Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
ZOPA Negotiation — Everything You Should Know
Key take-aways
- ZOPA, or the Zone of Possible Agreement in negotiation is where parties find a common ground that allows them to compromise and strike a deal.
- Negative ZOPA occurs when no terms overlap, while positive ZOPA occurs when terms overlap.
- Knowing your ZOPA boundaries, adaptability, and preparation are essential for successful negotiations.
ZOPA negotiation is always present when dealing with possible negotiation outcomes. Just like a box of cereal for a breakfast meal, it is something needed to make a negotiation complete. However, what really is it?
For this article, we will talk about how ZOPA is in negotiation and some key points that you have to take note of when evaluating ZOPA.
By the end of this article, you should know how to recognize ZOPA easily and utilize it to your advantage.
I have created a free-to-download negotiation preparation toolkit template. It’s a PowerPoint file that can help you prepare for your next negotiation. I even created a video where I’ll explain how you can use this template.
What is ZOPA in Negotiation?
Zone of Possible Agreement or ZOPA is the range in a negotiation where parties can find common ground. This is the area where parties will usually compromise and strike a deal.
In negotiation, parties need to work toward a common goal and seek areas that have at least some of their ideas to reach an agreement. Thus, ZOPA is crucial in negotiation.
No matter how far you have come in your negotiation, an agreement can never be reached outside of the zone of possible agreement. For a deal to happen, negotiating parties must understand their needs, interests, and values in the negotiation.
You must take note that a ZOPA can only exist if there is some overlap between what all parties are willing to accept from the negotiation.
Positive Bargaining Zone
There is said to be a positive bargaining zone when the terms of both parties somehow meet or overlap with each other. This simply means that the buyer agrees to align with the terms the seller is willing to accept.
For example, you are hoping to purchase a car for a price between $4,000 and $5,000. On the other hand, the seller is willing to sell a car for a price between $4,750 and $5,500. In this case, positive bargaining exists because the price that you are willing to pay and the price that the seller is willing to accept overlap.
Negative Bargaining Zone
When parties cannot reach a ZOPA, then they are in the negative bargaining zone. In the negative zone of possible agreement, a deal cannot be reached in the current circumstance if no one from both sides is willing to adjust their view of what is acceptable.
For example, in the case of buying a car, if the buyer is not willing to pay more than $6,000 for the brand-new car which the seller only accepts, then neither of the party’s terms can be met.
This Negative ZOPA can only be overcome if negotiating parties are willing to learn and adjust to each other’s interests, views, and needs.
BATNA as Foundation of ZOPA
In negotiation, for disputing parties to identify the ZOPA, they must know what alternatives are available. Your BATNA will help you determine each party’s reservation point or walkaway point in the negotiation.
Additionally, you should also explore the BATNA of the other party. By doing so, you can gain a realistic sense of what to expect in the negotiation.
Once you have seen an alternative that both parties will accept over an impasse, then a ZOPA exists.
Key Points to Keep in Mind in ZOPA
Here are some key points to keep in mind when it comes to ZOPA.
1. Your success depends on so many factors and not just your skills
Sometimes, luck plays a crucial role in negotiation, especially if you have no idea whom you will negotiate with on a given day. Some people will be unreasonable while others will be more understanding and are willing to offer more than what you hoped for.
Although you might have employed your best negotiation tactics, remember that some situations will always be uncontrollable.
2. Knowing your limits
Knowing the upper and lower boundaries of your ZOPA is a great advantage. A negotiator is usually reluctant to show or disclose their walkaway or bottom line. They will check all the options before walking away if none of those appeals to them.
It is possible to push the other party close to their limit to reach a favorable outcome by knowing the boundaries of a ZOPA.
3. ZOPA can be viewed in a different light
Your ZOPA can shrink, disappear, or grow during the negotiation as both you and the other party show their priorities and reassess each other’s walkaways.
When preparing for a negotiation, you should know that situations can always change and some will not go according to your plan. Thus, being adaptable to these changes is the key factor to being a successful negotiator.
4. Preparation
In a negotiation, you seldom know how big or small the ZOPA is or whether there is room for agreement at all. If you prepare well, you will have set guidelines for yourself when to walk away. Thus, establishing one boundary of your ZOPA.
However, the other party’s walkaway point will be unknown to you. The good thing is, that you are both uncertain of your walkaways. This mutual uncertainty underlies much of the exchange of offers and counteroffers that follow.
