Concessions

Definition

Concessions are compromises made during negotiations where one party agrees to give up something in order to reach an agreement. This process is crucial in creating a balance between competing interests, as each side may need to make sacrifices to achieve a mutually beneficial outcome. Understanding how to effectively use concessions can significantly influence the dynamics of negotiation, especially when it comes to opening offers and anchoring tactics.

5 Must Know Facts For Your Next Test

1. Making concessions can help build rapport and trust between negotiating parties, encouraging a collaborative atmosphere.
2. The timing and size of concessions are critical; small concessions can signal willingness to compromise, while large ones might weaken your position.
3. Effective use of concessions can influence the perception of value in negotiations, potentially leading the other party to make counter-concessions.
4. Concessions are often tied to the concept of reciprocity; when one side concedes, it is expected that the other side will do the same.
5. In negotiations, the first offer (or anchor) can significantly impact how concessions are perceived and what is ultimately agreed upon.

Review Questions

• How do concessions impact the dynamics of negotiation when one party makes an opening offer?
  • Concessions play a vital role in shaping the dynamics of negotiation after an opening offer is made. When one party presents their initial offer, it serves as an anchor that influences expectations and subsequent discussions. If concessions are made early on, they can signal flexibility and openness, prompting the other party to engage more seriously. However, if too many concessions are given away too soon, it may weaken one's negotiating position and make it harder to achieve desired outcomes.
• Evaluate the relationship between concessions and the anchoring effect in negotiation scenarios.
  • Concessions and anchoring are closely intertwined in negotiation scenarios. The initial offer sets a psychological anchor that shapes perceptions of value and fairness throughout the negotiation. If a party makes a concession from their opening offer, it can create an expectation that the other party will also make a concession in return. Understanding this relationship allows negotiators to strategically plan their offers and concessions to maintain leverage while also fostering collaboration toward a resolution.
• Assess how effective concession strategies can influence long-term relationships between negotiating parties.
  • Effective concession strategies can greatly influence long-term relationships between negotiating parties by fostering goodwill and cooperation. When parties view concessions as fair and reciprocated, it builds trust and sets a positive tone for future interactions. Additionally, consistently practicing thoughtful concession-making encourages open communication and reduces adversarial tensions, leading to better outcomes in subsequent negotiations. This strategic approach helps create lasting partnerships based on mutual respect and understanding.

Related terms

Negotiation:

A dialogue between two or more parties aimed at reaching a consensus or resolving a conflict.

Anchor: An initial offer or starting point in a negotiation that sets the stage for the discussion that follows.

BATNA:

Best Alternative to a Negotiated Agreement; the most advantageous alternative action a party can take if negotiations fail.