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Negotiation
Negotiation : Growing an enterprise requires the ability to negotiate, which is not developed by entrepreneurs. Negotiation is the process by which parties attempt to resolve a conflict by agreement. Even when a resolution is not possible, the process of negotiation identifies the critical issued in the disagreement and is therefore central to business dealings. Negotiation often involves one party attempting to get another to do something the first desires. At the same time the second party will not act unless obtaining something of interest in return. This motive for a return must be understood in the negotiation process, whether the negotiation is cooperative or competitive.Cooperative negotiation or Integrative bargaining: In this situation, the entrepreneur is willing to let the other side achieve its desired outcome while maintaining a commitment to his own goals. In one sense cooperative negotiation is joint problem solving. The effectiveness of the decisions made through this process depends on the adequacy of the information and the commitment of the parties involved implementing the decision reached. The best alternative solution should be selected. This requires the establishment of an open, honest relationship.Competitive negotiation or Distributive bargaining: This does not allow the other party to achieve his goals. There is a fixed pie to be divided, which means that the larger the opponent’s share, the smaller the entrepreneur’s. Since there is no trust between the parties, a solution can be reached only through a series of modified positions of compromise and concession.The key to successful competitive negotiation is for the entrepreneur to discover the goals and perceptions of the other party. The entrepreneur should get a feel of the other party’s goals and drives so that a strategy can be planned before the actual negotiation commences.An entrepreneur, skillful at negotiation, attempts to determine the settlement range of the other party. The key to good negotiations lies in the entrepreneur’s ability to manipulate the other party’s perception of a likely settlement point so that this point results in a more favorable position for the entrepreneur. This can be accomplished by indicating higher initial demands.Perhaps the best strategy for the entrepreneur is to bargain in good faith – indicating a willingness to bargain and be flexible. This strategy often leads to obtaining a settlement point that is acceptable to both parties, completing the negotiation faster than by using other strategies.The type of these skills varies according to location, products and clientele. For instance in rural areas a small enterprise making goods for local consumption based on local raw materials would require relatively simpler skills whereas in urban areas, the product, processes, packaging, advertising have to match with the growing sophistication of consumer preferences. Till recently the entrepreneurship in developing countries has been confined to persons coming from the traditionally trading families. There is now a shift towards anew class of entrepreneurs.
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