Understanding ZOPA, the next step to Harvard’s BATNA
Knowing how to negotiate is an essential skill to build a successful career. Although commonly defended as something “innate”, there are techniques that can help to improve it over time, making this process much more precise and dynamic. But, of course, you already know this.
In order to go deeper into these concepts that are so necessary for the front line professionals in the purchasing sector, Soluparts will discuss another technique, also widely disseminated, called ZOPA (Zone Of Possible Agreement), which can be interpreted as a next step to BATNA.
Why ZOPA is important
No negotiation can happen without both parties finding a possible agreement zone – and, of course, the larger the zone is for both sides, the more chances are there of reaching a comfortable common ground for both parties involved.
Often, people can lose good deals because they are unwilling to talk, or insist on negotiations with parties not interested in reaching a common ground. These pitfalls have been noted by academics like Taya R. Cohen (Carnegie Mellon University), Geoffrey J. Leonardelli (University of Toronto), and Leigh Thompson (Northwestern University).
Why does this happen? According to Professor Max H. Bazerman, from Harvard University, one of the reasons is the fact that many people, when negotiating, see the situation as a dispute in which there are only the options “win” and “lose” . There is a concrete difficulty in seeing the resources that each side has with mobility and not as permanent and immutable assets – what he calls “Fixed Pie of Negotiation”.
This is an erroneous idea, since the situations where both parties are not willing to give in, or cannot do so due to the type of negotiation involved, are very rare.
Finding your ZOPA
According to Roger Fischer, William Ury and Bruce Patton, from Harvard University, knowing your area of possible agreement depends, first, on an analysis of where your BATNA is – that is, recognizing what your limit is for that situation, in order to avoid extremely unfavorable results. After that, trying to identify the BATNA of the other involved in the negotiation is also a valid strategy.
During the negotiation period, if both reach a certain point where it is not possible to find an area that does not invade the BATNA of others, there is no agreement. Often, both will leave without a common benefit alternative. Accepting something that goes beyond your limit is what they call “the trap of the deal”.
How to identify your ZOPA
According to Harvard University, you can find it from five essential steps:
1. Understand that it takes more than “skill” to close a deal
Luck, for bad or for good, plays a role here. It all depends on who you are negotiating with: there are inflexible people and others who are willing to make a deal. Even if you use your best negotiation tactics, sometimes that will not be enough to strike a deal.
2. Know your limits
At the outset, there is a clear advantage in knowing what your limits are – both for good and for bad – since before leaving a negotiation with nothing, it is possible to negotiate something that is within your area of interest. More than that, this knowledge contributes so that negotiators can try in a more incisive way that the opposite side in the negotiation reaches, at least, its acceptable minimum.
In the purchasing sector, understanding the spending limit or the maximum lead time, for example, are fundamental points to guarantee a successful negotiation with suppliers.
3. Understand that the situation can change
The ZOPA is not static during the negotiation process: it can become larger or smaller over time. Be open to change and follow the course of the negotiation, always aiming for a favorable agreement.
In the pandemic, more than ever, resilience and adaptation have been put to the test. Knowing how to be malleable and working with different cost structures, reporting on unforeseen events and other issues certainly contribute to the success of the purchasing professional.
4. Know that ZOPA can be measured
Using persuasion and other speech techniques can help the other side understand what your ZOPA is and, in a way, convince him/her to accept your terms within a negotiation. Knowing more about these techniques, without a doubt, is something indispensable for negotiators.
5. Preparation matters – a lot
Entering a negotiation requires a lot of preparation to understand what are the main points involved, in addition to establishing clear limits on what you really want to achieve. From there, it is possible to face the situation more clearly, going back and forth with the other side of the negotiation and being attentive to find a satisfactory agreement.
When it comes to preparing, to be updated in relation to the global market is essential. Culture plays a fundamental role and, in an increasingly globalized world, it is possible to meet some of its challenges. How about taking a look at our articles on the subject? How Slowbalization Affects the Supply Chain and The Second Wave Industry 4.0.
The Zopa technique for purchasing professionals – and how to go above and beyond
For a professional whose need lies in negotiating every day, it is important to set limits on your mediation skills and, above all, how far you want to go to ensure a satisfactory agreement.
This takes time and effort. But, in addition, it is possible to facilitate this work by having the right partners, willing to negotiate efficiently for you, understanding your BATNA and collaborating to ensure a satisfactory agreement between sellers and buyers. With that in mind, Soluparts has different purchase options in order to always guarantee the best cost-benefit to its customers.
In addition to studying ZOPA and developing the negotiation skills – patience, persuasion, etc. – another technique that can contribute to success is Logrolling, that is, an opportunity for mutual gains in a negotiation. Again, this is not a universal approach, but something that can be used in different cases.
The technique was discovered through experiments by Prof. Dr. Roman Trötschel, from the University of Lüneburg, Germany, who found it effective in resolving partial impasses – that is, when both parties manage to find the ZOPA for different points, but have criteria that prevent them from achieving it completely.
In these cases, the teacher assessed that it is possible to resolve situations based on the understanding of the other’s experience and what he values most. Thus, by identifying the other’s top priority and checking whether he is willing to give in, both are able to reach a mutual gain agreement.
Negotiating may seem like an art, but in reality it is a set of techniques to be perfected over time. Preparation is essential, so is mastering negotiation techniques, but it is important to understand that external factors can – and should – influence the results of a business deal.
Reducing anxiety and using other emotions to your advantage are key points towards success in any negotiation. Even in a busy day-to-day, it is possible to establish a consistent and firm set of principles, capable of assisting in the purchasing sector – both for negotiations within the company, such as positions and salaries, and for outside work relations, when purchasing indirect materials.
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