Negotiation Process
THE NEGOTIATION PROCESS
By Charles B. Craver
When people prepare for bargaining encounters, they spend hours on the factual issues, the legal issues, the economic issues, and the political issues. They spend no more than ten to fifteen minutes on their negotiation strategy. When they begin their interaction, they have only three things in mind relating to their negotiation strategy: (1) where they plan to begin; (2) where they hope to end up; and (3) their bottom line. Between their opening offer and the conclusion of their encounter, most individuals “wing it”thinking of the interaction as wholly unstructured. If they only understood how structured bargaining transactions are, they would know what to do during each stage of the process.
In this article, we will explore the six distinct stages of the negotiation process: (1) preparation; (2) establishment of negotiator identities and the tone for the interaction; (3) information exchange; (4) exchange of items to be divided; (5) closing the deal; and (6) maximizing the joint returns. We will discuss the purpose of each stage and the most effective ways to accomplish the objectives underlying each.
I. PREPARATION
There is no substitute for thorough preparation when individuals have to negotiate. Information is power, and the person who is better prepared will exude an inner confidence that is likely to undermine the confidence of her less prepared adversary. People must know the relevant facts, economic issues, and, where applicable, any legal or political issues. Someone planning to purchase a new car needs to know what the dealer paid for the vehicle in question. They should never look at a dealer invoice, because it is a basically meaningless document that doesn’t tell you how much the dealer actually paid. It doesn’t include the 2-4% “hold-back” which the dealer gets if it sells the car by a certain date, and manufacturer-to-dealer rebates and incentives that are almost always
By Charles B. Craver
When people prepare for bargaining encounters, they spend hours on the factual issues, the legal issues, the economic issues, and the political issues. They spend no more than ten to fifteen minutes on their negotiation strategy. When they begin their interaction, they have only three things in mind relating to their negotiation strategy: (1) where they plan to begin; (2) where they hope to end up; and (3) their bottom line. Between their opening offer and the conclusion of their encounter, most individuals “wing it”thinking of the interaction as wholly unstructured. If they only understood how structured bargaining transactions are, they would know what to do during each stage of the process.
In this article, we will explore the six distinct stages of the negotiation process: (1) preparation; (2) establishment of negotiator identities and the tone for the interaction; (3) information exchange; (4) exchange of items to be divided; (5) closing the deal; and (6) maximizing the joint returns. We will discuss the purpose of each stage and the most effective ways to accomplish the objectives underlying each.
I. PREPARATION
There is no substitute for thorough preparation when individuals have to negotiate. Information is power, and the person who is better prepared will exude an inner confidence that is likely to undermine the confidence of her less prepared adversary. People must know the relevant facts, economic issues, and, where applicable, any legal or political issues. Someone planning to purchase a new car needs to know what the dealer paid for the vehicle in question. They should never look at a dealer invoice, because it is a basically meaningless document that doesn’t tell you how much the dealer actually paid. It doesn’t include the 2-4% “hold-back” which the dealer gets if it sells the car by a certain date, and manufacturer-to-dealer rebates and incentives that are almost always