Negotiation; Principles, Process & Strategies

Negotiation is the process of bargaining, where two parties try to reach an agreement on mutually acceptable terms to acquire each other’s wants.

Negotiation includes the discussions & bargaining that goes on between parties before a contract is settled or a deal is agreed upon.

Nature of the Negotiation

• Negotiation requires the involvement of two parties.
• Negotiation requires flexibility.
• Negotiation is a continuous process, not an event.
• Negotiation needs effective communication.
• Negotiation  looks for a win-win situation for the parties involved.

Four principles of best practice Negotiation

1. Preparation: understanding the issues and the people and equipping the team for the process
2. Relationship: developing a strategy for maintaining the relationship before, during and after negotiations
3. Communication: building trust by applying an open communication style
4. Problem-solving: exploring options and strategies for reaching agreement

Negotiation Process

1.       Offer: It is the first proposal made by one party to another in the negotiation opening stage.

2.       Counter Offer: It is the offer made by the second party to the first party.

3.       Concession: It is the increase or decrease made in the offer by both or one of the parties

4.       Compromise: it is the sacrifice made by both or one of the parties

5.       Agreement: It is the point where both parties agree on which is beneficial for both.

The Outcomes of the Negotiation

1.       Loss – Loss: Where both parties fail to achieve the desired outcome.

2.       Win – Loss: Where one party wins it, and another party loses

3.       Win – Win: Where both parties win to achieve the desired outcome.

Strategies for Successful Negotiation

1. Assess:

- What are the expected costs and benefits of participating in the negotiation.

- What are the losses if avoid the negotiation

2. Prepare:

- Analyze your interests in the negotiation

- Analyze the interests of your counterpart in the negotiation

3. Interact:

- Engage with your counterpart during the negotiation; Listen to the perspectives of the counterpart

- Provide some unique information that your counterpart needs.

4. Package:

- Present the packages that address both issues and solutions of both parties