Negotiation strategies in business. The term Negotiation has its roots in the Latin phrase “negare otium”, which translates to “to deny leisure”. This concept, in French and Spanish, equates to “business”. The Business Dictionary[1] defines negotiation as a form of bargaining involving two or more entities, each with unique needs, objectives, and viewpoints, striving to find a common platform and forge an agreement to resolve a shared issue or settle a conflict. In simpler terms, negotiation can be seen as reciprocal communication aimed at achieving a unified objective that is satisfactory to all parties engaged in such interaction. Regardless of the size or financial implications of the matter at hand, negotiation invariably involves an exchange of ideas to reach a mutually beneficial resolution.
The Process and Examples of Negotiation Strategies
The negotiation process is an amalgamation of art, skill, and natural ability. It offers a novel perspective on any transaction or conflict, regardless of its magnitude. Take, for example, person A’s desire to purchase a large house. When A finds a suitable property, the seller, B, asks for INR 80 million. Aiming to buy at a more affordable price, A conducts market research, finds the property overpriced, and subsequently negotiates a reduced price of INR 60 million with B. Given the significant stakes, A and B engage lawyers to handle the legal documentation and transfer of property. During this phase, additional costs like stamp duty and legal fees emerge, along with other issues such as outstanding municipal dues. The lawyers then negotiate these additional costs and ensure appropriate indemnification for A.
This entire process exemplifies negotiation at a basic buyer-seller level, illustrating how lawyers enhance the process by addressing current and future legal matters through negotiation.
Negotiation Strategies in Everyday Life and Business
Relevance of Negotiation Mastering the art of negotiation is crucial for the successful operation of any business. The importance of negotiation is intrinsically linked to securing the best possible deals, regardless of the business’s size. Negotiation is a constant in our lives, often unnoticed, occurring in various situations such as sales, salary discussions, work conditions, and loan interest negotiations, to name a few. Proficient negotiation skills can convert potential losses into advantageous compromises. Life invariably presents conflicts, and the capacity to resolve them, especially in the business realm, hinges on robust negotiation skills. These skills encompass confidence, thorough market research, and an understanding of the opposing party’s stance.
The Skillset and Importance in Formal Transactions
Negotiation strategies in business. A harmonious blend of these abilities renders an individual or a professional adept at negotiation. In the realm of business, negotiation skills are essential not only for informal daily interactions but also for formal transactions like strategizing and negotiating terms for investments, sales, leases, service deliveries, and other legal agreements. The essence of negotiation is to conclude deals where all parties feel they have attained their desired outcome, fostering a win-win scenario. The value of negotiation skills cannot be overstated. It’s vital to remember that negotiation should be approached as a collaborative venture, not a contest, ensuring all parties leave the table satisfied.
Bhumesh Verma with the Research Team of Aditi Duggal, Sanjay Narayan Das, Akhil Shandilya, Dibya Prakash Behera, Samridhi Duggal, and Niharika Sanadhya.
References
[1] Business Dictionary, Negotiation, (January 1, 2019, 4:58 PM), http://www.businessdictionary.com/definition/negotiation.html
[2] Jeff Cochran, The importance of Negotiation, (January 1, 2019, 6:30 PM) https://www.shapironegotiations.com/the-importance-of-negotiation/
Close to 3 decades' experience in advising on M&A, Joint ventures, Private Equity, Venture Capital, Startups, Technology transfer, External Commercial Borrowings, Corporate / Commercial contracts, Due Diligence for acquisitions, Entry Strategy for international ventures, Corporate Structuring, Regulatory Approvals, Corporate / Commercial Advisory, Commercial litigation, IPR. Collaborating with law firms across the Globe for reciprocal business referrals on a non-exclusive basis under 'Global Business Lawyers' League (www.gbll.in).
