Concession

Definition

A concession is a compromise or yield made by one party in a negotiation to help reach an agreement. It reflects the flexibility of the negotiator and can be a strategic move to build goodwill, create reciprocity, and ultimately facilitate a resolution. Concessions play a crucial role in the dynamics of negotiation, especially when considering elements like alternatives, acceptable ranges for agreements, and the limits of what each party is willing to accept.

5 Must Know Facts For Your Next Test

1. Concessions can be tactical moves that help strengthen relationships between negotiating parties by demonstrating willingness to collaborate.
2. Effective negotiators often use concessions strategically, ensuring that each concession made is reciprocated by the other party to maintain balance.
3. The size and nature of a concession can signal to the other party how much you value the outcome of the negotiation.
4. Understanding your own reservation point and that of the other party can help inform what concessions are reasonable and effective during negotiation.
5. Making a concession doesn’t mean surrendering your position; it's about finding mutually beneficial solutions that align with both parties’ interests.

Review Questions

• How do concessions influence the process and outcome of negotiations?
  • Concessions are essential in shaping the negotiation process by allowing parties to demonstrate flexibility and openness. When one party makes a concession, it often encourages the other party to reciprocate, fostering a collaborative atmosphere. This back-and-forth can help build trust and lead to a more favorable outcome for both sides as they work toward a mutually acceptable agreement.
• Discuss how understanding your BATNA can affect the concessions you are willing to make during negotiations.
  • Knowing your BATNA empowers you to make informed concessions without jeopardizing your interests. If you have a strong alternative, you may be more willing to make concessions that seem advantageous, knowing that you can walk away if necessary. Conversely, if your BATNA is weak, you might hesitate to concede too much, fearing that you could end up with an unfavorable deal.
• Evaluate the importance of balancing concessions with maintaining your reservation point during negotiations.
  • Balancing concessions with your reservation point is crucial for successful negotiations. While making concessions can facilitate agreement, it's vital not to concede beyond your reservation point, as this could lead to an unfavorable outcome. A skilled negotiator will navigate this balance by strategically offering concessions that promote collaboration while ensuring they do not compromise their minimum acceptable terms.

Related terms

BATNA: Best Alternative to a Negotiated Agreement; it represents the best outcome a negotiator can achieve if negotiations fail.

ZOPA: Zone of Possible Agreement; this is the range in which two negotiating parties can find common ground.

Reservation Point: The least favorable point at which one will accept a negotiated agreement; beyond this point, they will walk away.