Concessions

Definition

Concessions refer to compromises made by parties in negotiation to reach an agreement. These compromises often involve giving up certain demands or adjusting terms to satisfy the other party, facilitating a smoother negotiation process. Concessions play a crucial role in negotiation and buying strategies, as they can help build rapport and encourage collaboration between buyers and sellers.

5 Must Know Facts For Your Next Test

1. Concessions are often seen as a sign of goodwill and flexibility, helping to create a positive negotiating atmosphere.
2. Effective negotiators carefully consider what concessions they can offer without jeopardizing their own objectives.
3. The timing and manner of making concessions can impact how they are perceived by the other party, influencing the overall outcome.
4. Concessions can vary in size and significance, ranging from minor adjustments to major changes in terms.
5. In many cases, making concessions strategically can lead to more favorable terms in other areas of the negotiation.

Review Questions

• How do concessions influence the dynamics of negotiation and help parties reach agreements?
  • Concessions influence negotiation dynamics by demonstrating flexibility and willingness to collaborate, which fosters goodwill between parties. When one party makes a concession, it often encourages the other party to reciprocate, leading to a more balanced negotiation. This exchange can build trust and create a positive atmosphere, making it easier for both sides to find common ground and reach mutually beneficial agreements.
• Evaluate the strategic importance of making concessions during the buying process.
  • Making concessions during the buying process is strategically important because it can help buyers secure better deals while also maintaining relationships with sellers. By offering concessions, buyers may create opportunities for sellers to adjust their offers favorably, leading to cost savings or improved terms. This approach not only aids in closing deals but also positions buyers as cooperative partners, potentially benefiting future negotiations.
• Synthesize how effective use of concessions can transform negotiation outcomes and create lasting partnerships.
  • The effective use of concessions can significantly transform negotiation outcomes by fostering an environment of cooperation and mutual respect. When parties view concessions as collaborative rather than as weaknesses, it opens up pathways for innovative solutions that benefit both sides. Over time, this practice cultivates lasting partnerships built on trust and understanding, which can lead to ongoing collaboration and success beyond initial agreements.

Related terms

Negotiation: The process by which two or more parties communicate and reach an agreement regarding mutual interests or concerns.

Leverage: The power or advantage a party has in a negotiation that can influence the outcome in their favor.

BATNA: Best Alternative to a Negotiated Agreement; the best option available to a party if negotiations fail.