40 Critical Business Negotiation Terms

 

 

Negotiation is an essential skill in both personal and professional life. It is the process of reaching an agreement between two or more parties to resolve a dispute, make a deal, or discuss terms. Good negotiation skills can help you achieve your goals and get what you want while maintaining positive relationships with others.

To become an effective negotiator, it is important to have a good understanding of commonly used negotiation terms. Here are 40 critical business negotiation terms that you should know:

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BATNA – Best Alternative To a Negotiated Agreement

This term refers to the alternative course of action a party will take if an agreement cannot be reached through negotiation.

 

 

 

Bottom Line

The minimum acceptable outcome or offer in a negotiation for each party.

 

 

 

Win-Win

A negotiation outcome in which both parties feel they have gained something of value.

 

 

 

Concession

An agreement to give up something in order to achieve an agreement with the other party.

 

 

 

Deadlock

A situation where both parties are unable to reach an agreement and negotiations come to a standstill.

 

 

 

Fair Market Value

The price at which an item or service would be sold in a competitive market.

 

 

 

Impasse

A point in negotiation where both parties are unable to move forward and reach an agreement.

 

 

 

Mediation

The process of using a neutral third party to facilitate negotiations between two parties who are unable to come to an agreement on their own.

 

 

 

 

Positional Bargaining

A negotiation approach where each party takes a specific position and tries to convince the other party to accept it.

 

 

 

 

Quota

A predetermined quantity or amount that must be met in order for an agreement to be fulfilled.

 

 

 

 

Reservation Price

The point at which a negotiator would rather walk away from the negotiation than agree to terms that are not in their favor.

 

 

 

 

Tactics

Strategies used in negotiations to gain an advantage or achieve a desired outcome.

 

 

 

 

Win-Lose

A negotiation outcome where one party gains at the expense of the other party’s loss.

 

 

 

 

Arbitration

The process of resolving disputes through the use of a neutral third-party arbitrator who makes a binding decision on both parties.

 

 

 

 

Counteroffer

A response to an initial offer that revises the terms of the negotiation.

 

 

 

 

Distributive Bargaining

A negotiation approach where one party’s gain is directly correlated to the other party’s loss.

 

 

 

 

Face-saving

The act of maintaining dignity and avoiding embarrassment in a negotiation, even if it means giving up some concessions.

 

 

 

 

Interest-Based Negotiation

A collaborative negotiation approach where parties focus on understanding each other’s interests to reach a mutually beneficial solution.

 

 

 

 

Nonverbal Communication

The use of body language, gestures, and facial expressions to convey messages in a negotiation.

 

 

 

 

Reciprocity

A strategy where one party makes concessions in the hopes that the other party will reciprocate and make concessions as well.

 

 

 

 

Zone of Possible Agreement (ZOPA)

The range in which an agreement can be reached between two parties based on their respective interests and reservation prices.

 

 

 

Anchoring

A negotiation tactic where one party sets a starting point for negotiations that influences the final outcome.

 

 

 

 

Best Offer

The most favorable offer or proposal made by either party in a negotiation.

 

 

 

 

Leverage

The ability to influence or pressure the other party to agree to certain terms in a negotiation.

 

 

 

 

Objective Criteria

Factual information or standards used as a basis for decision-making in a negotiation.

 

 

 

 

Rationality

The act of making decisions based on logical reasoning rather than emotions.

 

 

 

 

Ultimatum

A final offer presented by one party with the threat of no further negotiation if not accepted.

 

 

 

 

Agreement in Principle

A preliminary agreement on the main terms of a negotiation that still needs to be finalized and documented.

 

 

 

 

Escalation

The act of increasing demands or tensions in a negotiation when one party feels they are not making progress.

 

 

 

 

Incentives

Rewards or benefits offered by one party to the other in order to gain concessions.

 

 

 

No-Deal

A situation where parties are unable to reach an agreement and decide not to proceed with the negotiation.

 

 

 

 

Rational Choice Theory

A model that explains decision-making in negotiation based on self-interest, logic, and rationality.

 

 

 

 

Walk-Away Point

The point at which a negotiator is willing to walk away from the negotiation without coming to an agreement.