Mastering the Art of Negotiation
Negotiations are complex as situations and offers keep changing even if you have a concrete idea or plan of the outcome. However, through proper negotiation, you can gain maximum value in the agreements you reach.
With our Negotiation Course For Procurement Professionals, you will learn how to deepen your understanding of the dynamics of negotiation. Additionally, you will understand key concepts in negotiation that will allow you to close every deal.
Procurement Expert’s Advice on ZOPA Negotiation
For this article, we asked a seasoned procurement professional to share his insights regarding ZOPA (Zone of Possible Agreement) negotiation.
Sjoerd Goedhart
Owner, Goedhart Interim Management & Consultancy
LinkedIn Profile: https://www.linkedin.com/in/sjoerdgoedhart/
1. Can you share a personal example of ZOPA (Zone of Possible Agreement)? What can readers learn from this?
“An example is when I was selling a certain product, for which there was a good relationship between both parties, and both parties were convinced that there was an intention to collaborate. It turned out that there was no ZOPA after long negotiations/conversations. In retrospect, we should have drawn this conclusion much earlier, but because both parties knew that they wanted to work together, this was a lengthy part of the negotiation without results. My learning is that it is important to regularly zoom out on the negotiation and the process, possibly under the guidance of someone who is not involved in the discussions. You need to be prepared to end the negotiation if there is no ZOPA, despite good negotiation and relationship.”
Follow-up Question: When you mention ‘zooming out on the negotiation and the process,’ could you elaborate on specific strategies or techniques that you find helpful in gaining a broader perspective during negotiations?
“In negotiating, whether at Zopa or elsewhere, it’s essential to allocate time to gain a broader perspective on the process. Rather than negotiating continuously over consecutive days, it’s beneficial to introduce breaks in between sessions. This allows for reflection and detachment from the immediate situation. It’s also valuable to engage with stakeholders, both those directly involved in the negotiation and those who are not, to gain diverse perspectives. Seeking input from impartial colleagues or stakeholders can provide valuable insights. Additionally, it’s crucial to avoid reacting emotionally during negotiations. When faced with a challenging situation or correspondence, such as writing an email, it’s advisable to refrain from responding immediately. Instead, take a day to consider the issue, allowing for a thoughtful and measured response. By implementing these strategies, negotiators can approach negotiations with clarity, objectivity, and strategic thinking.”
2. What should readers know about ZOPA?
“You can only define a ZOPA if you have determined a negotiation strategy in your preparation with an internally agreed breaking point. This is a condition for being able to define a ZOPA during the conversations.”
3. Can you explain the importance of understanding ZOPA in procurement negotiations?
“This must be there to even agree on a deal. If this is not there, or the parties are not prepared to move towards this, there is no basis for further negotiations.”
4. How do you identify and expand the ZOPA in complex procurement deals?
“Determining the ZOPA starts with defining your BATNA. If you have defined this, you have the space between the minimum and maximum you want to pay or receive, this is your negotiating space. Whether the negotiating space of the other party has an overlap can only be defined by exploring during the negotiations. How you can do this:
– to ask
– make proposals
– continue the conversation, so not only propose but also understand the why of a yes or a no from the other party by asking questions.”
5. What should procurement professionals keep in mind when working within the ZOPA?
“A ZOPA only works if you have a clear understanding of your BATNA, have defined your negotiating space, defined your counterparts, and have empathized with the other party. Everything that has to do with good preparation for the negotiation.”
6. How can effective communication help explore both you and the other party’s ZOPA?
“That helps because exploring the ZOPA is all about communicating with each other. What also important is, is trust. Both parties intend to do business.”
Conclusion
Understanding and utilizing the Zone of Possible Agreement (ZOPA) is essential for successful negotiations. This article has explored the significance of ZOPA in negotiation processes, shedding light on positive and negative bargaining zones, the influence of BATNA, and key considerations for negotiators.
By recognizing the ZOPA, negotiators can navigate the complexities of bargaining, capitalize on overlaps in interests, and work toward mutually beneficial agreements. As negotiators grasp the dynamics of ZOPA, they enhance their ability to adapt, prepare, and ultimately master the art of negotiation.
Frequentlyasked questions
What is ZOPA
ZOPA is where parties usually see a common ground that enables them to compromise and strike a deal.
Why is ZOPA important?
ZOPA enables parties in the negotiation to work toward a common goal that incorporates some of their ideas in the agreement.
What is BATNA
BATNA or the Best Alternative to a Negotiated Agreement is your backup plan if your negotiation does not lead to a deal.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
