Developing Effective Negotiation Strategy

negotiation strategyAfter you have prepared everything for your incoming negotiation, the next step is is to determine the goals for the negotiation: what is to be achieved by entering into a negotiation? This will include an evaluation of priorities. Goals may include tangible and intangible aspects, such as price, contract terms, delivery derails and agreement on principles.


Negotiation Goals and Negotiation Strategies

Negotiation goals have important impact on your negotiation strategies and results:

  • Goals of both parties are linked together, otherwise there would be no basis for a negotiation!
  • There are boundaries for achieving goals, based on the limits set by the parties.
  • Goals must be measurable for there to be clarity between the parties on any agreement reached.

Once goals have been determined, the next step is to devise the negotiation strategy, either through collaborative approach or  competitive approach, The decision about the overall strategy is usually based on the relative importance of two key factors: the substantive outcome; and the ongoing relationship. Where the relationship and the outcome are both important, then the strategy adopted is collaborative. Where the relationship is less important, then the strategy is more competitive. A third strategy is possible: where the outcome is less important than the relationship, then an accommodative approach may be used

It is important to note, however, that negotiators rarely pursue one strategy in its purest form. Most negotiations reflect the mixed goals and intentions of the parties, and are also constrained by various situational limitations.

Negotiation Strategy Options

The dominant force for success in negotiation is in the planning that takes place prior to the dialogue. Knowing when not to engage at all in negotiation and also when not to continue to engage in negotiation are key considerations in the negotiation preparation process. Conditions for not entering a negotiation may include:

  • When you could lose everything you have; in that case, choose another option rather than negotiate.
  • When the demands being made on you are unethical
  • When you cannot trust the other party in the negotiation (and therefore could not subsequently trust them to implement the agreed solution).
  • When waiting will improve your overall position.
  • When you are under-prepared to negotiate.

These issues are about knowing the limits of your own and the organization’s capability and willingness to reach an agreement with a specified other party.

An alternative approach to a negotiation will consider how the organization’s objectives could be realized with another (third or fourth) supplier. Clearly, where there are a number of alternative opportunities, then goals for reaching agreement will be higher than if there is only one potential supplier.

Options which limit negotiation may also be considered, for example, mediation or tendering. Mediation uses the services of a third party to negotiate on behalf of the organization. Tendering limits the opportunity for negotiation because of the specific nature of the supplier selection process.