Zone Of Possible Agreement Pdf

To determine whether there is a positive bargaining area, each party must understand its gain or its thought price. For example, Paul sells his car and refuses to sell it for less than $5,000 (his price at worst). Sarah is interested and negotiates with Paul. If she offers him a little more than $5,000, there is a positive bargaining area, if she is not willing to pay more than $4500, there is a negative bargaining area. As the master`s course in negotiation has shown, interaction in a negotiation is to shape the perception of ZOPA through conviction and other tactical measures, as this will lead to an agreement. There is a “possible area of agreement” (ZOPA- also known as “negotiation margin”) if there is a possible agreement that would benefit both parties more than their alternative options. For example, if Fred wants to buy a used car for $5,000 or less and Mary wants to sell one for $4,500, those two have a ZOPA. But if Mary doesn`t go below $7,000 and Fred doesn`t exceed $5,000, they won`t have a zone. On the other hand, inclusive negotiations are designed to create values or “increase the cake.” This is possible when the parties have common interests or deal with several issues. In this case, the parties can combine their interests and negotiate between several topics in order to create a common value.

In this way, both parties can “win,” even if neither side receives everything they originally thought possible. If, in the example above, the rewriting of the job description could create additional employment, distribution negotiation would become an inclusive negotiation between the employer and the two potential workers. If both candidates are qualified, they can now get both jobs. ZoPA exists in this case when two jobs are created and each candidate prefers one of the two. Of course, common sense dictates that if there is no overlap in the expectations of the seller and buyer, an agreement becomes highly unlikely. Similarly, even if ZOPA exists, the agreement still cannot be reached if, regardless of that, the parties are unable to reach an agreement. The letter “P” in ZOPA, which means a possible agreement, will be more likely, but it is not final. Let`s say, for example, that Dave wants to sell his mountain bike and equipment for $700 to buy new skis and ski equipment. Suzy wants to buy the bike and equipment for 400 dollars and can`t go higher. Dave and Suzy did not reach ZOPA; they are in a negative bargaining area.

A negative trading area can be overcome by “cake enlargement.” In integration negotiations, when it comes to a large number of issues and interests, parties who associate interests with value creation enter into a much more rewarding agreement. Behind each position, there are generally more common interests than opposing interests. [4] The search process for this area requires a bit of detective work for it to work.