The process of finding this area requires a little detective work to make it work. It starts with a proposal from a person, business entity or organization called a “promoter.” Essentially, it is the person who puts an offer on the table. The receiving part of a proposal is called the “prospect”. This is the natural or legal person who examines the merits of the offer or proposal. The interested party will accept the proposal, make a counter-proposal/counter-offer or reject it directly. This is where the game starts to be seriously fun. Negotiators can fall victim to the settlement trap for a number of reasons, according to researchers Taya R. Cohen (Carnegie Mellon University), Geoffrey J. Leonardelli (University of Toronto) and Leigh Thompson (Northwestern University). First, one party may succeed in hiding the fact that a proposed agreement would not be in the best interest of the other party.
For example, a contractor may try to significantly overwhelm a homeowner when bidding on a renovation project. To determine whether there is a positive trading area, each party must understand its final outcome or its most unfavourable price. For example, Paul sells his car and refuses to sell it for less than $5,000 (his worst price). Sarah is interested and negotiates with Paul. If she offers her a little more than $5,000, there is a positive trading area, if she is not willing to pay more than $4,500, there is a negative trading area. Your ZOPA analysis should start by considering your best alternative to a negotiated deal or BATTANA, write Roger Fisher, William Ury and Bruce Patton in their groundbreaking negotiating text Getting to Yes: Negotiating Agreement Without Giving In. Your BATNA is the course of action you would take if you did not reach an agreement in the ongoing negotiations. For example, if you decide to accept no less than $70,000 a year for a particular job offer, if you can`t negotiate that salary, your BATNA could be to take another job, look harder for other opportunities, or return to higher education. Leave a comment below and let us know when searching for your ZOPA in the store helped you reach an agreement. Do you want to deepen your understanding of the dynamics of negotiation? Check out our eight-week online course on mastering negotiation and learn how to develop the skills and techniques you need to effectively close deals and close deals. Spangler describes how, in order to identify ZOPA, the parties to the dispute must first know their alternatives and therefore their “bottom line” or “starting position”. For example, Mary might have two potential buyers for her car.
Georgio is willing to pay $6,950. Mary is now negotiating with Fred. If Fred pays more than Georgio (Mary`s best alternative to a negotiated deal or BATNA), she will sell to him. If Fred doesn`t pay as much, she will sell to Georgio. Similarly, if Fred has found another car he likes for $5,500, then he won`t pay more than that for Mary`s car. maybe even a little less. Fred`s BATNA costs $5,500. The BATNA determine the final result of each page. If you have an alternative car available for $5,000, $5,000 is your end result. If you can sell your car for $7,000, that`s your end result.
If you don`t do better in negotiation, you will leave. If the negotiating parties cannot reach the ZOPA, they are in a negative negotiating zone. An agreement cannot be reached in a negative negotiating area, as the needs and wishes of all parties cannot be satisfied by an agreement concluded in such circumstances. Brad Spangler (2003), updated by Heidi Burgess (2013), Zone of Possible Agreement (ZOPA), Beyond Intractability, www.beyondintractability.org/essay/zopa, accessed March 25, 2016. The article refers to Roger Fisher and William Ury. Arriving at Yes: Negotiating an Agreement Without Giving In, 3. Edition (New York: Penguin Books, 2011). and Michael Watkins and Susan Rosegrant, Breakthrough International Negotiation: How Great Negotiators Transformed the World`s Toughest Post-Cold War Conflicts (San Francisco: Jossey-Bass Publishers, 2001), 26-28. Negotiations are complex, with many factors contributing to the bottom line, but they don`t have to be a tortuous experience. Good preparation and a solid understanding of key trading concepts and strategies can help you create maximum value in the deals you make.
As has been demonstrated throughout the course on mastery of negotiation, much of the interaction in a negotiation is to shape the perception of ZOPA through persuasion and other tactical steps, as this is more likely to lead to an agreement. The ZOPA/negotiation zone is crucial for the successful conclusion of the negotiations. However, it may take some time to determine if a ZOPA exists. It can only be known when the parties explore their various interests and options. If the parties to the dispute can identify ZOPA, there is a good chance that they will be able to reach an agreement. A negative trading area can be overcome by “widening the pie”. In inclusive negotiations, which address a variety of issues and interests, parties who combine their interests to create value come to a much more rewarding agreement. Behind each position, there are usually more common interests than contradictory.  For example, a lender wants to lend money at a certain interest rate for a certain period of time. A borrower who is willing to pay this interest rate and accept the repayment period will share a ZOPA with the lender, and both may be able to reach an agreement. If the conditions that the two parties want to agree on overlap, it is said that there is a positive negotiating area. That is, the conditions to which the buyer accepts are clearly in accordance with the conditions that the seller is willing to accept.
A possible agreement area (ZOPA â€“ also known as a negotiating area) exists when there is a potential agreement from which both parties would benefit more than their alternative options…