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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Dealing with Option Overload

PON Staff   •  04/18/2011   •  Filed in Business Negotiations, Daily

Adapted from “Option Overload? Manage the Choices on the Table,” by Chris Guthrie (professor, Vanderbilt University Law School), first published in the Negotiation newsletter.

Consider what happened when Randy, who was opening his first restaurant, met with Albert, the general manager of Best Appliances, to negotiate a deal. Albert pulled out a stack of brochures and … Read Dealing with Option Overload

Negotiation and the Glass Ceiling

PON Staff   •  04/11/2011   •  Filed in Business Negotiations, Daily

Glass-and-steel domed skylight viewed from below against a blue sky

Adapted from “A Fresh Look Through the Glass Ceiling,” first published in the Negotiation newsletter.

Women are less likely to seize opportunities to negotiate than men, Linda Babcock and Sara Laschever documented in their widely-read book Women Don’t Ask. Subsequent research has indicated that, when they do negotiate on their own behalf, women ask for and … Read Negotiation and the Glass Ceiling

Put More on the Table

PON Staff   •  04/04/2011   •  Filed in Business Negotiations

Adapted from “Putting More on the Table: How Making Multiple Offers Can Increase the Final Value of the Deal,” by Victoria Husted Medvec and Adam D. Galinsky (professors, Northwestern University), first published in the Negotiation newsletter.

Suppose you open talks with an important customer by making an aggressive first offer. He becomes offended. You back off … Read Put More on the Table

The Negotiator’s Secret: More Than Merely Effective

PON Staff   •  04/01/2011   •  Filed in Business Negotiations, Daily

James K. Sebenius (Program on Negotiation Executive Committee Vice-Chair; Gordon Donaldson Professor of Business Administration, Harvard Business School; Co-author of 3-D Negotiation)

Negotiators are often too confident of their own position and too quick to demonize the other side. In this article, the author describes steps to conquer these damaging biases.

Read More … Learn More About This Program

What to do When the Ink is Dry

PON Staff   •  03/14/2011   •  Filed in Business Negotiations, Daily

dispute resolution

Adapted from “The Deal Is Done—Now What?” by Jeswald W. Salacuse (professor, Tufts University). First published in the Negotiation newsletter.

At last, the deal is done. After 18 months of negotiation, eight trips across the country, and countless meetings, you’ve finally signed a contract. It’s clear and precise. It covers all the contingencies and has … Read What to do When the Ink is Dry

How to Get to the Table

PON Staff   •  03/07/2011   •  Filed in Business Negotiations

Adapted from “Leading Horses to Water,” first published in the Negotiation newsletter.

The hardest step in negotiation is often the first. Costly lawsuits can drag on if everyone is afraid to be the first to blink. Prospective buyers and sellers can waste endless hours dancing around a possible deal. And in collective bargaining, labor and management … Read How to Get to the Table

Negotiation Video of Professor Lawrence Susskind Teaching Executive Education

PON Staff   •  02/18/2011   •  Filed in Business Negotiations, Daily, Resources, Videos

This negotiation video is a segment taken from PON’s “Negotiation Pedagogy Series, Part 2.” MIT Professor Lawrence Susskind uses the case “Teflex Products” to teach an Executive Education Seminar on how to deal with an angry public.

To watch more PON Videos, click here.

To watch PON videos on YouTube, click here. … Learn More About This Program

Negotiating Online? Meet Face to Face First

PON Staff   •  02/07/2011   •  Filed in Business Negotiations, Daily

Two hands shaking, emerging from an open laptop screen

Adapted from “How to Negotiate Successfully Online,” by Kathleen L. McGinn (professor, Harvard Business School) and Eric J. Wilson (Cogos Consulting), first published in the Negotiation newsletter.

The intricacies of electronic negotiation can be dizzying. You’re likely to find yourself communicating with numerous people you’ve never met about issues you each value differently, and you all … Read Negotiating Online? Meet Face to Face First

Dispute Prevention: It’s a Good Idea, Right?

PON Staff   •  02/04/2011   •  Filed in Business Negotiations, Daily

Lawrence Susskind (Ford professor of Urban and Environmental Planning, The Massachusetts Institute of Technology; co-author of Built to Win, Breaking Robert’s Rules and Breaking the Impasse)

Putting a dispute handling system in place has been shown to eliminate many disagreements or misunderstandings. So why are some industries reluctant to do so? In this posting, the author … Read Dispute Prevention: It’s a Good Idea, Right?

Improve Your Online Negotiation Results

PON Staff   •  01/31/2011   •  Filed in Business Negotiations, Daily

Businessman cheering with clenched fists at his laptop

Adapted from “Strategies for Overcoming E-Mail’s Weaknesses,” first published in the Negotiation newsletter.

Negotiators communicating via e-mail can easily be blinded to the medium’s pitfalls. In her research, professor Janice Nadler of Northwestern University Law School confirms that the “impoverished” nature of e-mail—its dearth of physical, social, and vocal cues—often leads to misunderstandings, ambiguous messages, and … Read Improve Your Online Negotiation Results