BUSINESS NEGOTIATIONS

I. Definition:
A negotiation is n organized process of communication beteen to !or more" partners# $o
tr% to come to a mutua&&% profitab&e agreement in order to ac$ie'e t$eir indi'idua& goa&s.
($aracteristics:
It is a transaction beteen to parties t$at $a'e t$eir on distinct# e'en conf&ictua&
interests.
It presupposes some common interests of t$e parties in'o&'ed
It is based on communication# t$e e)c$ange of information t$roug$ &anguage b% means of
'erba&# ritten and non*'erba& messages.
It ta+es 'arious forms to comp&% it$ t$e mu&titude of domains in $ic$ it is used.
A business negotiation is a process inc&uding t$e fo&&oing stages:
,e&ations$ip bui&ding
Agreeing procedure
E)c$anging information
-uestioning
Generating options
Bidding
Bargaining
Sett&ing and conc&uding
Depending on t$e princip&e t$e% are based on# business negotiations ma% be c&assified into:
- in*in !co*operati'e" negotiations# $ere t$e mutua& interests pre'ai& o'er
under&%ing differences
- in*&ose !conf&ictua&" negotiations# $ere t$e parties in'o&'ed aim at gaining t$e most
possib&e# or at inning at a&& costs.
II. Negotiating strategies
Problem solving . is based on t$e idea of reconci&iation t$e parties/ goa&s. T$is strateg%
inc&udes increasing a'ai&ab&e resources# compensation# e)c$anging concession on &o priorit%
issues# minimizing t$e cost of concessions# and creating ne mutua&&% beneficia& options.
0arties must be firm about t$eir goa&s# but f&e)ib&e regarding t$e means used to reac$ t$ose
goa&s. It inc&udes: offering information# pro'iding c&arification# faci&itating discussion#
summarizing arguments# e)pressing agreement.
T$e ris+ of prob&em so&'ing is t$at it ma% bac+fire if t$e ot$er part% c$ooses a contentious
strateg%.
Contending/contention . one part% tries to persuade t$e ot$er part% to agree to a so&ution t$at
fa'ours t$e former/s interests. Inf&ated demands# irre'ocab&e commitments# persuasion and
t$reats are among t$e most fre1uent contentious tactics. It ma% &ead to conf&ict# t$erefore it is
rat$er used as an opening strateg%# to be rep&aced b% prob&em*so&'ing at a &ater stage.
Yielding . partners reduce t$eir aspiations or goa&s . in t$e case of unimportant issues and
time pressure is $ig$ * an effecti'e a% of c&osing t$e negotiation.
Inaction - used to increase time pressure on t$e ot$er part%
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Co-operative (integrative) directed toards bui&ding &ong*term business re&ations$ips#
focusing on mutua& gain and mu&tip&e goa&s. (ooperati'e negotiators are interested in
understanding t$e positions of a&& t$e parties in'o&'ed. T$e% use effecti'e &istening and
responding s+i&&s to minimize misunderstandings. T$e% s$ou&d be prepared to ma+e
concessions and to s$are information. T%pica& of in*in resu&ts.
Competitive (distributive) strateg% tends to ma)imize a participant/s position at t$e e)pense of
t$e opponent. T$ere is t$e assumption t$at a gain on one side e1ua&s a &oss on t$e ot$er side.
Information is gi'en on&% for se&f*ser'ice. It is based on a in*&ose princip&e. Suc$ a strateg%
rare&% in'o&'es concessions or compromise# but it inc&udes: c$a&&enging# disagreeing to or
re3ecting t$e opponent/s position# c$anging t$e topic to refocus t$e discussion to one/s
ad'antages# accusing t$e opponent of neg&igence# ma+ing treats and demands# issuing
u&timatums# ma+ing persona& attac+s against t$e opponent.
Collaborative strategy . it is deri'ed from t$e 4princip&ed5 and 4prob&em*so&'ing5 strategies
and is directed toards optimizing resu&ts. It re&ies on reac$ing agreement b% s$aring
information# e)p&oring t$e interests of bot$ parties.
III. 6ain stages of a business negotiation
2. ,e&ations$ip bui&ding: it inc&udes e)c$ange of greetings# identif%ing t$e participants
c&ear&% b% name# s$a+ing $and it$ t$e members of t$e ot$er team# in'itation for
$a'ing a cup of coffee or some refres$ments# e)c$anging information about t$e 3ob
and t$e compan%.
7. Agreeing procedure : introducing t$e ob3ecti'es and agreeing on t$em it$ t$e ot$er
part%. It mig$t increase t$e atmosp$ere of cooperation.
8. E)c$anging information : t$e negotiators $a'e t$e possibi&it% to ma+e t$eir needs and
interests c&ear to t$e ot$er part%.
9. Generating options: it is 'er% resourcefu& stage during $ic$ a &ot of suggestions can
be made and ana&%sed.
:. Bidding and bargaining are t$e stages in $ic$ t$e proposa&s made are discussed#
accepted# a&tered or re3ected. T$ese are t$e most acti'e parts of a negotiation
;. Sett&ing and conc&uding . t$e &ast stage of a negotiation # $ose purpose is to
summarize $at agreements $a'e a&read% been reac$ed and $at responsibi&ities $a'e
a&read% been assigned.
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