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.

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The late-night-TV disputes

PON Staff   •  10/10/2011   •  Filed in Business Negotiations, Daily

Adapted from “Comedy of Errors: The Late-Night-TV Wars,” first published in the Negotiation newsletter, April 2010.

In 2004, NBC asked Jay Leno, the longtime host of The Tonight Show, to yield the show in five years to Conan O’Brien, his younger rival and host of NBC’s Late Night.

As the date of O’Brien’s promotion approached, Leno’s Tonight … Read The late-night-TV disputes

When negotiation goals backfire

PON Staff   •  10/04/2011   •  Filed in Business Negotiations, Daily

Adapted from “Managers: Think Twice Before Setting Negotiation Goals,” first published in the Negotiation newsletter, May 2009.

In the years leading up to its collapse, energy-trading company Enron promised its salespeople large bonuses for meeting challenging revenue goals. This focus on revenue rather than profit contributed to widespread fraud and, ultimately, to the firm’s downfall.

To encourage … Read When negotiation goals backfire

Conflict management from the start

PON Staff   •  09/27/2011   •  Filed in Business Negotiations, Daily

Adapted from “Before You Sign on the Dotted Line…”first published in the Negotiation newsletter, May 2009.

After reaching an agreement, professionals often rely on their lawyers to draw up the official contract. Unfortunately, miscommunication between negotiators and their lawyers often leads to costly mistakes. Contract terms may not accurately represent the negotiated agreement, key deal terms … Read Conflict management from the start

Negotiating among friends

PON Staff   •  09/13/2011   •  Filed in Business Negotiations, Daily

Adapted from “Pick the Right Negotiating Team,” first published in the Negotiation newsletter, November 2007.

We’ve all seen teams and work groups implode under the stress of personality clashes. These experiences might lead you to conclude that your negotiating team should be a tight-knit and harmonious group of colleagues. Yet in their research, Leigh Thompson, … Read Negotiating among friends

Have you chosen the right counterpart?

PON Staff   •  09/06/2011   •  Filed in Business Negotiations, Daily

Adapted from “Reach Your Target with Backward Mapping,” first published in the Negotiation newsletter, March 2010.

Here’s the problem: Your negotiation seems to be over before it has begun. Your targeted counterpart is refusing to sit down with you or simply ignoring your requests. How can you get her to see that she would benefit from … Read Have you chosen the right counterpart?

Why it pays to build relationships

PON Staff   •  09/06/2011   •  Filed in Business Negotiations, Daily

Adapted from “When Lose-Lose Wins,” first published in the Negotiation newsletter, August 2004.

Does negotiation research promote the creation of joint gain at the expense of relationship building? Researchers Jared R. Curhan, Margaret A. Neale, and Lee D. Ross suggest that the field is guilty as charged.

To illustrate, the team apply author O. Henry’s classic tale … Read Why it pays to build relationships

When you have all the power

PON Staff   •  08/30/2011   •  Filed in Business Negotiations, Daily

Adapted from “The Danger of ‘Take It or Leave It,’” by Ian Larkin (professor, Harvard Business School), first published in the Negotiation newsletter, January 2010.

Imagine that one of your organization’s suppliers, with whom you have been very happy, recently lost its only other big customer. Your contract comes up for renegotiation next month. You know … Read When you have all the power

Sizing up the competition

PON Staff   •  08/22/2011   •  Filed in Business Negotiations, Daily

Adapted from “The Ins and Outs of Making Sealed Bids,” by Guhan Subramanian (professor, Harvard Business School and Harvard Law School), first published in the Negotiation newsletter, July 2007.

Imagine you’re bidding for a house against another “very interested party,” according to your real-estate agent, and the seller wants a sealed bid from you by close … Read Sizing up the competition

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