Negotiation in business
Concept : Negotiation in business refers to a discussion or dialogue between two or more
people involved in a business relation to reach an agreement or common interest. Negotiation
Can take place between boss and employee, businessman and consumer, among business
partners and so on. For example, salary negotiations takes place between bosses and their
employees; price negotiations occur between a salesman and customer.
Why Negotiate: All persons differ in their thoughts and beliefs to a certain extent. In business,
all seek their own benefit and profit. They try to implement their rules and conditions on others
so that they can get more advantages. But it is a fact for everybody involved in a business.
Negotiation plays an important role to find everyone's matter of common interest based on
Types of Negotiation: There is no definite types of negotiation in business. Different types of
negotiations are being invented according to need and requirement. However, there are mainly
two approaches of negotiation in business that we should know about:
Integrative negotiation or soft bargaining : Integrative negotiation of soft bargaining is
developed for the welfare of all the parties taking part in negotiation. It emphasizes on
finding a solution that is acceptable and beneficial to all the parties. By this way
improved relationship between business parties are maintained. Integrative bargaining
are more accepted worldwide because it assures long term relationship, security and
future deals. It is a win-win situation for all the parties.
Destructive negotiation or hard bargaining : Destructive bargaining is quite opposite to
the integrative bargaining. This type of bargaining focuses on personal interest rather
than common interest. It provokes a win-lose situation where one party wins and other
party loses. Destructive bargaining often results into deal breaking and destroys
business relations. Destructive negotiation should be approached if it's absolutely
necessary for the business or if integrative negotiation fails and one party is not
concerned about other party whether they walk out of the negotiation or not.
How to prepare: The success of a negotiation process depends on the preparation greatly.
Preparation is more important in case of integrative negotiation. Be mentally prepared and
confident. Prepare your speech and rehearse. Have a sound sleep at night before the
preparation. Choose appropriate clothing. Reach the spot in time. Sit face to face with
confidence and ease. Don't rush to reach an agreement fast. Be a good listener and listen
carefully what they say. Place your statement and try to convince them. Ask questions if you
have any and also answer their questions. If the negotiation does not work for your of meet
your interest do not hesitate to counter it. If you sense more loss than benefit don't go for any
A model of business negotiation:
Party 1: As 60 percent shareholder we should get 60 percent of the profit. Please explain why
are you suggesting to split it 50-50?
Party 2 : It is true that we hold 40 percent share of the company but if you go through the
statistics of this year, you will find that our employees sold about 12 percent more products to
the customers compared to yours. So I think I am quite fair with my proposal.
Party 1 : But wasn't it on the agreement paper that the profit will be distributed according to
our share in the company?
Party 2 : You are right about the agreement paper but you can't deny that our business strategy
was more successful this year.
Party 1 : What are you trying to say?
Party 2 : We are saying we deserve 50 percent profit this year.
Party 1: But wouldn't that be a deal breaking? Let me suggest you better alternative. Let's keep
the profit according to our share this year. From the next year we can sign a new agreement of
50-50 share of the company.
Party 2 : That sounds like a reasonable solution. Yes, we are interested.
Party 1: So, we have a deal then!
Party 2: Yes. We do.
Useful Negotiation tips:
Have patience: Sometimes negotiation becomes a lengthy process and exhausting but
try not to run out of your patience.
Be confident: Be confident and do not be nervous during negotiation. Make sure you
know what you want and what you are doing.
Get involved : Be equally involved in the negotiation process or other parties may take
advantage of you.
Clear voice: Make sure you do not shout neither whisper. Also control the speed of your
speech; don't be too slow or too fast.
Be precise in conversation: Do not be too elaborate or too short in your conversation.
Be more specific and to the point.
Ask and answer : In a negotiation, you should not keep any confusion in your mind. Ask
anything related to negotiation no matter how silly it sounds, if you are not sure. It will
prevent any future conflict regarding the negotiation.
Control your attitude: Do not make any personal attack or criticism. Also, try not to take
anything personally. Do not use informal language; use formal business language
Note down necessary points: Point out all aspects of negotiation and note down.
Be realistic: Be realistic about the negotiation. Think how much you are getting from it
and what are you compromising on.
Improve business relationship: Negotiation process should be as such that it improves
your business relationship with others.
Be ready to walk away: Your first approach should be always to make a successful deal.
But if the outcome of the negotiation is not reliable, simply walk away.
Conclusion: Negotiation is closely related to business and you have to do a lot of practice to
become a successful negotiator. You have to improve your negotiation shills if you want to
improve your business.