Zopa Negotiation – 5 Strategies Every Professional Must Know
For this article, we are going to talk about what ZOPA is and how to recognize it during a negotiation.
By the end of this article, you should know how to recognize ZOPA easily and be able to use it to your advantage.
What exactly is ZOPA?
We’ve already covered ZOPA in our procurement articles, but as a refresher course, ZOPA is the acronym for Zones of Possible Agreements. It may sound like a small circle on the ground, but the actual ‘zone’ is not a place or venue; it is an area where two negotiating parties can agree.
The ZOPA is that one slim chance for two parties who are dead set against each other to come to a common ground and may accept a compromise for everyone’s sake. However, you also need to realize that every result may differ.
As a seasoned negotiator, there will come a time where you will encounter a negotiation where both parties are agreeing on a compromise that both parties wouldn’t agree on in an early stage: this also is the ZOPA-area.
That is just the nature of negotiations!
A negotiation is a “joint decision making process of two or more parties working together to reach a mutually acceptable agreement over one or more issues . The aim of negotiations is to create a meeting of positions through an exchange of concessions. Therefore, a bargaining space or ZOPA needs to be found. The negotiator has to calculate the cost of loss and find out at what point it is better to pay.
When dealing negotiation can be represented as shown here under. If the highest price the buyer is willing to pay is greater than the lowest price the seller can accept (b > s), then the agreement is possible, otherwise no agreement would be possible. The range in the middle between these two reservation prices is referred to as ZOPA (Zone of Possible Agreement). The problem with ZOPA is that both parties usually have an imprecise reservation price and make no formal attempt to assess probabilistic information about the other’s reservation price.
ZOPA Within Negotiations – How to Recognize it?
Every negotiation consists of two parties that are both trying to gain the upper hand against the other. A ZOPA will appear if both parties have ideas that are still within the ZOPA or the zone of possible agreement. Any more than that and you have a negative bargaining zone. Simply put, there is no bargaining for you or the other party.
As a negotiator, you need to do the following during a negotiation:
1. Do you have a BATNA ready in case negotiation starts to fall off?
During ZOPA negotiations, having a BATNA should keep the zone of possible agreements alive. The BATNA is your concession, your best alternative rather than having no alternative. It’s better to go on with this alternative rather than waste your time and the other party’s time even further!
2. What about the other party? Do they have a BATNA as well?
If not, then you’re in luck. You can certainly use this to your advantage since your BATNA will most likely end up getting followed. Of course, don’t push too hard with what you want, as it may end up with the other party getting frustrated and leaving.
3. During the talks for the concession, remember to use a proper tone when doing so.
Being too bullheaded can drive the other party away from you. Of course, having a weak voice will also get you nowhere, as the other party will simply ignore your ideas.
Always take into consideration that the other party may be reluctant to walk away from a less than optimal deal because they’ve already invested time, effort, and money with the negotiations. Do be sensitive when addressing the other party with this matter.
4. If the other party is trying to come up with a concession, keep an open mind and ear with their suggestion.
Let them explain their side of the table and remember to take notes and ask questions. When the time comes for a decision, make one and make sure that it’s for the best for you and your negotiation team.
How Possible is it to get a Win-Win Situation with a ZOPA?
This is a very good question. So good that this is already in our Negotiation Gamechanger course. If you want to learn more about the whole details, then you’d better head to our website and get yourself enrolled!
In any case, it is possible to get a win-win situation with a ZOPA negotiation. Of course, you also have to remember that even if it’s a win for you, the results may not always be the same.
There will be a time when the win-win situation is less than optimal for both parties. It could be agreeing to an amount that is lower than what is expected or agreeing to a concession that will put some of your interests (or the interests of the person who contracted you as a negotiator) down. Sometimes the win situation is just for the other party; you, on the other hand, receive hand-me-downs from the negotiation.
Well, you can just console yourself and say that it’s a lot better than not getting anything at all. It will happen most of the time. What you can do is learn from the whole experience to make sure that your next negotiation will not end in failure.
+ What is Zopa in negotiation?
ZOPA in negotiation means a point or area during negotiations where you and the other party can agree. It is usually a form of concession.
+ How to determine Zopa in negotiation?
To determine ZOPA in negotiation, you need to come up with a BATNA. Your BATNA is your trump card when negotiations may start to fail.
+ How to find Zopa in negotiation?
To find Zopa in negotiation, you need to look at a common price or offer that both parties can agree on.
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