What is Negotiation? - Introduction to Negotiation (2023)

See also: Transactional Analysis

Negotiation is a method by which people settle differences.It is a process by which compromise or agreement is reached while avoiding argument and dispute.

In any disagreement, individuals understandably aim to achieve the best possible outcome for their position (or perhaps an organisation they represent).However, the principles of fairness, seeking mutual benefit and maintaining a relationship are the keys to a successful outcome.

Specific forms of negotiation are used in many situations: international affairs, the legal system, government, industrial disputes or domestic relationships as examples. However, general negotiation skills can be learned and applied in a wide range of activities.Negotiation skills can be of great benefit in resolving any differences that arise between you and others.

Stages of Negotiation

In order to achieve a desirable outcome, it may be useful to follow a structured approach to negotiation. For example, in a work situation a meeting may need to be arranged in which all parties involved can come together.

The process of negotiation includes the following stages:

  1. Preparation
  2. Discussion
  3. Clarification of goals
  4. Negotiate towards a Win-Win outcome
  5. Agreement
  6. Implementation of a course of action

1. Preparation

Before any negotiation takes place, a decision needs to be taken as to when and where a meeting will take place to discuss the problem and who will attend. Setting a limited time-scale can also be helpful to prevent the disagreement continuing.

This stage involves ensuring all the pertinent facts of the situation are known in order to clarify your own position. In the work example above, this would include knowing the ‘rules’ of your organisation, to whom help is given, when help is not felt appropriate and the grounds for such refusals. Your organisation may well have policies to which you can refer in preparation for the negotiation.

(Video) Introduction to Negotiation by Yale University. Week 1. What is the Pie?

Undertaking preparation before discussing the disagreement will help to avoid further conflict and unnecessarily wasting time during the meeting.

2. Discussion

During this stage, individuals or members of each side put forward the case as they see it, i.e. their understanding of the situation.

Key skills during this stage include questioning, listening and clarifying.

Sometimes it is helpful to take notes during the discussion stage to record all points put forward in case there is need for further clarification. It is extremely important to listen, as when disagreement takes place it is easy to make the mistake of saying too much and listening too little. Each side should have an equal opportunity to present their case.

3. Clarifying Goals

From the discussion, the goals, interests and viewpoints of both sides of the disagreement need to be clarified.

It is helpful to list these factors in order of priority. Through this clarification it is often possible to identify or establish some common ground. Clarification is an essential part of the negotiation process, without it misunderstandings are likely to occur which may cause problems and barriers to reaching a beneficial outcome.

4. Negotiate Towards a Win-Win Outcome

This stage focuses on what is termed a 'win-win' outcome where both sides feel they have gained something positive through the process of negotiation and both sides feel their point of view has been taken into consideration.

A win-win outcome is usually the best result. Although this may not always be possible, through negotiation, it should be the ultimate goal.

Suggestions of alternative strategies and compromises need to be considered at this point. Compromises are often positive alternatives which can often achieve greater benefit for all concerned compared to holding to the original positions.

5. Agreement

Agreement can be achieved once understanding of both sides’ viewpoints and interests have been considered.

(Video) Introduction to Negotiation by Yale University. Week 1. Limo Ride

It is essential to for everybody involved to keep an open mind in order to achieve an acceptable solution. Any agreement needs to be made perfectly clear so that both sides know what has been decided.

6.Implementing a Course of Action

From the agreement, a course of action has to be implemented to carry through the decision.

See our pages: Strategic Thinking and Action Planning for more information.

Failure to Agree

If the process of negotiation breaks down and agreement cannot be reached, then re-scheduling a further meeting is called for. This avoids all parties becoming embroiled in heated discussion or argument, which not only wastes time but can also damage future relationships.

At the subsequent meeting, the stages of negotiation should be repeated. Any new ideas or interests should be taken into account and the situation looked at afresh. At this stage it may also be helpful to look at other alternative solutions and/or bring in another person to mediate.

See our page on Mediation Skills for more information.

