Key Negotiation Terms and Tactics: Preparation to Closing

Posted on Jan 14, 2025 in Communication

Elements of Preparation for a Negotiation

  • Reservation Point: The least favorable point at which a negotiator is willing to accept a deal. It’s essentially your “walk away” point.
  • BATNA: Stands for Best Alternative To a Negotiated Agreement. It’s your best option if the current negotiation fails. A strong BATNA can increase your negotiating power.
  • Target or Aspiration Points: These are the ideal outcomes or goals you hope to achieve in the negotiation. They represent what you’re aiming for instead of what you’re willing to settle for.
  • Opening Offer: The initial proposal made by one party to start the negotiation process. It often sets the tone and anchors the discussion.
  • Power in Negotiation: Power in negotiation refers to the ability of one party to influence the other party’s behavior or the outcome of the negotiation. Sources of power can include:
    • Expertise or knowledge
    • Resources or alternatives
    • Legitimate authority
    • Relationships or networks
    • Information

Distributive Negotiation Terms

  • Positive/Negative Bargaining Zone:
    • Positive: When there’s an overlap between the buyer’s and seller’s reservation points, creating potential for agreement.
    • Negative: With no overlap, agreeing is unlikely without significant concessions.
  • ZOPA: Zone Of Possible Agreement. The range between the parties’ reservation points where a deal is possible.
  • Bargaining Range: The full range between the parties’ opening offers or aspirational points.
  • Seller’s and Buyer’s Surplus: The difference between the final agreed price and each party’s reservation point.
  • Goals for Distributive Negotiations: The main goal is to claim as much value as possible for oneself, often at the expense of the other party.
  • Reservation Point vs. BATNA: The reservation point is the least favorable deal you’ll accept. BATNA is your best alternative if you don’t reach a deal. Your BATNA often informs your reservation point.

Concessions

Concessions are compromises where one party agrees to give up something to reach a mutually beneficial agreement.

  • Timing: When to make concessions during the negotiation.
  • Pattern & Size: How concessions are structured and their magnitude.
  • Consistency & Follow-Through: Ensuring concessions align with your overall strategy and are implemented.

Pressure Tactics

  • Silence: Using pauses to create discomfort or pressure the other party to speak or concede.
  • Limited Authority: Claiming a lack of decision-making power to resist concessions or gain time.
  • Emotional Displays: Using emotions (anger, frustration, disappointment) to influence the other party.
  • Playing Dumb: Feigning ignorance to gain information or avoid committing to something.
  • Nibble: Asking for small additional concessions after the main agreement seems settled.
  • Good Cop/Bad Cop: Using contrasting negotiation styles between team members to manipulate the other party.
  • Red Herring: Introducing a false issue to distract or gain leverage on the real issues.
  • Responding to Distributive Tactics: This involves recognizing these tactics when they’re used against you and having strategies to counter them effectively, such as:
    • Calling out the tactic
    • Refocusing on interests
    • Taking a break
    • Using reciprocal tactics
    • Maintaining composure