Negotiation

economic-dictionary

Negotiation is a process of exchange of information and commitments in which two or more parties, who have common interests and others that diverge, try to reach an agreement.

Negotiation is a process where the agents interested in reaching an agreement on a particular matter exchange information, promises and accept formal commitments.

In this sense, the negotiation usually takes place in the form of dialogue between the parties, where each one has an interest in what the other party has or can offer, but is not willing to accept all its conditions. In this way, each party wants the other to give up its position somewhat in order to reach a point of agreement acceptable to both.

Basic characteristics of the negotiation

Negotiation, regardless of the context in which it is carried out, has the following basic characteristics:

  • There are two or more interested in negotiating (negotiating parties)
  • The negotiating parties are interrelated. That is, each of them have something of interest to the other party, which largely determines their bargaining power. If there is nothing that can be offered, it cannot be negotiated.
  • There is a dynamic process where the parties communicate, report their positions and discuss how much each one is willing to give up in exchange for something that the other can grant.
  • Each of the negotiating parties will have a specific negotiating strategy whose objective will be that most of their conditions are accepted. The strategy may or may not be successful.
  • If the negotiation is successful, a formal agreement will be reached in which the parties commit to the agreement.

Stages of negotiation

Next, we describe each of the stages of the negotiation:

  • Preparation: In general terms, it consists of identifying the conflict between the parties (what is negotiated), the position and strategy of each one. Among the activities carried out are the following:
    • Diagnosis of the situation: Who are the parties and what is the conflict
    • Determine your own objectives and possible concessions: Determine what is the most favorable point and what is the resistance zone (up to what limit you are willing to give in)
    • Define the negotiating strategy to follow
  • Antagonism: It is about exposing to the counterpart what you want to obtain from the negotiation. This stage is decisive to define the bargaining power of each party. According to the firmness of their position and arguments, it will be seen which of the parties will be more or less willing to give up part of their conditions.
  • Acceptance of the common framework: Once the parties have already presented themselves, they must decide whether they are willing to bring their positions closer together and what type of position they will choose: competitive, collaborative or unilaterally assigned.
  • Presentation of alternatives: At this stage, the parties offer alternative alternatives (with more or less concessions) that can bring their positions closer together.
  • Closing: The parties accept a certain alternative in agreement and undertake to comply with it.

It should be noted that the names of the negotiation stages that we have described may vary from one author to another. However, whatever the name of each of the stages, the essence is the same.

Trading types

There are different types of negotiation according to the attitude adopted by the negotiator. Here are five of the most relevant:

  • Accommodative: The negotiator accepts all the conditions of the counterpart in order to establish a future relationship. Probably in a future negotiation its power will increase and it will demand that some of its conditions be fulfilled.
  • Competitive or distributive: It is about achieving that the greatest number of own conditions is accepted in the negotiation. You compete with your counterpart trying to impose your position. This type of negotiation is also called win-lose.
  • Collaborative or integrative: Negotiators are willing to give up a large part of their conditions in order to reach a favorable agreement for both parties. In this case, the negotiator is more empathetic with the point of view of his counterpart and seeks that the relationship is of mutual benefit. This type of negotiation is also called win-win.
  • Commitment: It is about negotiating superficially in order to continue the relationship, but without resolving all the points in conflict. In other words, it is a "patch" agreement to move forward, but postpones the resolution of the conflict.
  • Avoidant: Try to adopt a position of inaction. Avoid negotiation because it is believed that for the moment it will not bring benefits.

Tags:  banks markets present 

Interesting Articles

add