Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.


business negotiation

Negotiations in business can be for a range of items, including but not limited to: employee compensation, business acquisitions, vendor pricing and sales, real estate leases, and the fulfillment of contract obligations.

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Rational Games A Philosophy of Business Negotiation from Practical Reason

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When two rational players face off in a business negotiation, why do they settle for less than each of them could and should get? Each pursues his or her interests as theory dictates, but often the result is less than optimal. Young proposes that the root of the problem lies in the philosophical assumptions underlying … Read More 

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NEW FREE REPORT! Salary Negotiations

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Discover how to refine your negotiation skills with this free special report, Negotiation Training: How Harvard Negotiation Exercises, Negotiation Cases and Good Negotiation Coaching Can Make You a Better Negotiator, from Harvard Law School. … Read More 

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Negotiation Techniques from International Diplomacy: Lessons for Business Negotiators

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Negotiation Techniques from International Diplomacy: Lessons for Business Negotiators

Executives rarely view themselves as diplomats engaged in international diplomacy but business negotiators often find the two fields share negotiation skills and negotiation techniques. Rightly or wrongly, diplomacy evokes images of frivolity – days spent wandering exotic capitals, nights spent cruising embassy cocktail parties. … Read More 

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Harborco: Role-Play Simulation

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Harborco is a consortium of development, industrial, and shipping concerns that are eager to proceed with the building of a new port, but face hurdles and potential opposition as they advance through the licensing process. The Federal Licensing Agency would like to see them work with other stakeholders to develop a project that is acceptable … Read More 

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How to Balance Your Own Values in Negotiation

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best negotiation examples negotiating conflicts of interest

What are the best negotiation examples from real life? Imagine that you’ve been negotiating the sale of a property that is owned by your company. The buyer has made an attractive offer that you’ve tentatively accepted. Your boss is pleased with the terms as they stand, but suggests that you go back to the buyer … Read More 

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Negotiation Examples: BATNA and Negotiation Scenarios Where Alternatives are Preferable to Negotiated Agreements

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Negotiation Examples: BATNA and Negotiation Scenarios Where Alternatives are Preferable to Negotiated Agreements

One of the most popular questions concerning negotiation strategy and an area of negotiation research that draws heavily on negotiation examples in real life is how do negotiators identify their BATNA, or best alternative to a negotiated agreement, and even better, how do they identify their counterpart’s BATNA? Consider the saga of a company that … Read More 

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How to Negotiate a Business Deal

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How to Negotiate a Business Deal

In late 2016 and early 2017, news stories abounded of companies that were having second thoughts about planned mega-mergers. Abbott Laboratories began looking for ways to exit its acquisition of Alere, citing investigations of the medical test maker, for example. And Verizon started rethinking its acquisition of Yahoo! following a data breach at the tech … Read More 

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Conflict and Negotiation Case Study: The Pitfalls of Negotiations Over Email

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conflict resolution online the pitfalls of negotiations over email

Negotiation research suggests that email often poses more problems than solutions when it comes to relationships, information exchange, and outcomes in conflict resolution negotiation scenarios. First, establishing social rapport via email can be challenging. The lack of nonverbal cues and the dearth of social norms regarding its use can cause negotiators to be impolite and … Read More 

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For Price Negotiators, Preparation is the Key to Success

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For Price Negotiators Preparation is the Key to Success

Some cultures have a long tradition of haggling—bargaining back and forth about the price of an item—in markets and bazaars. By contrast, in the United States and many other countries, haggling between buyers and sellers is an under-practiced skill. You might routinely pass up opportunities to haggle in situations where financial negotiations are not the … Read More 

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When a Win-Win Negotiation Creates Controversy

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When a Win-Win Negotiation Creates Controversy

In negotiation, the concessions we are willing to make in public sometimes are very different from the concessions we are willing to make in private. Take the statement that U.S. secretary of state Rex Tillerson made during his visit to China in March. … Read More 

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Why Great Negotiators Earn More Money

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Why Great Negotiators Earn More Money

What’s the best way to claim more money in a negotiation? Many professional negotiators would recommend hard-bargaining tactics, such as asking the other party to disclose their bottom line, standing firm on price, and threatening to walk away. But truly great negotiators recognize that using haggling strategies alone may leave significant money on the table. … Read More 

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Negotiation Skills and Bargaining Techniques from Female Executives

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Negotiation Skills and Bargaining Techniques from Female Executives

Dozens of female CEOs and other high-level women negotiators have told us about their experiences negotiating in traditionally masculine contexts where standards and expectations were ambiguous. Their experiences varied according to the gender triggers that were present in the negotiations and they adapted their negotiation strategies to accommodate these shifts. … Read More 

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In Business Negotiations, Dress the Part

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negotiation topics in business dress the part at the bargaining table

Negotiators involved in high-stakes mergers and acquisitions typically come to the table armored in meticulously tailored apparel and designer shoes. But as Dana Mattioli reports in a recent Wall Street Journal negotiation topics in business article, those who are trying to woo business from an apparel company often end up dressing down at the bargaining … Read More 

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Cross Cultural Communication: Translation and Negotiations

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Cross Cultural Communication: Translation and Negotiations

In previous international negotiation articles from cross cultural negotiation case studies, we have focused on how international negotiators can avoid cognitive biases and overcome cultural barriers. But how do negotiators dealing with counterparts that speak another language modify their negotiation techniques to accommodate for the lack of a common language? … Read More 

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Your Reputation at the Bargaining Table in Business Negotiations

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In multi-issue negotiations, research suggests that the advantage goes to negotiators with a reputation for collaboration rather than competition. In a series of studies by Catherine H. Tinsley and Kathleen O’Connor, participants were told they would be negotiating with someone who had either a tough reputation, a cooperative reputation, or an unknown reputation. Although this … Read More 

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Ten Popular Business Negotiation Articles

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top 10 business negotiation articles

Here are ten popular business negotiation articles on the Program on Negotiation website. Drawn from a variety of negotiation case studies as well as negotiation research, the following articles present negotiation examples in real life and offer strategies for engaging in integrative negotiations strategies aimed at creating win-win scenarios for each party at the negotiation … Read More 

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5 Win-Win Negotiation Strategies

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Business negotiators understand the importance of reaching a win-win deal: when both sides are satisfied with their agreement, the odds of a long-lasting and successful business partnership are much higher. But concrete strategies for generating a win-win contract often seem elusive. The following five, from experts at the Program on Negotiation at Harvard Law School, … Read More 

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Contract Negotiations and Business Communication: How to Write an Iron-Clad Contract

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contract negotiations and business communication how to write an iron clad contract

Writing a contract that both encapsulates the negotiated agreement but also incorporates future elements such as the business relationship and the sustainability of the agreement can be a daunting task for even the most experienced negotiators. Executives often leave the legal issues surrounding their deals to their attorneys. While this division of labor is often … Read More 

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Negotiation Books: A Negotiation Reading List for 2017

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As a new year approaches, many of us are making the usual resolutions aimed at improving our health and well-being. Why not also add the goal of being a more effective negotiator to the list? Whether you are facing negotiations with Congress, colleagues, customers, or family members, the following negotiation books, published in recent years … Read More 

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How to Use MESOs in Business Negotiations

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It’s not uncommon in business negotiations to find yourself on the brink of impasse. You and your counterpart have exchanged a series of offers and counteroffers, and you’ve met somewhere close to the middle—but not close enough. With each side firmly rooted in its position, there may seem to be no way forward. … Read More 

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Business Negotiation Skills: How to Deal with a Failing Business Partnership

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It had seemed like the beginning of a fruitful relationship. In April 2012, six wealthy businessmen teamed up to buy the Philadelphia Inquirer and several affiliated businesses for $61.1 million, promising to work together to reverse the newspaper’s flagging fortunes. Their infusions of cash and appointment of a Pulitzer Prize–winning reporter, William K. Marimow, as … Read More 

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How to Find the ZOPA in Business Negotiations

