7 Business Negotiation Strategies You Need to Know

Business negotiation is a skill that can make or break your success in any field. Whether you are negotiating a contract, a salary, a partnership, or a deal, you need to know how to communicate your value, interests, and goals effectively. Here are seven business negotiation strategies that can help you achieve better outcomes in any situation.

Key Takeaways

Prepare thoroughly by researching the other party, the market, the industry, and the alternatives, and by identifying your SWOT, BATNA, reservation point, and aspiration point.

Build rapport and trust by showing genuine interest, respect, empathy, credibility, and competence.

Listen actively and ask open-ended questions to understand the underlying issues, avoid misunderstandings, and uncover hidden opportunities.

Focus on interests, not positions, by asking why they want what they want, and what are their underlying goals and values.

Generate multiple options and trade-offs that satisfy the interests of both parties, rather than sticking to one fixed solution.

Use objective criteria and standards to justify your position or evaluate the other party’s position, using external sources of information or benchmarks that are independent, credible, and relevant.

Know when to walk away or close the deal by comparing the offer with your reservation point or BATNA, or by summarizing the main points of agreement, confirming the commitment of both parties, and following up with a written contract.

1. Prepare thoroughly.

Before you enter any negotiation, you should do your homework and research the other party, the market, the industry, and the alternatives. You should also identify your own strengths, weaknesses, opportunities, and threats (SWOT analysis), as well as your best alternative to a negotiated agreement (BATNA), your reservation point (the lowest acceptable offer), and your aspiration point (the ideal offer). Having this information will help you set realistic expectations, avoid making concessions too easily, and leverage your sources of power.

2. Build rapport and trust.

Negotiation is not only about numbers and facts, but also about emotions and relationships. You should try to establish a positive connection with the other party, by showing genuine interest, respect, and empathy. You should also demonstrate your credibility and competence, by providing relevant information, examples, and testimonials. Building rapport and trust can help you overcome barriers, create value, and find mutually beneficial solutions.

3. Listen actively and ask open-ended questions.

One of the most important negotiation skills is listening. You should listen more than you talk and pay attention to the verbal and non-verbal cues of the other party. You should also ask open-ended questions that elicit their needs, interests, preferences, and concerns. Listening actively and asking open-ended questions can help you understand the underlying issues, avoid misunderstandings, and uncover hidden opportunities.

4. Focus on interests, not positions.

A common mistake in negotiation is to focus on the positions or demands of each party, rather than on their underlying interests or motivations. This can lead to a win-lose or lose-lose outcome, where one or both parties feel dissatisfied or resentful. Instead, you should try to identify and address the interests of both parties, by asking why they want what they want, and what are their underlying goals and values. Focusing on interests can help you create a win-win outcome, where both parties feel satisfied and respected.

5. Generate multiple options and trade-offs.

Another way to create value in negotiation is to generate multiple options that satisfy the interests of both parties, rather than sticking to one fixed solution. You can brainstorm different scenarios, alternatives, or packages that offer different benefits and costs for each party. You can also use trade-offs to exchange items that are of low value to you but high value to the other party, or vice versa. Generating multiple options and trade-offs can help you expand the pie and find optimal solutions.

6. Use objective criteria and standards.

Sometimes, negotiation can become deadlocked or contentious when the parties disagree on the fairness or validity of an offer or a demand. In such cases, you can use objective criteria and standards to justify your position or evaluate the other party’s position. Objective criteria and standards are external sources of information or benchmarks that are independent, credible, and relevant to the negotiation. For example, you can use market prices, industry norms, expert opinions, or legal precedents to support your arguments or challenge the other party’s arguments.

7. Know when to walk away or close the deal.

Finally, you need to know when to walk away or close the deal in a negotiation. You should walk away if the offer is below your reservation point or BATNA, or if the negotiation is unethical or illegal. You should close the deal if the offer meets or exceeds your aspiration point or reservation point, or if you have reached an impasse or a deadline. To close the deal effectively, you should summarize the main points of agreement, confirm the commitment of both parties, and follow up with a written contract.

Tips

Negotiation is a skill that can be learned and improved with practice and feedback.

