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Winning a Negotiation
by Ron Kurtus (26 June 2007)
In simple terms, a negotiation is a discussion between two parties with the intention to produce an agreement. Usually, one side initiates an offer or demand that the other side counters.
It is a head-to-head competition where each side seeks different rewards. Some negotiators seek almost total victory, where they squeeze the opponent to get what they want for little in return. The best negotiation is where both sides feel they have won. It is a win-win proposition.
In order to win a negotiation, you need to have clear goals of what you want, as well as what you are willing to give up.
Questions you may have include:
- What is the negotiation process?
- What are the types of victories in negotiation?
- How can you win a negotiation?
This lesson will answer those questions.
Negotiation is the process of discussing an issue between parties with competing interests with the purpose of coming to an agreement. It is to resolve a difference of opinion, or dispute, or to settle the terms of an agreement or transaction.
The process usually starts with one side laying down demands or making an offer and the other side countering with their own offer or demand. Each side should give in a little, perhaps making offering side incentives, until an agreement takes place.
For example, when you purchase an automobile, you probably will negotiate with the salesperson on the final price of the car. The salesperson states a price and you counter with a lower price. He goes to talk to his manager and comes back with better price, but still higher than what you offered. Finally, you agree on a price according with the dealership's need to sell and your desire for the car and ability to pay.
Another example is when labor unions make demands on a company.
Labor unions will negotiate on the terms of a labor contract, seeking higher pay and greater benefits. In return, the company officials want greater productivity and a guarantee there will be no labor problems for the length of the contract. Usually, the union starts with outrageous demands that they reduce during the process. They often have the upper hand in being able to threaten a strike if the company does not give in.
The negotiation process is seen in many aspects of business and life.
Types of victories
Depending on the goals of the participants and the competitive position, the victory can be greatly one-sided or can be where both sides are satisfied.
If one party in a negotiation has a competitive advantage or is very tenacious in getting what they want, the result can be one-sided.
Labor unions often have the upper hand, especially when business is booming or there is a great need for the product. In such a case, they will often ask for more than deserved and the companies will capitulate.
During World War II, labor leader John L. Lewis lead a strike of coal miners for higher pay. Although considered unpatriotic, he was able to get his demands in the negotiations, because the country needed coal for the war effort.
The same can be true in other negotiations.
During the negotiations to end the Vietnam war, the Viet Cong delegates signed a two-year lease for housing in Paris. Meanwhile, the American negotiators rented suites on a weekly basis. The Viet Cong knew the Americans were desperate for a settlement, while they were willing to continue discussions for two years or more to achieve their goals. It can be said that the Viet Cong almost achieve total victory in the talks.
But such total victory tactics can backfire.
The printer's union made excessive demands on the Milwaukee (WI) Sentinel newspaper and went on strike to achieve their goals. But the newspaper company was struggling and went out of business, selling their property to a rival newspaper company. The striking workers lost the negotiation and their jobs.
The best negotiations employ the use of direct argument and compromise to arrive at a mutually satisfactory agreement. This type of negotiation is an art of achieving what you want from a transaction, such that everyone involved is content that the relationship has gone well.
When purchasing an automobile, the best negotiation is when both sides go away happy.
Techniques to win
As in any competition, you need to be well prepared to perform at your peak. This means knowing your goals and what you want to get out of the negotiation. If possible, you should also have an idea of what the opponent truly wants and is willing to give up. You need to know your bargaining position in preparing for the negotiation.
Using the example of buying a car, you need to know how much you can afford. But you also need to do research on the dealer cost for the car and typical selling price. It is good to know what the market is for the automobile you want, as well as your own desire, to determine your bargaining position and how much you are willing to pay.
During the negotiation, you must be patient and not concerned with time or deadlines. The side that has time constraints is at a disadvantage. This is a head-to-head competition where both sides use defensive tactics to prevent the other from "scoring points" or gaining an advantage.
Some car salesmen will stretch out the negotiation process, often leaving the room to check with the sales manager, realizing that many customers get impatient and will be anxious to finalize the deal. This can give the salesman an advantage on getting a higher price for the car.
On reaching an agreement that both sides can live with, the negotiation is finalized. Ideally, it is a win-win agreement, since a one-sided victory in a negotiation can create hard feelings and may come back to haunt the victor down the road.
A negotiation is a discussion between two parties with the intention to produce an agreement. Each side seeks different rewards. Some negotiators seek almost total victory, but best negotiation is where both sides feel they have won. In order to win a negotiation, you need to have clear goals of what you want, what you are willing to give up, and your position of strength.
Resources and references
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Top-rated books on Negotiation
Top-rated books on Winning Competitions
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Winning a Negotiation