What do you understand by business negotiation?

At its most basic, business negotiations are negotiations between corporate

entities, their vendors, or their employees. But there is a lot beyond that.

In most of our business negotiations, we try to drive a hard bargain; giving away
not a penny more than is necessary even as we strive to ensure that our
counterpart is satisfied with their own outcome. However, figuring out who
should get what is rarely easy, but creative solutions to problems in negotiation
do exist.

For example, it’s not uncommon in business negotiations to find you on the brink
of an 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. That’s when it helps to know how to use MESOs in negotiations.

MESO’s, which stands for multiple equivalent simultaneous offers, may help you
break through your deadlock and find common ground. When you present more
than one offer at a time, instead of a single offer, you are likely to increase your
counterpart’s satisfaction while also boosting your odds of coming to an
agreement.

Research has also shed light on an important aspect of integrative bargaining

strategies and business negotiations – namely, the idea of negotiation ethics and
fairness when negotiating.

In most negotiations, there are three fairness norms that negotiators frequently
invoke: equality (an equal split of the resources), equity (a split in proportion to
input), and need (a split that favors the negotiator who could most benefit from
the resources).

Approaching business negotiations with a creative mindset will not only preserve
a relationship but also add significant value for both sides creating win-win
solutions.
Elaborate on the negotiation process

In order to achieve a desirable outcome, it may be useful to follow a structured

approach to negotiation. For example, in a work situation a meeting may need to
be arranged in which all parties involved can come together.

The process of negotiation includes the following stages:

Preparation

Discussion

Clarification of goals

Negotiate towards a Win-Win outcome

Agreement

Implementation of a course of action

1. Preparation

Before any negotiation takes place, a decision needs to be taken as to when and
where a meeting will take place to discuss the problem and who will attend.
Setting a limited time-scale can also be helpful to prevent the disagreement
continuing.

This stage involves ensuring all the pertinent facts of the situation are known in
order to clarify your own position. In the work example above, this would include
knowing the ‘rules’ of your organization, to whom help is given, when help is not
felt appropriate and the grounds for such refusals. Your organization may well
have policies to which you can refer in preparation for the negotiation.

Undertaking preparation before discussing the disagreement will help to avoid

further conflict and unnecessarily wasting time during the meeting.

2. Discussion
During this stage, individuals or members of each side put forward the case as
they see it, i.e. their understanding of the situation.

Key skills during this stage include questioning, listening and clarifying.

Sometimes it is helpful to take notes during the discussion stage to record all
points put forward in case there is need for further clarification. It is extremely
important to listen, as when disagreement takes place it is easy to make the
mistake of saying too much and listening too little. Each side should have an
equal opportunity to present their case.

3. Clarifying Goals

From the discussion, the goals, interests and viewpoints of both sides of the
disagreement need to be clarified.

It is helpful to list these factors in order of priority. Through this clarification it is

often possible to identify or establish some common ground. Clarification is an
essential part of the negotiation process, without it misunderstandings are likely
to occur which may cause problems and barriers to reaching a beneficial
outcome.

4. Negotiate Towards a Win-Win Outcome

This stage focuses on what is termed a 'win-win' outcome where both sides feel
they have gained something positive through the process of negotiation and both
sides feel their point of view has been taken into consideration.

A win-win outcome is usually the best result. Although this may not always be
possible, through negotiation, it should be the ultimate goal.

Suggestions of alternative strategies and compromises need to be considered at

this point. Compromises are often positive alternatives which can often achieve
greater benefit for all concerned compared to holding to the original positions.

5. Agreement
Agreement can be achieved once understanding of both sides’ viewpoints and
interests have been considered.

It is essential to for everybody involved to keep an open mind in order to achieve

an acceptable solution. Any agreement needs to be made perfectly clear so that
both sides know what has been decided.

6. Implementing a Course of Action

From the agreement, a course of action has to be implemented to carry through

the decision.

Factors Influencing Negotiations

The actual negotiation process depends on the following factors:

I. The goals and interests of the parties

II. The extent to which the negotiating parties are interdependent
III. The past relations which exist between the two negotiating parties
IV. The nature, temperament, and personalities of the parties
V. The persuasive ability of each party

In addition to the above, P.D. Chaturvedi and Mukesh Chaturvedi in their book,
Business Communications: Concepts, Cases and Applications, have listed out
some factors that affect the outcome of negotiations:

1. Place: The place of meeting for negotiation influences one’s level of

confidence. Choosing a place like your own office has many advantages:

You are in your area of strength.

You can get whatever information or material that is needed during the course of
the discussion.

You can extend social courtesies as a token of goodwill; this would move the
negotiation towards an agreement.
2. Time: The choice of time for holding discussions should be fixed according to
mutual convenience. The time should be adequate for the smooth exchange of
ideas through different stages of negotiation

Exchanging initial views

Exploring possible compromise

Searching for common ground

Securing agreement

The time to prepare for negotiation and the time for implementing the agreement
should also be carefully fixed for action before and after the meeting.

To be effective, negotiations should be timely. This means that the negotiation

should be done before it is too late so as to secure an agreement.

3. Subjective Factors: Often the outcome of the discussion does not depend
wholly on the objective factors of logic and the facts of matter under
consideration. The final outcome of the negotiation is also determined by the
subjective factors of influence and persuasion.

Personal relationship: The conduct of negotiation is influenced not only by the

real situation of the matter but also by the relationship between the two persons
or parties involved in the process of discussion.

Fear: Often our bargaining power is conditioned by our fear of the other party’s
authority, power, higher connections and the capacity to harm.

Mutual Obligation: The memories of well done in the past by the other party also
act as an influence on us.

Future Considerations: When personal relationships are at stake we may not wish
to win the argument, especially when good relations between the two parties are
likely to be affected.

Practical Wisdom: Fear of losing good opportunities in the future is a strong

factor in our bargaining and negotiation positions and power.