How to close a Negotiation successfully with Zopa

negotiation-keyNegotiation can at times be tricky. Though the principles of negotiation remain simple, the biggest problem in negotiation arrives when the parties involved hit a dead end. You are already familiar with talks like “I have been working hard for you from past 2 years either double my salary, or I quit!

The above statement is a pure dead-end. People are not ready to find out whether something can work out between them. You can either term this as a lack of understanding other party’s priorities, or ego to concentrate only on what one can get back from the deal. Both the ways it is not a win-win situation.  A successful negotiation relies on the win-win principle which comes from understanding all the negotiators involved. Here comes Zopa for the rescue!

What is ZOPA

Zopa stands for Zone of possible agreement. This is ‘the zone’ in which both the negotiating parties agree to each other. The phase in which they can be satisfied of what they have got. Lets take an example. Lets say you are looking to buy a house, now as a buyer there will always be an appropriate budget in your mind. And a price which would be the max you are ready to pitch in. Assume that is 500,000. At the same time a seller (who has not disclosed his amount to you) is looking forward to sell the house for 400,000 or above. Every seller wants the best of what he can get from a deal. However there is always a minimum price he sets.

If you are offered a house beyond 500,000 you simply walk away. If the seller is offered a deal less than 400,000 she simply walks away.

Here the difference between the 2 values (500K-400K), the 100,000 is the Zopa. It is the zone in which the deal can work out. Let’s say the final amount is 450,000. If the both the negotiators don’t get another alternative (another buyer or seller). Or want to close the deal asap; this amount fits well to their expectation.

Zopa is an essential part to every negotiation. If Zopa is not achieved in a negotiation, there are chances that either of the negotiators will walk away from the deal. In case if you are a mediator in any conflict, or are assigned the task to negotiate on behalf of someone else, it is very important for you to understand the ZOPA between the parties.

3 things you should consider for ZOPA.

  1. The bigger the ZOPA, higher are the chances of the deal getting closed successfully.
  2. Try to analyze the ZOPA but don’t reveal your BATNA.
  3. If at the first shot the offer is in your ZOPA, try negotiating further to sweeten the deal rather than just accepting it as it is.

Can ZOPA be changed?

ZOPA might not be just what it seems to be prevalent. By analyzing the situation and background of the counter party you might able to expand his ZOPA.

This can be pretty simple. In our example say the seller wants to sell the house over and above 600,000. This amount falls beyond the ZOPA of this negotiation. To this, if the seller can expand the buyers ZOPA the deal can still work out. If the seller can convince that the cost is high because of factors like the locality, the ease of commuting and similar advantages which he might not get in any other house there are chances that the buyer may relook his bottom line. Same is applicable if the buyer works out to convince the seller.

Conclusion

So as we understand Negotiations always end happily in ZOPA. The next time you proceed for any negotiation try to understand your requirement, brainstorm about what the other party wants, and finally come up with the ZOPA that both negotiators agree to and close the negotiation.

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