 

 

 

 

Alternatives

Other options or choices available to a party in a negotiation that can be used as leverage.

 

 

 

 

Commitment

The act of being dedicated and sticking to an agreement made during negotiations.

 

 

 

 

Integrative Negotiation

A cooperative approach where both parties work together to find mutual gains and maximize the value for both parties.

 

 

 

 

Power

The ability to influence or control the outcome of a negotiation.

 

 

 

 

 

Ripeness

A negotiation concept that refers to the readiness and willingness of parties to engage in negotiations.

 

 

 

 

 

Win-Win-Win

A negotiation outcome where all parties involved feel they have gained something of value.

 

 

 

 

 

Bargaining Zone

The range between each party’s bottom line and reservation price, where an agreement can be reached.

 

 

 

 

Compromise

An agreement in which both parties give up something to reach a mutually acceptable outcome.

 

 

 

 

Interests

The underlying needs, concerns, or desires that motivate each party in a negotiation.

 

 

 

 

Objective

A measurable and tangible goal that is desired by one or both parties in a negotiation.

 

 

 

 

Rationalize

The act of justifying one’s actions or decisions based on logic and reasoning in a negotiation.

 

 

 

 

Third-party

An individual or organization that is not directly involved in the negotiation but may be consulted for advice or assistance.

 

 

 

 

Collaboration

The act of working together to achieve a common goal, often used as a strategy in negotiations.

 

 

 

 

Alternative Dispute Resolution (ADR)

Methods used to resolve disputes outside of the court system, such as mediation and arbitration.

 

 

 

 

Compliance

The act of following through with an agreement made during negotiations.

 

 

 

 

 

Intangible Interests

Non-material interests or needs that may be important to a party in a negotiation, such as feelings or values.

 

 

 

 

Options

Different choices or possibilities that can be explored in a negotiation to find a mutually beneficial outcome.

 

 

 

 

Rational Decision Making

The process of evaluating all available information and making a logical choice in a negotiation.

 

 

 

 

 

Trade-offs

Giving up one thing in exchange for another in order to reach an agreement in negotiations.

 

 

 

 

 

Best Alternative to a Negotiated Agreement (BATNA)

The best alternative to a negotiated agreement that a party has if the current negotiation does not result in their desired outcome.

 

 

 

 

 

Collaboration

A negotiation approach where parties work together to find mutually beneficial solutions and create value for both sides.

 

 

 

 

Interpersonal Skills

The ability to effectively communicate, build relationships, and manage emotions in a negotiation.

 

 

 

 

Persuasion

The act of convincing or influencing another party to agree with one’s position in a negotiation.

 

 

 

 

Rationality

The use of logical reasoning and objective criteria in decision-making during negotiations.

 

 

 

 

 

Trust

A belief that the other party will follow through on their commitments and act in good faith during a negotiation.

 

 

 

 

Win-Lose

A negotiation outcome where one party gains more than the other, resulting in a winner and a loser.

 

 

 

 

Bottom Line

The minimum acceptable outcome for a party in a negotiation, also known as their reservation price.

 

 

 

 

Concession

A compromise or giving up of something in order to reach an agreement in a negotiation.

 

 

 

 

Interdependence

The mutual reliance and influence between parties in a negotiation, often leading to a need for cooperation.

 

 

 

 

Objective Standards

Unbiased and fair criteria used to evaluate proposals and decisions in a negotiation.

 

 

 

 

Rationalization

The process of justifying one’s own actions or decisions based on logical reasoning in a negotiation.

 

 

 

 

Unbundling

Breaking down complex issues into smaller, more manageable parts in order to find a mutually acceptable solution in a negotiation.

 

 

 

 

ZOPA

Zone of Possible Agreement, the overlap between each party’s bottom line and reservation price where an agreement can be reached.

 

 

 

 

Conflict Management

The process of addressing and resolving disputes or differences in a negotiation through cooperative strategies.

 

 

 

 

 

 

So now that you have read through the 40 critical business negotiation terms, you should be feeling pretty confident in your understanding of these important concepts. But don’t stop there!