Informal Negotiation

There are times when there is a need to negotiate more informally. At such times, when a difference of opinion arises, it might not be possible or appropriate to go through the stages set out above in a formal manner.

Nevertheless, remembering the key points in the stages of formal negotiation may be very helpful in a variety of informal situations.

In any negotiation, the following three elements are important and likely to affect the ultimate outcome of the negotiation:

  1. Attitudes
  2. Knowledge
  3. Interpersonal Skills


All negotiation is strongly influenced by underlying attitudes to the process itself, for example attitudes to the issues and personalities involved in the particular case or attitudes linked to personal needs for recognition.

(Video) What is Negotiation | Explained in 2 min

Always be aware that:

  • Negotiation is not an arena for the realisation of individual achievements.
  • There can be resentment of the need to negotiate by those in authority.
  • Certain features of negotiation may influence a person’s behaviour, for example some people may become defensive.


The more knowledge you possess of the issues in question, the greater your participation in the process of negotiation. In other words, good preparation is essential.

Do your homework and gather as much information about the issues as you can.

Furthermore, the way issues are negotiated must be understood as negotiating will require different methods in different situations.

Interpersonal Skills

Good interpersonal skills are essential for effective negotiations, both in formal situations and in less formal or one-to-one negotiations.

These skills include:

  • Effective verbal communication.
    See our pages: Verbal Communication and Effective Speaking.
  • Listening.
    We provide a lot of advice to help you improve your listening skills, see our page Active Listening.
  • Reducing misunderstandings is a key part of effective negotiation.
    See our pages: Reflection, Clarification and The Ladder of Inference for more information.
  • Rapport Building.
    Build stronger working relationships based on mutual respect. See our pages: Building Rapport and How to be Polite.
  • Problem Solving.
    See our section on effective Problem Solving.
  • Decision Making.
    Learn some simple techniques to help you make better decisions, see our section: Decision Making.
  • Assertiveness.
    Assertiveness is an essential skill for successful negotiation. See our page: Assertiveness Techniques for more information.
  • Dealing with Difficult Situations.
    See our page: Communicating in Difficult Situations for some tips and advice to make difficult communications, easier.

Further Reading from Skills You Need

Conflict Resolution and Mediation

Learn more about how to effectively resolve conflict and mediate personal relationships at home, at work and socially.

Our eBooks are ideal for anyone who wants to learn about or develop their interpersonal skills and are full of easy-to-follow, practical information.

(Video) Introduction to Negotiation by Yale University. Week 1. Sea Corp

See also:
Transactional Analysis
Assertiveness | Peer Negotiation Skills
7 Tips for Negotiating a Better Salary
Top Emotional Sales Negotiation Tactics You Need to Know

(Video) Introduction to Negotiation by Yale University. Week 1. Airline Cost Sharing


What does a negotiation means? ›

Negotiation is a strategic discussion that resolves an issue in a way that both parties find acceptable. Compromise is normally the basis of negotiation. Negotiations can take place between buyers and sellers, an employer and prospective employee, or governments of two or more countries.

What is negotiation * Mcq? ›

Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute.

What is negotiation and its example? ›

Negotiation is a discussion in which two or more parties attempt to reach an agreement through bargaining. Here are a few examples of negotiation in business: Salary negotiation: Candidates for jobs can bargain with an employer about their salary and benefits.

What is the meaning of negotiation PDF? ›

Definition: Negotiation is a process by which two or more people (or groups) resolve an issue or arrive at a better outcome but not through compromise. Negotiation is a way to avoid arguing and come to an agreement with which both parties feel satisfied.

What is negotiation in a sentence? ›

We need a negotiation between the townspeople and mayor over the site of the new library. She is skilled at negotiation. The college president was against any negotiation with the students.

Why is negotiation so important? ›

Good negotiations contribute significantly to business success, as they: help you build better relationships. deliver lasting, quality solutions—rather than poor short-term solutions that do not satisfy the needs of either party. help you avoid future problems and conflicts.

