ZOPA or Negotiation Bargaining Zone

Patrick from United States asked:

"Are there any advantages or disadvantages for a wide or large bargaining zone (ZOPA)?"

Phillip Cohen Answered:

The negotiation ZOPA, ‘Zone of Possible Agreement’, reflects the positive overlap of the parties 'Walk Aways' or 'Real Bases' or ‘Bottom-Lines’ on any issue under negotiation. So the deal is highly likely to be struck within this zone or region of agreement.

When considering the ZOPA the only position that a negotiator knows with certainty is his or her own bottom-line; the other side’s position is always an estimation and is arrived at by gathering information at all stages of the negotiation from preparation to closure, both at the table and away from the table. A negotiator almost always knows the other parties' 'Opening Offers' or 'Aspiration Bases' - through their requests, demands and positions. An Opening Offer can be useful in determining their Walk Away / Real Base / Bottom Line.

A negotiator should always start considering both parties' ZOPA at the earliest stage of his or her preparations and constantly refine and adjust these figures as the process proceeds.

There are considerable disadvantages to a narrow negotiation Zone of Possible Agreement. Firstly the parties generally, and often incorrectly, view their bottom-lines as sacrosanct and non-negotiable, and thus form a psychological bond with these positions; of course they may also be bound to their bottom-line positions by mandates received from their principals. Unless the negotiators are able or willing to review and relax their bottom-lines they become locked in to a narrow bargaining range and, in these circumstances, settlement is most often reached by way of compromise, invariably leaving value on the table.

If you find yourself locked into a narrow Negotiation Bargaining Zone on one issue, and the situation stands to your disadvantage, consider linking your issue with other issues. So for example: if you're not able to easily agree on price, consider changing the volume or the SLA (Service Level Agreement).

Our Seminar for Sellers, Purchasing Skills Courses and other negotiation skills training typically train negotiators to deal with both wide zones of possible agreement, and narrow zones of possible agreement. The most challenging situations are those where little to no ZOPA exists.

Consider the following:

  • Firstly, a wide ZOPA offers both parties an extended opportunity to create and add value by identifying and understanding the interests, needs and concerns underlying each other’s positions and by prioritizing these positions and interests. The effect of these actions alone often results in a further widening of the bargaining zone or “playing field”.
  • Secondly, experienced negotiators will formulate appropriate concession strategies whereby they formulate ways and means of benefiting the other side at little expense to themselves.
  • Thirdly, in bargaining over the created value the parties will have generated additional “room” to exercise and apply appropriate competitive power strategies and pressure tactics.
  • Finally, ask yourself this question: "Assuming we're not able to reach agreement on this issue or this deal, what would I do?" If your answer is to cut your losses and find another company or party to do business with, then best start the wheels rolling sooner rather than too-late. Alternatively, you may unearth a new area of value. Creatively adding value in negotiation is similar to creativity in other areas of human endeavour. For example: inventors very often experience flashes of inspiration that result in new breakthrough technologies only after they've hit a wall. So find ways to detach yourself from the problem by thinking of creative solutions.

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