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This presentation on ZOPA Negotiation 101 will aid you in understanding What Is ZOPA Negotiation? In this ZOPA Negotiation Example slides, you will go through the details of how the zone of possible agreement works and why it is important. So, let's get started!
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Meet Steve. He is trying to purchase a new vehicle to gift his brother on the occasion of his birthday.
Steve's parents have given him 20,000 dollars to buy the vehicle. And Steve also has an extra 2,000 dollars to invest in this purchase. 2,000 USD 20,000 USD
Steve came across a few excellent offers for refurbished cars on eBay.
The deal about Jeep’s Wrangler car marked with price 30,000 dollars captured Steve’s attention. 30,000 US Dollars
The seller is looking to sell his car between the range of 21,000 to 30,000 dollars. Price Range 21,000 dollars | 30,000 dollars
Whereas, Steve is looking to buy the car at price ranging between 20,000 dollars to 22,000 dollars.
While negotiating, Steve started assessing what range the seller wants to sell his product at.
Seller knows that he will have to walk away from this deal if the outcome price is closer to his worst-case cost estimation.
The feasible range at which this deal can happen is known as the Zone of Possible Agreement. Seller’s worst case Seller’s Range Seller’s Best case ZOPA Buyer’s Range Steve’s Best case Steve’s Worst case
ZOPA A Zone Of Possible Agreement can exist only if there is some overlap in what both the parties are ready to accept from an agreement. Buyer’s Range Seller’s Range Zone Of Possible Agreement
ZOPA Requirements Values Interests Negotiating counterparts must understand each other's requirements, values, and interests in order to reach a successful agreement.
As Steve’s and seller’s reservation range was overlapping, there was possibility of mutually beneficial agreement. Mutually Beneficial Agreement
The final outcome price of this negotiation was 21,500 dollars, which is a win-win result for both Steve and Seller. 21,500 USD
Understanding your ZOPA can assist you determine whether to accept or reject a deal. As a result, before engaging in a negotiating meeting, you must determine your ZOPA.