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What is Negotiation?

In our daily life, we come across various instances of negotiations. A prospective employee may negotiate with his employer over his salary, a consumer may negotiate the price of the product with the salesman, and the management may negotiate with the workers union over work-related issues. It is through negotiation that parties decide what each of them finally get and give in their relationship.


Before delving into the various aspects of negotiation, it is important to understand conflict. Conflict and negotiation go hand in hand.

Conflict means ‘serious disagreement or argument about something important’  or ‘a state of mind in which one finds it difficult to make a decision or a choice’. Conflicts are an inherent part of all business organizations.

According to K.K. Sinha, the essential ingredients of conflict include the following:

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Resolving conflicts is important and there are various approaches to it. But the best approach to conflict resolution is a negotiation.

Thus, negotiation can be defined as ‘a process by which two parties interact to resolve conflict’. Negotiation is a process by which two or more individuals or groups having both common and conflicting goals state and discuss proposals for the specific terms of a possible agreement.

J.l. Graham has defined negotiation as ‘a face to face decision-making process between parties concerning a specific product’.

A negotiation is, thus, an interactive communication process that may take place whenever we want something from someone else or another person who wants something from us.

Factors Influencing Negotiations

The actual negotiation process depends on the following factors:

(i) The goals and interests of the parties
(ii) The extent to which the negotiating parties  are interdependent
(iii) The past relations which  exist between the two negotiating parties
(iv) The nature, temperament, and personalities of the parties
(v) The persuasive ability of each party

In addition to the above, P.D. Chaturvedi and Mukesh Chaturvedi in their book, Business Communications: Concepts, Cases and Applications, have listed out some factors that affect the outcome of negotiations:

1. Place

The place of meeting for negotiation influences one’s level of confidence. Choosing a place like your own office has many advantages:

  • You are in your area of strength.
  • You can get whatever information or material that is needed during the course of the discussion.
  • You can extend social courtesies as a token of goodwill; this would move the negotiation towards an agreement.
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2. Time

  • The choice of time for holding discussions should be fixed according to mutual convenience.
  • The time should be adequate for the smooth exchange of ideas through different stages of negotiation
  • Exchanging initial views
  • Exploring possible compromise
  • Searching for common ground
  • Securing agreement
  • The time to prepare for negotiation and the time for implementing the agreement should also be carefully fixed for action before and after the meeting.
  • To be effective, negotiations should be timely. This means that the negotiation should be done before it is too late so as to secure an agreement.

3. Subjective Factors

Often the outcome of the discussion does not depend wholly on the objective factors of logic and the facts of matter under consideration. The final outcome of the negotiation is also determined by the subjective factors of influence and persuasion.

Personal relationship: The conduct of negotiation is influenced not only by the real situation of the matter but also by the relationship between the two persons or parties involved in the process of discussion.

Fear: Often our bargaining power is conditioned by our fear of the other party’s authority, power, higher connections and the capacity to harm.

Mutual Obligation: The memories of well done in the past by the other party also act as an influence on us.

Future Considerations: When personal relationships are at stake we may not wish to win the argument, especially when good relations between the two parties are likely to be affected.

Practical Wisdom: Fear of losing good opportunities in the future is a strong factor in our bargaining and negotiation positions and power.

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About Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. I hold a degree in MBA from well known management college in India. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people.