OPTIONS

The process of generating and analysing options during the negotiation is another key point of the Business Theory developed by the Harvard Negotiation Project.

The options can be defined as the range of possibilities on which the parties may reach a negotiated agreement or, from the parties’ interest point of view, as the different solutions that may satisfy the parties.

In most cases, the range of possibilities that may lead the parties to succeed in the negotiation is much wider than it may seem at first. For reaching a good agreement as beneficial as possible for both parties, the best one of these possibilities must be chosen.

To this end, the parties should be prepared beforehand investing reasonable time, since it is usually difficult to generate solutions to problems under pressure or before new unexpected situations which may arise during the negotiation process.

Options may be defined as the range of possibilities on which the parties may reach a negotiated agreement and it is advisable to generate as many as possible beforehand (…)

Firstly, it is recommendable to generate as many options as possible. An adequate forum could a brainstorming so that the components of the group may generate the widest range of possibilities. During this process, it is also recommendable not to criticise the ideas that seem to be absurd, since this attitude may limit the creativity of the group which, at this stage, may be determining.

A different thing is that once the brainstorming is concluded, it is advisable to develop such options that may seem to be the more promising ones and then create one or several proposals that may satisfy the interests of the parties.

Preparation may be carried out internally or with the other party, clarifying in advance in this last case the purpose of the meeting and trying to make it clear that no commitment will be assumed at this stage. This may be very useful, particularly in complex negotiations, where there are many variables and interests at stake.

Therefore, once the list of options have been prepared, the most useful ones should be chosen and, if any, they should be developed exhaustively, just leaving those that may seem to be less appropriate in the background.

Anyone in the position of a negotiator who has not performed this preliminary exercise may run the risk to position himself in his initial ideas, thus not being well disposed to deal with the different options that have been generated during the negotiating process and which, after being thoroughly analysed, could be more advantageous.

It is worth mentioning that one of the most frequently detected error is to limit – although unconsciously -, the profits of both parties based on the initial positions of each party.

For example, let’s suppose that the parties are negotiating a sale. One of the parties offers a payment of 10 as a limit. The other, instead, does not want to sell under 12. Regardless of the agreement reached, the value of the transaction may be easily placed between these two values. However, if the parties previously analyse the interests at stake and are willing to cooperate by generating options jointly, multiple solutions may arise which generate higher profits than the ones initially expected for both parties:

  • To sell at a lower price for the purchase of more units in the future.
  • To subject the sale price to an exclusive supply agreement.
  • To sell more units for a lower price.
  • To sell at a higher price in return of a service agreement with lower costs.
  • To sell at a mid price in return of extending the warranty.

Once the list of options has been drawn up, the negotiator will select the one that best covers its interests(…)

Or in the example of two friends that must share an orange, the options could be as follows:

  • The exact half for each one
  • The whole orange for one of the parties
  • The whole orange for the other party
  • The peel for one party and the juice for the other

A joint analysis of all the options on the bargaining table notably enhances the possibility to increase the joint benefits. In a cooperative negotiation – in which the parties do not fight, but they jointly collaborate to reach an agreement – the parties should evaluate the pros and cons that each of the options implies in relation to their interests, so that the agreement becomes the most beneficial one for all the parties.

Therefore, one of the keys of this process lies in the generation of joint profits – the interests of the parties being satisfied – to enhance as much as possible the profit sharing.

The best option will be the one that may not be improved without damaging the other party. This factor may be confirmed when, if we increase the profit of one party, the profit of the other decreases.

In conclusion, before assuming commitments, the negotiator should analyse if the option he will opt for is the best one among all possible options.