Effective Preparation for a Negotiation:Assessment of the Situation
Along with understanding yourself and the counterparty, a successful negotiator must also understand the overall situation in which the negotiation is taking place.
This is the third pillar of effective preparation.
Assessment of the situation means analyzing the context, environment, and external factors that influence the negotiation.
Let’s break it down.
🔵 1. What Is the Overall Context of the Negotiation?
Ask yourself:
- Why are we negotiating?
- What problem or opportunity brought us here?
- Is this a new relationship or a long-term partnership?
- Is this a routine negotiation or a high-stakes one?
The context shapes your approach.
For example, a long-term partnership requires more collaboration and trust-building than a one-time deal.
🟦 2. What Is the Market or Industry Condition?
External conditions can impact the negotiation.
Consider:
- Is the market competitive or stable?
- Are prices rising or falling?
- Are there many alternatives available?
- Is technology changing rapidly?
These factors influence power and urgency on both sides.
🟫 3. What Is the Power Balance Between Both Parties?
Power plays a crucial role in negotiation.
Ask:
- Who has more alternatives?
- Who is more dependent on this deal?
- Who has more information or expertise?
If power is balanced, cooperation becomes easier.
If power is one-sided, strategy must be adjusted.
🟩 4. What Are the Time Pressures?
Time pressure changes negotiation behavior.
Ask:
- Is there a deadline?
- Who is under more time pressure?
- Can the negotiation be delayed?
The party with less time usually has less power.
🟧 5. What Risks and Opportunities Does the Situation Create?
Evaluate:
- What happens if the negotiation succeeds?
- What happens if it fails?
- What risks must be prevented?
- What opportunities can be created?
This helps you decide how aggressive or flexible you should be.
🔷 Why Situation Assessment Matters
When you understand the situation fully, you can:
✔ Choose the right strategy
✔ Avoid surprises
✔ Understand pressures on both sides
✔ Identify opportunities others may miss
✔ Predict realistic outcomes
✔ Keep the negotiation grounded and practical
A smart negotiator not only understands people, but also understands the environment.