Competitive negotiation is a zero-sum game where one party wins and the other loses. It focuses on prices, terms, and value, and relationships are irrelevant. Strategies include hard trading and double-dealing, but it may harm long-term relationships.
Competitive negotiation is a method of negotiating the prices and conditions surrounding a given transaction. This trading method is based on the concept that trading is a zero-sum game; meaning that one party must win the negotiation while the other party loses. This concept is in direct contrast to cooperative negotiation methods, which conclude that there can be multiple winners in a negotiation, resulting in a win-win scenario for all parties involved.
A person or business using competitive negotiation tactics assumes that there is only one fixed outcome that both parties are striving for. The outcome of a competitive negotiation often leads to one party feeling that they have received all that is possible from the negotiations, while the other party feels that they have lost the negotiation. The losing side typically concedes more to the winning side’s demands.
The competitive negotiation concept was first implemented as a tendering method for companies and government agencies. Individuals within these organizations would submit a Request for Proposals (RFP) to qualified vendors. The RFP would state all the parameters and conditions under which the project would be awarded. Suppliers who submitted proposals within a predetermined competitive range were then chosen based on the proposal that offered the best price or service.
In a competitive negotiation, the only factors of concern are the prices, terms and overall value created during the negotiations. The relationships between the negotiating parties tend to be irrelevant in this type of negotiation. Some feel that showing concern for the other side can weaken one side’s position and create an opportunity for exploitation.
Strategies implemented in competitive negotiation focus on hard trading or double trading. The hard trading process is one where both sides know exactly what terms are being negotiated and where there is little or no high-pressure tactics. Instead, in the form of competitive negotiation known as double-dealing, each side uses high-pressure tactics and deception to achieve their goals.
Competitive negotiation tactics can help organizations achieve their business goals. Although skilled negotiators may leave a negotiation with a sense of success and triumph, the competitive nature of the process can cause them to alienate the other side. Ultimately, business success relies in part on good relationships, and organizations that regularly negotiate on a zero-sum basis may find this practice has negative long-term effects.
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