Business Negotiations

Effective business negotiation is a core leadership and management skill. This is the ability to negotiate effectively in a wide range of business contexts, including dealmaking, employment discussions, corporate team building, labor/management talks, contracts, handling disputes, employee compensation, business acquisitions, vendor pricing and sales, real estate leases, and the fulfillment of contract obligations. Business negotiation is critical to be creative in any negotiation in a business setting. Business negotiation strategies include breaking the problem into smaller parts, considering unusual deal terms, and having your side brainstorm new ideas.

Leveraging the contrast effect is also a powerful tool in negotiations. You might ask for more than you realistically expect, accept rejection, and then shade your offer downward. Your counterpart is likely to find a reasonable offer even more appealing after rejecting an offer that’s out of the question. Additionally, offering several equivalent offers that aim higher than your counterpart is likely to accept will elicit reactions that can help you frame a subsequent set that, thanks in part to the contrast effect, are more likely to hit the mark.

Building a team is critical to negotiations in business. To prevent conflicts among diverse, strong-minded team members from overshadowing group goals, negotiation teams should spend at least twice as much time preparing for upcoming talks as they expect to spend at the table. Because the other side will be ready and willing to exploit any chinks in your team’s armor, it’s important to hash out your differences in advance.

Other business negotiation tips include curbing overconfidence, creating value in the negotiation, establishing a powerful BATNA, effective use of emotions at the bargaining table, caucusing, delineating your zone of possible agreement, and other skills geared toward an integrative bargaining outcome rather than a distributive, or haggling, bargaining outcome.

In addition, considering the ethical and legal repercussions of a deal to insure that it is a true win-win is the hallmark of every experienced business negotiator.

Articles include many business negotiation examples, and explore concepts such as creative dealmaking, renegotiating unfavorable deals, seeking advice from a negotiation opponent, identifying a solid BATNA and crafting draft agreements.

Build strong relationships in business negotiations

PON Staff   •  07/15/2014   •  Filed in Business Negotiations

Instagram cofounder and CEO Kevin Systrom

While a student at Stanford University in the mid-2000s, Kevin Systrom met Facebook founder and CEO Mark Zuckerberg at gatherings on campus. Though Systrom declined Zuckerberg’s proposal that he drop out of school and take a job with Facebook, the two men kept in touch by phone in the years following. After Systrom launched photo-sharing … Read More 

Master the Art and Science of Haggling for More Productive Business Negotiations

PON Staff   •  06/23/2014   •  Filed in Business Negotiations

Just like the prices of houses, cars, and other big-ticket items, the prices of furniture, electronics, wine, jewelry, another “medium-ticket” goods are now frequently up for discussion. The ancient art of haggling—the back-and-forth dance of offers and concessions between buyer and seller—is making a comeback, and you would do well to brush up on your … Read More 

Dealmaking: What About the Fine Print?

PON Staff   •  06/09/2014   •  Filed in Business Negotiations

Choosing the right words for your contract is a negotiation in itself. Five guidelines will help you achieve greater precision.

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 … Read More 

In Business Negotiations, 12 Strategies for Curbing Deception

Katie Shonk   •  05/07/2014   •  Filed in Business Negotiations

In negotiation, deception can run rampant: parties “stretch” the numbers, conceal key information, and make promises they know they can’t keep.

Unfortunately, most of us are very poor lie detectors. Even professions that encounter liars regularly, such as police officers and judges, do not perform better than chance at detecting deception, Professor Paul Ekman of the … Read More 

Business Negotiations: Why Does Process Matter?

PON Staff   •  04/21/2014   •  Filed in Business Negotiations

Negotiating the right process for your negotiation is well worth the time and effort, for two important reasons.

First, process drives substance.

Imagine what might have happened if the pharmaceutical company and the biotech firm had agreed up front to resolve the royalty issue rather than simply exchanging their best arguments before splitting the difference. … Read More 

Business Negotiations: Imposing Procedural Constraints

Guhan Subramanian   •  04/17/2014   •  Filed in Business Negotiations

Sometimes the courts will be unwilling to get involved in the substantive terms of the deal but will impose procedural constraints on the more powerful party.

Consider the case of a controlling shareholder in a publicly traded company – someone who holds more than 51% – who wants to “cash out” the minority shareholders.

Under the corporate … Read More 

You Have Less Information Than You Think

PON Staff   •  03/28/2014   •  Filed in Business Negotiations

Most negotiators understand the importance of preparation and will dedicate significant time and energy to analyzing important negotiations in advance.

Chances are, however, that powerful negotiators will undertake less informative and less accurate analyses than their weaker counterparts will.

For instance, in a hypothetical salary raise negotiation, a negotiator may be so confident of her contributions that … Read More 

In negotiation, are your differences holding you back?

PON Staff   •  03/15/2014   •  Filed in Business Negotiations

In July 2012, Google executive Marissa Mayer, a top contender for the position of CEO of Yahoo, had a dazzling interview with the struggling Internet company’s board of directors. Mayer presented a detailed, impressive plan to lead each sector of Yahoo’s business, and she skillfully reassured board members about her perceived weaknesses, reports Bethany McLean … Read More 

Nothing but net profit: The NBA and “the greatest deal known to man”

PON Staff   •  02/15/2014   •  Filed in Business Negotiations

When we think of our worst negotiation disasters, they tend to be the blunders that are freshest in our minds. But what about mistakes whose repercussions accumulate over years, even decades? Those are typically the most significant negotiation messes of all.

An agreement reached in 1976 in the realm of professional basketball illustrates how carelessly negotiated … Read More 

What aren’t you noticing in your negotiations?

PON Staff   •  01/15/2014   •  Filed in Business Negotiations

Recently, a corporation that we’ll call Firm A was negotiating to give another company, Firm B, access to its intellectual property. The CEOs reached an oral agreement on deal terms, and the lawyers on both sides began drafting the formal contract.

At this point, Firm B asked for the right to use Firm A’s intellectual property … Read More