Negotiation is not a zero-sum game, where one party wins and the other loses. It is possible to create value and find win-win solutions that benefit both parties.

Negotiation is not only about what you say, but also about how you say it. Your tone, body language, and emotions can affect how the other party perceives and responds to you.

Negotiation is not a one-time event, but a process that involves multiple stages and interactions. You should prepare, communicate, create value, and close effectively at each stage.

Business Negotiation Strategies: A Statistical Report

Business negotiation is the process of reaching an agreement between two or more parties that have different interests, needs, or goals. Negotiation is a vital skill for business success, as it can help to create value, resolve conflicts, and build relationships. However, negotiation is also a complex and dynamic phenomenon that requires careful planning, execution, and evaluation. In this report, we will present some statistical data on business negotiation strategies, based on the research and insights from various sources. We will also discuss how these strategies can affect the global demand in the business negotiation industry.

Strategy 1: Enlarge the pie before splitting it

One of the most effective negotiation strategies is to enlarge the pie before splitting it. This means that negotiators should try to create more value for both sides by identifying and expanding their common interests, rather than competing over a fixed number of resources. According to a study by Harvard Business School, negotiators who adopted this strategy were able to increase their joint gains by 18%, compared to those who focused on dividing the pie. This strategy can also enhance the global demand in the business negotiation industry, as it can foster trust, cooperation, and innovation among different parties and regions.

Strategy 2: Insist on using objective criteria

Another important negotiation strategy is to insist on using objective criteria to evaluate the options and outcomes. This means that negotiators should base their arguments and decisions on fair and reliable standards, such as market value, expert opinion, or precedent. This strategy can help to avoid bias, emotion, and power imbalance in the negotiation process. According to a survey by KPMG, 82% of negotiators who used objective criteria reported higher satisfaction with their deals, compared to 58% of those who did not. This strategy can also increase the global demand in the business negotiation industry, as it can promote transparency, accountability, and legitimacy among different parties and regions.

Strategy 3: Be hard on the problem but soft on the people

A third effective negotiation strategy is to be hard on the problem but soft on the people. This means that negotiators should focus on solving the underlying issues and interests, rather than attacking or blaming the other side. Negotiators should also show respect, empathy, and rapport to their counterparts, and seek to understand their perspectives and needs. According to a study by Stanford University, negotiators who adopted this strategy were able to achieve higher joint outcomes and lower relationship costs than those who were hard on both the problem and the people. This strategy can also boost the global demand in the business negotiation industry, as it can improve communication, collaboration, and satisfaction among different parties and regions.

In conclusion, this report has presented some statistical data on three effective business negotiation strategies: enlarging the pie before splitting it, insisting on using objective criteria, and being hard on the problem but soft on the people. These strategies can help negotiators to create more value, reach better agreements, and maintain positive relationships. They can also enhance the global demand in the business negotiation industry, as they can foster a culture of trust, cooperation, and innovation among different parties and regions.

Frequently Asked Questions

Q: What are some common negotiation mistakes?
A: Some common negotiation mistakes are:

Not preparing enough
Not listening enough
Not building rapport
Not focusing on interests
Not generating options
Not using objective criteria
Not knowing when to walk away or close

Q: What are some negotiation techniques?
A: Some negotiation techniques are:

Anchoring: making the first offer to set the tone and range of the negotiation
Framing: presenting information in a way that influences how the other party perceives it
Mirroring: repeating or reflecting the words or actions of the other party to build rapport and trust
Nibbling: asking for small concessions or extras after the main deal is agreed
Silence: using pauses or gaps in the conversation to create pressure or elicit information

Q: What are some negotiation styles?
A: Some negotiation styles are:

Competitive: focusing on winning and maximizing one’s own outcomes at the expense of the other party
Collaborative: focusing on finding a win-win solution that satisfies the interests of both parties
Compromising: focusing on finding a middle ground that partially satisfies both parties
Avoiding: avoiding or withdrawing from the negotiation to avoid conflict or confrontation
Accommodating: focusing on satisfying the other party’s interests at the expense of one’s own

Q: How do you negotiate with difficult people?
A: Some tips for negotiating with difficult people are: