Factors affecting entrepreneurial negotiation

  

Date Posted: 6/5/2013 11:59:03 PM

Posted By: Chadeshady  Membership Level: Gold  Total Points: 1697

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Entrepreneurs are constantly negotiating with customers, clients, stakeholders and stockholders. Whenever these parties with different interest and perceptions depend on each other for results, negotiation is key. Knowledge of basic principles in negotiating can greatly influence one’s chances of success in an entrepreneurial venture.

Negotiation is the art of arriving to an agreement by resolving differences through creativity; it can best be understood as a means of advancing the full set of interests by jointly decided action where the outcome is a win-win situation. The expected outcome of this process is some form of a deal. Each party normally enters the deal with two critical positions; aspiration and negotiating base. As the negotiation starts and proceeds, each party yields some ground in terms of their aspirations and moves on towards their negotiating base.

Steps Involved in the Negotiating Process
1) In this step, it is important to gather as much information about the other party that you can use to your advantage in the negotiation process. Clarify your position and interests identifying the course of action you would take if the proposed agreement were not possible.

2) At the negotiating table, the process begins with a first offer and as a general rule; you should strive to push the other party to give their first offers.

3) Make a counter offer and discuss in detail why they should accept your offer.

4) A deal is struck when none of the parties can manage a change of position of the other’s.

Negotiating Tactics
a) Never over-commit yourself during the early stages; instead use the following de-committing strategies:
b) Bluffing offers such as ‘this is really my final offer’
c) Precedence – ‘last time the deal was better’
d) Responding that the offer is too high without disclosing your position

Common Mistakes in Negotiating
• Forcing people to take your position and not willing to meet them half way
• Failure to uncover underlying interests

of stakeholders
• Forgetting interests and opinions of other stakeholders
• Ignoring conflicts of interest and perceptions of stakeholders

Elements that Affect Negotiation
1. Subjective utilities: beware that different people have very different values on elements of a negotiation. Finding out what is 'of value' to them is one of the key parts of negotiation.
2. Personalities: be conscious of aspects of your personality and interpersonal style and others’ as well.
3. Time availability: think about whether time will affect the negotiation and whether you need to try and change this variable.
4. Physical space: at times during negotiations, the current physical space may be uncomfortable to you and comfortable to the other party. So, it’s best to locate a place where it’s comfortable for both of you.
5. Past interaction: if a past conflict left both of you in bad terms, think of how history will affect the upcoming negotiation and try settling your differences by burying the hatchet.

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