What are the steps in negotiation? ›

6 stages of negotiation
  1. Open discussion. Sharing information between parties at the start of a negotiation can help you create a more positive outcome for all sides. ...
  2. Clarification of goals. ...
  3. Negotiation. ...
  4. Agreement. ...
  5. Implementation of a plan. ...
  6. Practice active listening. ...
  7. Communicate clearly. ...
  8. Remain open to collaboration.

What are negotiation questions? ›

With this in mind, here are 7 “must ask” questions in any negotiation to best ensure a desirable outcome:
  • Would you explain the reasons for your position? ...
  • Is there any reason you can't? ...
  • Why do you think this is a fair and reasonable term or condition? ...
  • Why is that point or provision important?
30 Dec 2020

What is negotiable instrument Mcq? ›

According to section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument means “promissory note, bill of exchange or cheque, payable either to order or to bearer

What are the negotiation types? ›

Some of the most common are distributive negotiation, integrative negotiation, team negotiation, and multiparty negotiation. In distributive negotiation, parties compete over the distribution of a fixed pool of value.

What is the best type of negotiation? ›

Most research suggests that negotiators with a primarily cooperative style are more successful than hard bargainers at reaching novel solutions that improve everyone's outcomes. Negotiators who lean toward cooperation also tend to be more satisfied with the process and their results, according to Weingart.

What is the law of negotiation? ›

Negotiations allow the parties to agree to an outcome which is mutually satisfactory. The actual terms of the agreement must be concluded by the parties and can be as broad or as specific as the parties desire. A negotiated settlement can be recorded in the form of an agreement.

What is the introduction to negotiation? ›

Negotiation is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute. In any disagreement, individuals understandably aim to achieve the best possible outcome for their position (or perhaps an organisation they represent).

Who is the father of negotiation? ›

Gerard Irwin Nierenberg

What is the full meaning of negotiable? ›

: capable of being negotiated. especially : transferable from one party to another by delivery with or without endorsement so that title passes to the transferee. negotiable securities. a negotiable certificate of deposit. see also negotiable instrument.

What is a negotiation skill? ›

Skills in Negotiation

An effective negotiator will be using some of the below skills during the process of negotiation. Active listening. Asking good questions. Communication skills (Specially verbal communication) Decision making ability.

What negotiator means? ›

a person who has formal discussions with someone else in order to reach an agreement, or a person whose job is to do this: a chief/lead/top negotiator He is the chief negotiator for the union.

What makes a good negotiator? ›

One of the key traits of a great negotiator is emotional intelligence. A good negotiator should know from the get-go what the value of the bottom line expected on each side is. The negotiation should be focused on value and benefit, and obstacles should be considered beforehand so you can set yourself up for success.

Where can we use negotiation? ›

Negotiating a job offer, asking for a raise, making the case for a budget increase, buying and selling property or equipment, and closing a sale with a customer are just a few examples of the many deals you might be involved in.

What is negotiation strategy? ›

A predetermined approach or prepared plan of action to achieve a goal or objective to make an agreement or contract. (also see Negotiation Tactics.)

What are characteristics of negotiation? ›

The characteristics of Negotiation Skills are among others: preparation and planning skill, knowledge of the subject matter being negotiated, ability to think clearly and rapidly under pressure and uncertainty, ability to express thoughts verbally, listening skill, judgment and general intelligence, integrity, ability ...

What are the 2 types of negotiations? ›

The two distinctive negotiation types are distributive negotiations and integrative negotiations.

What is the most important skill in negotiation? ›

Preparing, planning and thinking ahead is crucial to a successful negotiation. The best negotiators enter a discussion with at least one backup plan, but often more. Consider all possible outcomes, and be prepared for each of these scenarios.

Is negotiation a life skill? ›

Negotiation is a life skill. All of us do it on a daily basis, and if we become conscious of the skill and practice it, all of us have the opportunity to become better at it. The following are 10 tips to help you ensure a successful negotiation. Tip #1 – recognize that everything in life is negotiable.

What quality is most important during negotiation? ›

Active listening is the key to a successful negotiation as it ensures that you listen to the other party and understand what they are trying to say. Also, with active listening, you do not miss out on crucial information, which builds trust and helps reach a consensus faster.

