Defining the Context of a Negotiation
Understanding the strategic environment of a negotiation can help you achieve the outcome you want.
The first step in any negotiating process is defining and understanding the context you’re operating in. You have to understand the strategic environment of the negotiation in order to be successful. There are several elements to defining this context.
First, who is the decision maker, and why are they doing this? The better you understand these players and what they’re trying to get out of the negotiation, the more successfully you’re going to be able to approach them.
Second, define your goals. What are you interested in, and what do you need? By laying out these objective functions, you can focus on achieving them during the negotiation and make sure that you don’t accidentally give them up.
Third, what are the outcomes that are in play? What’s at stake? When you look at the final negotiation, what are those possible end states? What do you risk losing? What do you risk gaining?
Next, define the other options you’re considering. Many negotiations have many different outcomes that you can pursue. By defining what these options are, you’re better able to determine which one you should pursue.
And last, what will it take to close the deal? Trying to get a clear understanding of what’s going to lead the other party to say yes, and what’s going to get approval on your end for the negotiation is critical.
An example of a negotiation I went through where we had to clearly define the context was when we were trying to buy back a franchise operation. The owners were looking to cash out. They wanted to sell their franchise back to us as a corporation. Our goal was to buy access to their market but do so at a reasonable price. So these were the goals of the parties that were involved. Now, the options we had available to us were either a full purchase of their territory or no sale and they would retain it. We couldn’t buy a portion of it, and we couldn’t enter that market without making the purchase. So we had these two options that we had to think through and evaluate. We had to understand that it would take significant cash up front, and we had to look at our ability to pay that as well as what that offer would be worth to the franchise owners. By laying out this complete context to the negotiation, we made our negotiating position much stronger because we understood what we wanted to get out of the deal.
As you look at negotiations you enter, make sure you take the time to define this context and document it so you can go back to it on a regular basis, test your assumptions, and stay on track to achieve your goals.
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