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In business negotiation, two polar-opposite errors are common: reaching agreement when it wouldn’t be wise to do so, and walking away from a mutually beneficial outcome. How can you avoid these pitfalls? Through careful preparation that includes an analysis of the zone of possible agreement, or ZOPA. The agreement trap The “agreement trap” describes the tendency to agree … Read More 

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Top 10 Celebrity Negotiations of 2015

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Here are the top 10 celebrity negotiations from the year 2015. From integrative bargaining strategies to building bridges with counterparts in contentious talks, these negotiation scenarios demonstrate the effectiveness of collaborative, win-win negotiation tactics. … Read More 

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In Business Negotiations, Capitalize on a Right of First Refusal

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in business negotiations capitalize on a right of first refusal

As dealmakers look for more sophisticated ways to reduce risks and increase returns, a right of first refusal—a contractual guarantee that one side can match any offer that the other side later receives—has become a common and useful tool to add to your business negotiation skills.

in business negotiations capitalize on a right of first refusal

As dealmakers look for more sophisticated ways to reduce risks and increase returns, a right of first refusal—a contractual guarantee that one side can match any offer that the other side later receives—has become a common and useful tool to add to your business negotiation skills.

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When the mergers-and-acquisitions (M&A) boom began in 1993, many deals simply required the seller to let the buyer know if a “superior proposal” came along. By the late 1990s, buyers were demanding—and receiving—more than this: an exclusive negotiating period of several days, during which they could decide whether to match or improve upon another bidder’s offer. In current business negotiations, rights of first refusal, also known as matching rights or rights of first offer, are being rapidly incorporated into business negotiations at all levels and in many industries.

In the typical right of first refusal, the grantor gives the right holder the right to buy an asset on the same terms that the grantor would receive from any other bona fide, prospective bidder, otherwise known as the third party.

Suppose, for example, that a private company is negotiating an equity infusion from an investor in exchange for a 20% ownership stake and a set on the board. To preserve its stability, the company conditions the deal on a right of first refusal: before the investor can sell his stake to someone else, the company can buy it back at the negotiated price. The investor accepts the deal, and the company gets its equity.

Now suppose that two years have passed since the company (the right holder) and the investor (the grantor) signed their deal. The investor now wants to liquidate his investment. One potential buyer offers to purchase the 20% interest for $3.4 million. The investor now is required to ask the company, which holds the matching right, if it wants to match the offer. This contractual obligation has important consequences that depend in large part upon the role you play in a negotiation.

Advice for the grantor In negotiation, including a right of first refusal in an agreement can be a classic win-win move. To take a real estate right of first refusal, suppose you’re a landlord negotiating with a prospective tenant. You want to maintain the ability to sell the apartment to someone else in the future, while your prospective tenant wants a commitment to rent the apartment for as long as she wants. The solution might be to offer the tenant a right of first refusal—the power to match any legitimate third-party offer. In this manner, the tenant gains the opportunity to avoid the disruption of a move, and you preserve your own flexibility.

A right of first refusal can also create value through tradeoffs on negotiators’ different expectations. Let’s return to the case of the investor who buys a 20% ownership stake in a private company, and assume that the investor plans to hold the stake for a long time. If the company is not as sure about his commitment, a right of first refusal is cheap for the investor to give and valuable for the company to receive.

Advice for the right holder As the prospective right holder, you should know precisely what a proposed right of first refusal will give you. Many deals that seem to guarantee a right of first refusal are, in fact, murky about the consequences that could arise.

For potential right holders, the most common mistake is to fail to specify what will happen if you choose to match a bid. Will your matching bid call off the contest with the third party or launch a bidding war?

Other details are equally important. How long do you have to decide whether to match an offer? If the duration of the right of first refusal is ambiguous, a third party could short-circuit your right by making an exploding offer with a short fuse. You might fail to match the offer due to time pressure rather than to your unwillingness to pay. The end result is a right of first refusal worth significantly less than you thought.

