MBA Course Insight: The Art of Negotiating a Business Deal
When it comes to business negotiations, there is no one-size-fits-all template. But there are proven skills and techniques that can lead participants to a win-win conclusion.
“Negotiation demands many diverse skills: preparation, communication, awareness, empathy with others, reflection, and so on. It is, however, more important to be aware that every situation will have its own dynamics,” write Carl Evans and Mark Richardson, from the business school at the University of Worcester in Worcester, United Kingdom, in the article, “How to Negotiate Effectively.” “It is therefore crucial that the administrative manager remains flexible throughout, treating every negotiation situation on its merits and avoiding trying to replicate a ‘negotiation blueprint’ for all scenarios.”
This article is a key reading assignment in Negotiation and Conflict Management, a course for students in Walden University’s Master of Business Administration (MBA) degree program. In this business-relevant class, MBA-degree students learn methods and tools to help them succeed in future negotiations—from handling internal disputes to cinching international mergers. Read along with Walden’s online MBA candidates to learn practices you can implement today:1
Negotiation can be described as the act of conferring in order to reach an agreement. As such, it is an essential requirement of organizational life, an important activity for all administrative managers, and not something to worry about. Negotiations may involve securing a discount from a supplier, agreeing [upon] key aspects of service delivery with a customer, agreeing reasonable workloads with administrative team members, or resolving conflict between administrative staff or between the administrative function and customers within the organization.
Effective negotiation is an important skill for all members of an organization. It requires situational awareness, empathy, astute judgment, the ability to create effective social networks, excellent communications skills, and just a little bit of planning. It is therefore very much akin to assertiveness, where aggressive behavior (at the one end of the spectrum) or passiveness (at the other) is probably best avoided.
There are three distinct stages in a negotiation situation: pre-negotiation, during the negotiation, and post-negotiation.
Like many managerial activities, prior preparation is a key requirement of successful negotiation as it is important to determine the objectives. For important negotiations, take time to think what the best possible outcomes might be, what outcomes would be acceptable (which will probably require an element of compromise), and what outcomes would be unacceptable (perhaps because they would be detrimental to the personal position of the individual manager or the broader administrative function).
In your preparation, it is also helpful to consider the position of other parties involved in the situation. In particular, what will their objectives be? What will be their likely stance? How flexible and willing to compromise are they likely to be? Essentially, what will be their “bottom line”? Remember, it may be that both parties in a negotiation actually want very similar outcomes. McRae (1998) feels that effective negotiation starts with recognizing your personal style of negotiating, along with that of the opposing party. This facilitates subsequently adjusting your approach to harmonize with that of the other party, rather than clashing through a like-for-like approach.
Sometimes there will be highly emotive issues affecting the negotiation and so it will be necessary to take these into account. Furthermore, it is useful to attempt to consider all factors that might affect the situation. This not only helps prevent you being taken by surprise by an opposing party but might also yield creative solutions to the situation. It is then important to identify the arguments that will support your case and conversely, the counter arguments the other party might raise.
During the Negotiation
The objective of the negotiation must be to achieve a satisfactory outcome for all parties—a win-win situation is likely to deliver genuine and sustainable business benefits to all parties. It is important not to be “macho” and attempt to batter the opposition into submission. In addition, histrionics, double bluffing, red herrings, and so on are usually considered to be poor practice (although be alert to the other party adopting such tactics). Instead, try to maintain an objective, professional stance and put forward carefully considered arguments for your position.
As previously stated, there may be underlying tensions or emotions affecting the situation, so this must be carefully handled if solutions are to be found. Ideally, patience is important in order to carefully craft negotiations towards maximizing outcomes. However, this will be influenced by the time frame involved, with some negotiations needing a swifter solution.
During negotiations, it is helpful to try and empathize with the other party and take care to remain objective, rather than too sympathetic. The administrative manager needs to be aware of delegated levels of authority and be careful not to exceed them, or make promises with little chance of fulfilling them.
An effective technique that might be helpful in negotiations is the “if, then” approach. This entails asking for what you need, before stating what you can do in return. For example, in negotiation with a member of administrative staff regarding working overtime, “If you work the next bank holiday date, then you can have two days off in lieu to suit.” This has the very practical benefit of not allowing your fellow negotiator to interrupt you halfway through your offer, especially before the “cost” has been mentioned.
Fowler (1996) recognizes that negotiation can take place not only in face-to-face situations but also by letter, e-mail, or telephone. The danger here is that you could be diverted into a negotiation situation without prior planning. The advantage of this, however, is the speed by which agreement can be reached and therefore this option should not be too readily dismissed.
Once agreement has been reached, it is important to re-state and perhaps note all outcomes clearly, so that there can be no misunderstanding. If, however, agreement cannot be reached, consider introducing a third party to mediate. This is especially useful when emotion is prevalent since a third party can often examine both sides of a situation more dispassionately.
As mentioned, any actions agreed at the negotiation need to be recorded and undertaken or followed-up. It is also important that the administrative manager takes time to reflect upon the overall negotiation process—and specifically upon the performance of individuals involved in the negotiation.
Grow Your Career With an Online MBA
Learning how to master negotiations is just one of the desirable skills you can gain while pursuing an online master’s degree in business administration from Walden University. The Accreditation Council for Business Schools and Programs (ACBSP) is the accrediting body for Walden’s MBA degree program, which means your coursework is focused on delivering today’s most in-demand skills.
With a business degree from Walden’s top MBA program, you’ll be ready to stand out, make an impact, and negotiate your way through a career full of rewards.
Walden University is an accredited institution offering an online Master of Business Administration degree program with multiple specializations. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.
Walden’s BS in Business Administration, Master of Business Administration (MBA), Doctor of Business Administration (DBA), and PhD in Management programs are accredited by the Accreditation Council for Business Schools and Programs (ACBSP). The MS in Accounting and BS in Accounting programs are also accredited by the ACBSP and have earned the organization’s Specialized Accounting Accreditation.
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