Have you tried bargaining with someone or a group of people to convince them to see your side of an issue, reach a common ground, or resolve conflict? If so, then you have negotiated.

At some point in our lives, we are all negotiators, even teens. Have you asked mom and dad to increase your allowance? How did it go? Were you successful? Negotiation is based on the underlying presumption that nothing is permanent. Mom and dad can increase your allowance if you perform better in school, or they can decrease it and impose other sanctions if your grades go south.

In a negotiation, both parties try to persuade the other that their point of view is superior. Abraham Lincoln, the sixteenth President of the United States, was a master negotiator. Lincoln was a lawyer by trade, and a professional in that he varied his negotiating style depending on his audience.

At times he used reason and logic, storytelling, and metaphor when it suited who he was negotiating with. When he thought his audience could use some arm bending, he notoriously applied pressure and provided incentives when took take his side. Above all, he showed the importance of vision in negotiations. He painted a picture of the evils of slavery and consequently won a Congressional majority to abolish it.

What are the factors for a successful negotiation?

Many things that we thought are firm and final are actually negotiable. You can, for example, negotiate to reduce your debt, to change the conditions of a contract or get a better price on a car deal. There are seven factors that you need to consider to succeed in negotiation.

  • Know who you’re dealing with. If you know the interests and backgrounds of the parties to a negotiation and how their interests affect their position, you will have a better chance of persuading them to take your side.
  • Know the relationships of the parties. Are there business relations between the parties involved? Are they going to be willing to break these relationships just to take your side, or do you need to join them to win their sympathies?
  • What is the best way to communicate with the parties? Are you dealing with highly educated academics, or are they hard-knock, practical individuals? You can’t have a one-size-fits-all approach to delivering your message and expect to get the desired result.
  • Are there alternatives to what all of the parties want? If you or the other parties can’t get a direct agreement, would both sides be willing to get an alternative outcome and compromise?
  • Are there options available to both parties? Have the parties laid down where they can be flexible on the issue?
  • Are the demands valid? Can you or the other parties give evidence that your requirements are doable and within reason? Would both parties guarantee to pursue the results of the negotiations?
  • What are the stakes involved? Why would the parties even consider getting into the negotiating table in the first place? Will the stakes encourage them to deliver the desired results of the negotiations?

What is the “Zone of Possible Agreement” (ZOPA)?

The Zone of Possible Agreement, also known as the bargaining range, is zone wherein a concession is possible between the parties involved in negotiations. It is in this area where the parties make offers and counter-offers and strike a deal.

For all parties to agree, they must focus on their similarities instead of their differences. Often, they compromise and incorporate each other’s ideas into the deal. To go back to our analogy about raising your allowance: if your grade in math is terrible but you are getting A’s in all other subjects, mom and dad might agree to give you the same allowance provided you mow the lawn on weekends and give up gaming time to study. You could make a counteroffer of promising to improve your grade and mowing, but not give up on the iPad. After all, gaming is life right?

To understand the importance of negotiation and how you can win your opponents over, it is crucial to understand the factors of success and the ways to compromise. Take a page out of Abraham Lincoln’s playbook and tailor an argument to your audience and you will find success.



This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stockpile assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell. There is no guarantee that any strategies discussed will be effective. Each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services and should seek advice from an independent advisor before acting on any information presented.

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