Advice for third parties What if you’re thinking about making an offer that would trigger a right of first refusal? Returning to the case of the investor with a 20% stake in a company, imagine that you approach the investor about buying him out. When you learn about the company’s right of first refusal, you face a difficult situation. If the company exercises its right of first refusal, you’ve wasted time conducting due diligence and negotiating. If the company doesn’t exercise its right of first refusal, you likely have overpaid. Why? Because the company probably has better information about the true value of the 20% stake than you do. As a result of this information asymmetry, many sophisticated investors avoid deals that trigger a right of first refusal.

Yet the winner’s curse may not apply to you. First, the right holder simply might not be able to match your offer due to a liquidity crunch. Second, you may have just as much or better information about the value of the asset as the right holder. If the right holder doesn’t match your bid, she may not recognize these sources of value. Third, you might bring some special value to the table that the right holder lacks. Try to assess whether any of these three justifications apply before making a bid. If one of them does, you’re ready for business.

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Adapted from “Matching Rights: A Boon to Both Sides,” by Harvard Business School and Harvard Law School professor Guhan Subramanian, first published in the Negotiation newsletter.

When the mergers-and-acquisitions (M&A) boom began in 1993, many deals … Read More 

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Crossed Wires? Negotiation Games To Help Your Business Deal Sidestep Legal, Technical And Emotional Glitches

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What’s faster than the pace of technological development? The pace of lawsuits being filed about the adoption of new technologies, patent infringement, and intellectual property rights. In our modern world, professionals must be able to resolve highly challenging technology-related disputes – often before they reach the courtroom. That’s where the Program on Negotiation’s Teaching … Read More 

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What Does Conflict Management Mean in Business Negotiations with Competitors?

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They say it pays to keep your friends close and your enemies closer, but in business negotiation, keeping your enemies—or competitors—close could end you up in court, as Apple’s recent encounter with the U.S. Department of Justice suggests. The story begins back in 2007 when, unhappy with Amazon’s low, flat price of $9.99 for e-books, five … Read More 

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Jennifer Lawrence and Jennifer Aniston: Asking for More in Salary Negotiations

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“We’re very much a sexist society,” actress Jennifer Aniston said in a recent interview with the New York Times, addressing not just the constant questions she faces about marriage and children, but about recent revelations of pay discrimination in Hollywood. “Women are still not paid as much as men,” Aniston continued. “I’ve been up against that … Read More 

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In Business Negotiations, Eat Before You Negotiate

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When preparing for your next business negotiation, you may want to strategize not only about what you’ll put on the bargaining table, but also how much food you’ll put in your belly beforehand. That’s the message of new research that Cornell University professor Emily Zitek and Dartmouth College professor Alexander Jordan presented at the annual … Read More 

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Why Classic Cases?

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Why are some negotiation exercises still used in a great many university classes even twenty years after they were written? In an effort to understand more about the enduring quality of some classic teaching materials, we asked faculty affiliated with PON to explain why they think some role play simulations remain bestsellers in the Clearinghouse … Read More 

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Jeswald Salacuse Article Published in International Negotiation Journal

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Jeswald Salacuse’s article Teaching International Business Negotiation: Reflections on Three Decades of Experience was published in International Negotiation, Volume 15, Number 2. The full article can be purchased here. Abstract: The author has taught international business negotiation in a wide variety of university courses and executive training programs throughout the world during the last three decades. He … Read More 

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Teams across cultures

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Adapted from “Team Negotiating: Strength in Numbers?”, first published in the Negotiation newsletter. According to conventional wisdom, when it comes to negotiation, there’s strength in numbers. Indeed, several experimental studies have supported the notion that you should bring at least one other person from your organization to the bargaining table if you can. On average, this … Read More 

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Your place or mine?

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Adapted from “Your Place or Mine? Deciding Where to Negotiate,” by Jeswald W. Salacuse (Professor, Tufts University), first published in the “Negotiation Newsletter”. Everyone knows the three rules of real estate: “Location! Location! Location!” When it comes to making deals, choosing the right place to negotiate can be just as important. The location you select can … Read More