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.

Does Your Company Have to Negotiate with a Giant that Dominates Your Business Market?

PON Staff   •  06/26/2008   •  Filed in Business Negotiations, Daily

Individuals in this position often feel as though they have few if any options. In his February 2006 article in Negotiation newsletter, “Negotiating with a 900-Pound Gorilla,” MIT Professor Lawrence Susskind offers strategies for how negotiators in a weak position should deal with a seemingly all-powerful opponent. … Read More 

The Value of Making Several Offers in Business Negotiations

PON Staff   •  06/24/2008   •  Filed in Business Negotiations, Daily

What’s the right number of options to put forward in financial negotiations? In their April 2005 article in the Negotiation newsletter, “Putting More on the Table: How Making Multiple Offers Can Increase the Final Value of the Deal,” Northwestern professors Victoria Husted Medvec and Adam D. Galinsky write that issuing three equivalent offers simultaneously can … Read More