top of page
Search

Negotiating With a Power Imbalance

Updated: May 13, 2021

It may be difficult to maintain equal bargaining power when your opponent is a market leader or otherwise calls the shots in the deal. That could weaken your stance and is likely to move the balance of power in their favor.

So, what do you do?

The best way to deal with an unequal power equation is twofold - increasing your power and exploiting the weakness of the other party. Here are some tactics you can use to maintain a semblance of equality even when the opponent is more powerful and influential.

1. Have more than one BATNA*. Research to see how you can improve your own alternatives to the deal. The more number of reasonable options you have to the agreement on hand, the more you are poised to negotiate strongly for your terms; not to mention the psychological edge you have when you know that this is not the only deal in the market.

2. Avoid an adversarial negotiation style. A distributive/ co-operative negotiation style is preferable at the best of times, but is absolutely crucial when you have a powerful opponent. It may be tempting to adapt a competitive negotiation style, to get the first strike advantage but you may be bested if you are pitted against a team of higher caliber or if you have underestimated the other team. Especially, it will do you no favors if it is an unequal arrangement and your opponent has more power in the larger scheme of things. However, don’t let the other party browbeat you either. Be co-operative and politely let them know that you expect the same from them.

3. Understand what the other party wants and why. A great way to gain power in a negotiation with unequal partners is to understand what the other party wants and why. They may be a market leader or the only player in a niche market, but if they are negotiating with you, it means that you have something of value to offer. It is up to you to find out what differentiates you from your competitors in the eyes of the opponent and to play it up to your advantage. Sometimes, it may not be apparent, but a little research can give you a fairly good idea of what motivates the opponent to enter this deal. They may be looking for higher profits, entry into a new market, enlarge their scope of current business or others.

Being aware of this will go a long way towards putting you on fairly equal terms regardless of their size or presence in the market. Once you know the reason why this deal is important for them, you could then try to offer value through this deal and negotiate to help them achieve their goal in return for better terms. Knowing the motivators will help you to address their requirement accurately and to have a better say in the negotiations, because you can structure your terms to a mutually beneficial arrangement.

4. Identify their weakness and capitalize on it. Every party, regardless of how strong it is, has its own weaknesses. In today’s world, it’s not difficult to find out about an organization, with a little research. Capitalize on any weaknesses that the other party may have. It could be in their negotiation strategy, their preparation or the actual deal itself. See how it ties in to the deal you are working on, and use it to your advantage. That will reduce the power they can exert during the negotiation

5. Be well prepared. A high caliber, well-coordinated team with a clear execution strategy can make a huge difference to the final outcome. A well prepared and strategic approach to the deal is the best approach regardless of how powerful a party maybe. An inexperienced or badly prepared team, without a well thought out negotiation strategy can hurt its chances even if it is the more powerful party.

6. Exploit the people influence. Strike a rapport with the opponent. A cordial, friendly ambiance is more conducive to successful negotiation than aggressive posturing. A deal does not work by itself. Even after it is executed, it needs people to run its course. At the end of the day, it’s all about the rapport between the parties before, during and after the contract execution. Regardless of the power equation, if the other party refuses to see you as an equal and is not keen to build a rapport, that could very well be a red flag as to how the deal might eventually turn out, once the agreement is signed. You don’t want a contractual relationship where you are the lesser partner and have to keep looking over your shoulder for the entire duration of the contract for fear of upsetting your powerful and difficult customer.

7. Don’t betray your concerns. Even the toughest of teams have their weaknesses and areas of concern. In fact, the more prepared and aware you are, the clearer your concerns would appear. Once you identify any issues that could affect your negotiation, quietly go about addressing them. Of course, you should have the relevant capabilities to honor the contract once you execute it, and be upfront about your competencies required to do the job. As for other issues that could jeopardize your negotiation, don’t betray them unless they have a bearing on the contract, because your opponent might exploit them to weaken your negotiation. I have seen strong arguments falter simply because the team let their fears get the better of them. The teams stumbled over themselves and the other party seized the opportunity to get several concessions which they might not have gotten otherwise.

8. Have a game plan and stick to it. A smart opponent always capitalizes on a weak team that does not have a common jointed approach, doesn’t co-ordinate well internally or where the team members don’t share the same perspective. Don’t be the team that has no strategy, co-ordination, or betrays its internal skirmishes to its opponent. A shrewd opponent will use miss opportunity to take advantage of your shortcomings. Remember, the deal does not end with the execution of the contract. Rather, it starts at that point. The inability to collaborate with your internal stakeholders could greatly hurt the chances of a getting a good deal, which could lead to less than favorable terms in your agreement. Something that may haunt you for the life-time of the contract.

These are some of the strategies that I have seen, successfully employed by parties to gain leverage in negotiations. Maybe one or more of these tips will help you if you are in a negotiation with a formidable opponent. What challenges did you encounter while negotiating with a powerful opponent and how you did you handle them? Please share your thoughts below.


*BATNA - Best Alternative to the Negotiated Agreement (BATNA). If you wish to know more about BATNA, and why it is important, please refer to my previous article.


9 views0 comments

Recent Posts

See All

Best Practices When Structuring Contracts

https://www.youtube.com/watch?v=0Euwh5aIqp0 ABOUT THE TOPIC: The question is not whether a well-drafted contract is crucial for a successful engagement. Rather, it is how do you draft a contract that

7 Simple (and overlooked) Tips for Successful Deal Making

Contract negotiations could be stressful enough without the added pressure of using the other party’s draft version, or jockeying for control throughout the entire process. While having full control o

Commentaires


bottom of page