An understanding of a few key terms is essential to learning the basics of negotiation. It would be benefitcal to know the following concepts and practice applying them in a real world negotiation situation:
Reservation Point
The point which a party will not go beyond; their bottom line. When a one side’s back-up plan, or BATNA (Best Alternative to No Agreement), is a better option than continuing the negotiation, they have reached their Reservation Point.
Bargaining Range
The distance between each side’s reservation points where agreement is possible.
Expanding the Pie
Collaborating efforts with others to create more value in a negotiation. Cooperating with the other side in order to explore their interest and needs, while at the same times sharing what you want from the negotiation, can open a channel of trust and break down barriers to allow creativity to flow. This method is obviously preferable to the reverse route of cut-throat competition where you isolate yourself and go at it alone in an effort to secure the best position, while disregarding the interests of all others involved.
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