5 Recognizable Stages in Business Negotiation Process


Negotiation as a technique in achieving smooth running in any business is vital for an organization’s overall effectiveness. Organizational effectiveness is a product of activities within a system – internal and external. Negotiation is critical to establishing the internal system (structure, people, functions, plans, measures, etc) and the organization’s relationship to the external system (markets, suppliers, technology, etc). Negotiation is also critical to optimising the performance of activities internally and externally (principally through communication).

Negotiation occurs when asking for salary raise, when purchasing a new house, or when creating a specification for a broadcast studio. Negotiating is nothing other than a process for finding a compromise that balances incompatible values, goals, wishes and requirements, which design engineers call “sorting trade-offs”.

Competing requirements frequently appear among individuals, within a single person, or as part of a technical situation. While we all negotiate and sort trade-offs, few of us have considered that there is a formal technique that makes the process efficient, thereby leading to an optimum solution with a minimum of stress, anxiety and acrimony.


Negotiation Process

Today, we shall consider some recognisable stages in business negotiation process.

Stage 1: All the parties articulate their values and goals while being careful not to include hidden solutions. For example, a station manager may articulate the following goals: increase profitability for the owner, increase listener’s loyalty, establish a unique sound that is recognized among advertisers and create a pleasant working environment for the staff. As a personal level, an engineer may desire to earn a large income, have an opportunity for professional growth, be within walking distance of his home and become well known in the industry. A secondary school teacher may desire to be a professor in a University in the future.


Stage 2: Each party sorts their goals in order of priority. It is unlikely that a solution exists that will satisfy all goals. Some goals are obviously more important than others and the least important ones can be abandoned if the highest priority goals are for most people, figuring out what is most important stage. Give it the time it deserves. In your scale of preference, you consider the most important thing on the list and go on with it.

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For example, In your company or your business, there are items or projects to execute, you have to take preference on the most important one that will be done within short period of time and which will bring in the rewards that will cater for other items on your list instead of embarking on a huge project that will you will not be able to financially complete on time.


Stage 3:The parties engage in a dialogue to understand each other’s list of goals. One must not challenge the list until it is collaboratively reach compromise on it. Because nobody can tell another person what he should want, one must respect everyone’s right to have a personal set of goals. Goals are not negotiable.


Stage 4: The parties brainstorm for a comprehensive list of possible solutions but without regard for their quality or utility. With a large enough list, there is the likelihood that some variant of a solution, or some combination of solutions, will match the highest priorities for all parties. Through this process, solutions on shared interests will be emerged and the parties will reach into conclution on a particular business.


Stage 5:Only now, do the parties explore how to select a solution that matches the highest priorities. Inventing solutions is everyone’s job, and that job requires solutions that optimize the collective needs of all parties. By devaluing everyone’s low priority needs, trading takes place. Everyone contributes because everyone’s situation is public. However, goodwill is still required for the process to work. Try to force a solution that matches his goals, ignoring the goals of the other party, the process becomes a deadlocked stalemate without a solution.


Negotiation techniques are primarily for sales but can also apply to other negotiations such as debt negotiations, contracts negotiations, buying negotiations, salary and employment contracts’ negotiations and to an extent all other negotiating situations.Good sales negotiation can easily add to sales revenues, which arguably goes straight to the bottom line as incremental profit.

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Good purchasing negotiation can easily save certain percentage of the cost of bought products and services which again arguably go straight to the bottom line as extra profit. Sales negotiation is an increasingly important part of the sales process. Negotiation starts when the buyer and seller are conditionally committed to the sale and not sooner if you are the sales person (the sooner the better if you are the buyer). Negotiation generally results in a price compromise between the seller and buyer i.e. the seller and buyer increases from their starting positions.

Good negotiation by managers, in dealing with staff, can easily reduce staff turnover by 5-10% which reduces recruitment and training costs by at least the same percentage. It can also improve quality, consistency and competitive advantage, which for many companies is the difference between ultimate success and failure. Good negotiation by executives with regulatory and planning authorities enables opening new markets, developing new technologies, and the choice of where the business operates and is based, all of which individually can make the difference between a business succeeding or failing.

Successful debt negotiation with creditors enables a business to continue trading. Failure to negotiate debts often leads to business closure. Salary negotiation affects individuals and organizations and good negotiation skills on both sides produce positive outcomes for all. The negotiation stages discussed above deal mainly with sales negotiation are written from the point of view of the seller to access the view point of a buyer if you want to know how buyers tend to behave in what you sell.


Certified Negotiation Specialist (CNS)
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