be rather difficult.

The objectives should be classified basically as follows:

: 14/09/2007