business negotiation techniques

Negotiation techniques in business negotiations are similar to those in interpersonal or personal negotiations in that they employ the same methodologies and strategies except at a much larger scale.

The following items are tagged business negotiation techniques.

Fine-Tuning Your Contract

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When negotiators sign on the dotted line, they sometimes worry about the wrong concerns. “Did I overpay?” wonders the buyer as he inks the sales agreement. Across the table, the seller is thinking, “I bet if I’d pushed a little harder, I would have gotten more.”

Beware Your Lawyer’s Biases

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Parties in litigation are often overly optimistic about their chances of winning in court. This tendency reduces the bargaining range for settlement because one or both parties perceive their walkaway alternative (namely, letting the courts decide) to be more attractive than it actually is. According to conventional wisdom, lawyers can help their clients overcome this overoptimism bias by providing an objective assessment of a case’s merits and encourage acceptance of a deal.

Small Talk, Big Gains?

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According to conventional wisdom, small talk builds rapport and gets both sides a better deal in the end. But in fact, the question of whether to engage in small talk can be highly context-specific. New York City investment bankers, for example, tend to be far less likely than Texas oil executives to engage in small talk at the outset of a negotiation.

Pick the Right Agent

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So, you’ve decided to use an agent in your next negotiation. Now what?

It’s important not to rush headlong into the process of choosing an agent—picking the first one you speak to, for example, and sending him off to talks the next day. You need to choose your agent carefully, then establish a clear, detailed understanding of each other’s responsibilities and expectations. The following are critical steps in picking an agent and negotiating his contract.

“Are We Exclusive?”

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Ron McAfee, a carpenter and roofing expert, spent considerable time working with a condominium association on the design of a new roof deck. After gaining agreement on the proposed layout, design, and materials, McAfee submitted a written bid of $12,500. One of the board members subsequently showed McAfee’s plans to another roofer, who offered to do the job for $10,250. The condo association voted unanimously to go with the cheaper roofer, and McAfee was left with nothing to show for his time and effort.

Eyeing the Competition

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Ford vs. GM. Coke vs. Pepsi. Oxford vs. Cambridge. These famous rivalries remind us that the top two achievers in a given realm often compete fiercely with each other. Researchers Stephen M. Garcia and Richard Gonzalez of the University of Michigan and Avishalom Tor of the University of Haifa have produced a useful series of studies on when competition between entities will exist—with findings that are relevant to all negotiators.

How to Lighten Your Burdens

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For decades, General Electric (GE) and the Environmental Protection Agency sparred over who would pay for the removal of PCBs, or polychlorinated biphenyls, that GE had discharged into New York’s Hudson River, a cleanup project expected to cost hundreds of millions of dollars. In October 2005, the two sides came to an agreement.

How Status Conscious are You?

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Sometimes in negotiation, we’re forced to deal not only with the issues on the table but also with concerns about status. One famous instance took place in the late 1980s, when Robert Campeau, head of the Campeau Corporation, tried to acquire Federated Department Stores, the parent company of the prestigious department store Bloomingdale’s. A bidding war over Bloomingdale’s escalated between Campeau and R.H. Macy. Campeau won with an irrationally high offer—and had to declare bankruptcy shortly thereafter.