Who is called as holder? ›

Holder is a term used to any person that has in their custody a promissory note, bill of exchange or cheque. It should be entitled in his own name. Holder means a person entitled in his own name to the possession of a negotiable instrument and to receive the amount due on it.

What is negotiable example? ›

Examples of negotiable instruments include cheques, money orders, promissory notes, drafts, and certificates of deposit (CDs). Among all the examples mentioned above, cheques are the most widely used type of negotiable instruments.

What is cheque money? ›

A cheque is a document you can issue to your bank, directing it to pay the specified sum mentioned in digits as well as words to the person whose name is borne on the cheque. Cheques are also called negotiable instruments.

What are 5 rules of negotiation? ›

Manoj Thelakkat
  • 1) SHUT UP and Listen :
  • 2) Be willing to Walk Away.
  • 3) Shift the Focus Light.
  • 4) Do Not take it Personally.
  • 5) Do Your Homework.
25 May 2017

What are the 5 stages of negotiation? ›

Negotiation consists of five phases that include investigation, determining your BATNA, presentation, bargaining, and closure.

What is hard negotiation? ›

Most people know of only two ways to negotiate, either soft or hard. The soft negotiator wants to keep peace and readily makes concessions to avoid or resolve conflicts. The hard negotiator sees conflict as a battle in which the person who takes the most extreme position and holds out fares better.

What is direct negotiation? ›

Direct negotiations are a procurement process in which an agency may contact a single contractor of its choice to submit a quote or tender without having first gone through a genuine competitive process. A variation to an existing contract can also be a direct negotiation.

What are negotiation roots? ›

1590s, "to communicate with another or others in search of mutual agreement," a back-formation from negotiation, or else from Latin negotiatus, past participle of negotiari "carry on business, do business," from negotium "a business, employment, occupation, affair (public or private)," literally "lack of leisure," from ...

What is negotiation theory and practice? ›

Negotiation Theory and Practice offers a resource text for students of negotiation, either professional or lay. This text is published in association with the Program on Negotiation at Harvard Law School, and is designed to complement that program's Curriculum for Negotiation and Conflict Management.

Who is the negotiator of management? ›

You negotiate with people, not companies, departments or organizations. As a negotiating manager, you meet people. Workplace negotiations are about building and growing mutually beneficial relationships with these people. People have their own interests, needs and motivations besides their goals for the organization.

What does no negotiation mean? ›

Non-negotiable means not open for debate or modification. It can refer to the price of a good or security that is firmly established and cannot be adjusted, or a part of a contract or deal that is considered a requirement by one or both involved parties.

What is the meaning of negotiation in Oxford dictionary? ›

noun. /nɪˌɡoʊʃiˈeɪʃn/ [countable, usually plural, uncountable] formal discussion between people who are trying to reach an agreement peace/trade/wage, etc.

What are the 3 types of negotiation? ›

When preparing to negotiate, business professionals often wonder what types of negotiation are available to them. Some of the most common are distributive negotiation, integrative negotiation, team negotiation, and multiparty negotiation.

What does it mean to negotiate with someone? ›

According to Dictionary.com, negotiation is defined as: The mutual discussion and arrangement of the terms of a transaction or agreement.

What are negotiation skills? ›

Negotiation skills are inherent qualities that help two or more parties agree to a common logical solution. In the workplace, you may have to display your negotiating skills in various situations such as: Negotiating a salary hike with the HR manager after promotion.

What is a successful negotiation? ›

But successful negotiation is about discussion aimed at reaching an agreement. An adept negotiator uses skillful techniques to reach a deal without aggression. While negotiation skills can require some practice, becoming a good negotiator is within reach.

What is a negotiation plan? ›

Refers to a process where an individual identifies systematic mechanisms for developing and implementing bargaining strategies.

What is a negotiation strategy? ›

A predetermined approach or prepared plan of action to achieve a goal or objective to make an agreement or contract. (also see Negotiation Tactics.)


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