Negotiation is a strategic discussion that resolves a problem in a way that is agreeable to both sides. In a professional setup, it is treated as a complex, sophisticated, and structured process. However, to accomplish a successful win-win negotiation, there are a few prerequisites the involved parties will need to evaluate in a negotiation meeting. ZOPA or the Zone Of Possible Agreement is one of those crucial prerequisites. So, in this tutorial, you are going to explore ZOPA negotiations in detail.
What Is ZOPA Negotiation?
A Zone Of Possible Agreement or bargaining range is defined as an area where two or more negotiation parties may establish common ground. This range is where negotiating parties will often compromise and strike a deal. To establish a settlement or an accord, negotiation parties must strive towards a shared objective and seek an area that integrates at least some of each party's views and requirements.
The ZOPA is a crucial factor to attain a successful outcome. However, determining whether a ZOPA exists or not may take some time; it may only be determined after the parties have explored their numerous interests and possibilities. There is a significant possibility that the disputing parties will be able to reach an agreement if they can identify the ZOPA.
Understanding ZOPA Negotiations Through an Example
Steve is a management student. He is trying to purchase a vehicle to gift his brother on the occasion of his birthday. Steve has 22,000 dollars to purchase a vehicle. And he comes across one good deal on eBay selling a Jeep Wrangler car at a price of 30,000 dollars. So, Steve decides to get in touch with the seller to negotiate the pricing. Steve’s reservation range lies around 20,000 to 22,000 U. S dollars, which means he cannot offer a price of more than 22,000 dollars.
Whereas, the seller’s reservation range is 21,000 to 30,000 USD. The seller will walk away from this negotiation if the outcome price is less than 21,000 dollars.
The feasible price range at which this deal can happen is considered as the ZOPA. And since the reservation ranges of Seller and Steve coincide, there's a chance that they will come to an agreement. This possible prizing zone at which an agreement can happen is the ZOPA.
From the image above, you can perceive ZOPA as an overlap between the reservation ranges of negotiating parties. The ZOPA, for the above-discussed example, will be 21,000 to 22,000 dollars.
Negative bargaining occurs when negotiating parties are unable to achieve a ZOPA. However, a deal cannot be attained in such a case as the requirements and objectives of involved parties cannot be met.
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In this ZOPA negotiations tutorial, you learned what a Zone Of Possible Agreement is. After that, you went through an illustrative example of ZOPA. You also learned about the negative bargaining zone.
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