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Saturday, June 21, 2008

Introduction to Negotiation

Negotiation skills are essential in everyday life.

Nope, i’m not talking about the struggle with the used car salesman. I’m talking about our daily everyday lives. We negotiate everyday without even knowing about it.

Take for instance you are with a friend and you feel like having pizza for lunch while your friend on the other hand, wants Mexican food. It is up to you to negotiate a win-win situation.

So, this being an introduction to the different aspects of negotiation, i will now compare and contrast the various aspects of negotiations.

Firstly, lets look at bargaining.

This is the most obvious form of negotiation know to us, such as the used car salesman example mentioned earlier.

It occurs when a buyer interacts with a seller, and the objective for each party is to maximise each individual’s maximum gains.

However, this case presents a zero sum game to the buyer as well as the seller. A party’s gain is the other party’s loss.

If the salesman manages to convince the buyer to buy at a high price, the salesman wins but the buyer loses. It is a zero-sum game.

The second type of negotiation is the auction.

In this case, the buyers bid against each other, with no interaction between seller and buyer. It is a form of reverse bargaining where the buyers are trying to out-do one another to get the highest price.

Finally, the last form is negotiation.

Negotiation is a form of corporation, and not a confrontation. The unique thing about negotiation is that additional values can be created to provide a win-win senerio, and this distinguishes it from bargaining.

Let me illustrate this point with an example. In bargaining, when the car salesman and buyer haggle over the price, one party has to lose for the other party to win.

However, in negotiation, each individual can create additional pockets of value to sweeten the pot. The car salesman could throw in some freebies such as rust protector coating while the buyer could offer to pay upfront in cash. These allows a win-win situation to be created more easily.

Negotiation is a process between two or more parties in which they consider alternatives to arrive at mutually agreeable solutions. Do consider alternatives when trying to influence people to get your way. Be a better communicator, today!

If you are interested in this post, do consider checking out the related posts in the negotiation mini series.
- An Introduction to Negotiation
- The Three Stages of Negotiation
- Negotiation Tactics - Part 1
- Negotiation Tactics - Part 2


Gagan said...
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Anonymous said...

Yes, you are right there. We do all in our everyday life without knowing it. It is no even limited to negotiating but to all, mathematics, economics, accounting...all these stuffs.

Good presentation as well as the photos. I am glad I subscribed. What a good way to look at negotiation. ^_^

Anonymous said...

Got to admit, negotiating is the hardest for me to do. Got to learn to play it hard ball at times - especially when you know you are offering something that the others can just find elsewhere.

Good post.