It is safe to say that negotiating is one of the oldest arts practiced by humankind. From time immemorial, humans have participated in negotiations, whether we were aware of it or not. Negotiating happens among young children and continue towards adulthood, occurring between family members, friends, colleagues, and superiors. Although the context in which these negotiations occur vary widely, one thing remains the same – parties involved in the negotiation must understand the process and have the right skills to perform it successfully.
Understanding the Negotiation Process
Every negotiation is a process in which two or more individuals or groups discuss their wants and needs, based on their desired outcome. Negotiators typically want different results, which is why they negotiate to discuss how to achieve a solution that is mutually beneficial or agreeable.
A negotiation undergoes 5 stages. These are:
- Preparation, Probing, and Proposal
The first stage of the negotiation process sets the foundation for the discussion. Being prepared allows negotiators to build the arguments that will support their stand. Ideally, there is enough time to prepare and do research so pertinent information can be gathered. At this stage, it is critical to determine the key elements involved, such as:
-the persons/groups involved in the negotiation
-the reason for the conflict
-when the conflict started
-what each party stands to gain/lose as a result of the negotiation
Once these issues are probed, a proposal in the form of a solution may then be presented.
- Setting the Ground Rules
This stage involves communication with the other party to set the terms of the negotiation so it can begin. At this stage, each party will be able to assess and consider the proposal of the other. The initial positions of both parties will be provided at this stage, allowing each side to present their concerns and interests, along with what they desire to achieve once the negotiation is concluded.
- Clarification
During the clarification stage, both parties present supporting arguments for their positions to bolster their stand. Any disagreements at this stage will be discussed and any points of contention will be clarified. The point of this stage is to understand the other party’s position so any doubts and misconceptions are eliminated.
- Bargaining and Problem Solving
This stage is likely the most familiar for those who have participated in a negotiation before. The peak of the process begins here, wherein both parties exchange offers through give-and-take. If the party does not agree to the terms offered by the other, a counter-offer may be presented. At this point, concessions will be made, discussed, and managed. Both parties will attempt to arrive at a course of action that offers a mutually beneficial solution.
- Conclusion and Implementation
By this stage, a solution that both sides can agree on would have been reached and agreed upon. The discussion will end at this stage, once both parties have formalized the terms and details of the agreement, and after the expectations of either party are presented, the negotiation process will be concluded. The action plan will then be implemented and metrics for its success or completion will be observed.
In most cases, the agreement will involve a written document, such as a contract or formal agreement signed by representatives of both parties. During the implementation phase, follow-ups may be performed at certain stages to assess and confirm whether or not the terms are being implemented within the standards set.
MergersCorp M&A International is an experienced M&A corporate advisory firm with a global reach. The company has concluded dozens of mergers and acquisitions in over 40 countries around the world. The company has experts in a variety of industries to advise clients when they want to buy or sell a company.
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