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Home > Management Tutorials > Types of Negotiation in Organizations
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Types of Negotiation in Organizations
(Part -2 of Negotiating Skills - Ken Shah, Prof. Param J. Shah)
Depending upon the situation and time, the way the negotiations are to be conducted differs. The skills of negotiations depends and differs widely from one situation to the other. Basically the types can be divided into three broad categories.
Types Parties
Day-to-day/ Managerial Negotiations
  1. Different levels of Management
  2. In between colleagues
  3. Trade unions
  4. Legal advisers
  1. Negotiation for pay, terms and working conditions.
  2. Description of the job and fixation of responsibility.
  3. Increasing productivity.
Commercial Negotiations
  1. Management
  2. Suppliers
  3. Government
  4. Customers
  5. Trade unions
  6. Legal advisors
  7. Public
  1. Striking a contract with the customer.
  2. Negotiations for the price and quality of goods to be purchased.
  3. Negotiations with financial institutions as regarding the availability of capital. 
Legal Negotiations
  1. Government
  2. Management
  3. Customers
  1. Adhereing to the laws of the local and national government.

1. Day-to-day / Managerial Negotiations

Such types of negotiations are done within the organization and are related to the internal problems in the organization. It is in regards to the working relationship between the groups of employees. Usually, the manager needs to interact with the members at different levels in the organization structure. For conducting the day-to-day business, internally, the superior needs to allot job responsibilities, maintain a flow of information, direct the record keeping and many more activities for smooth functioning. All this requires entering into negotiations with the parties internal to the organization.

2. Commercial Negotiations

Such types of negotiations are conducted with external parties. The driving forces behind such negotiations are usually financial gains. They are based on a give-and-take relationship. Commercial negotiations successfully end up into contracts. It relates to foregoing of one resource to get the other.

3. Legal Negotiations

These negotiations are usually formal and legally binding. Disputes over precedents can become as significant as the main issue. They are also contractual in nature and relate to gaining legal ground.


Negotiation, at times can be a lengthy and cumbersome process. By asking whether it is necessary, time may sometimes be saved and unnecessary compromise avoided. On occasions, a request to negotiate may best be met by pointing out that the party making the request has no standing in the matter. If a manager has the undoubted authority to act, making a decision rather than negotiating about it may be the best tactic.

Alternatively, there are cases in which the best response to a request or a claim is to concede it without argument. Why waste time negotiating if the other party has a good case and there are no adverse consequences in conceding ? Unnecessary negotiation, followed, perhaps, by a grudging concession of the other party’s claim, will lose all the advantage that might be gained with a quick unexpected yes.

An alternative to a simple yes or no when a difference of view occurs is to skip negotiation and proceed immediately to some form of third – party intervention. An alternative to a simple yes or no when a difference of view occurs, is to skip negotiation and proceed immediately to some form of third – party intervention. On the most formal basis, this might imply a decision to take a dispute to court : informally, two managers who quickly realize that they cannot reach agreement about a working problem may jointly agree to stop wasting time in argument and refer the matter to a senior manager for resolution.

It is good to follow the general rule :

Do not negotiate unless you have to – or unless you can obtain some direct or indirect advantage by doing so.

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