Negotiation Strategy

Anchoring negotiations

Negotiations carry out in our daily life from daily personal activities such as grocery shopping in a flea market to business activities such as purchasing, procurement and business agreement for a project. Most of the business negotiations involved at least by two parties to reach a mutual agreement before proceed to formalize in contractual agreement. The negotiations could be included the pricing, terms of payment, timing, emotional hassle, risk, etc. Negotiation skills are very important in decisions making. Most of the negotiations involved anchoring negotiations. The term ‘Anchoring’ was extracted from the word ‘Anchor’ which is a metal to moor a ship to the sea bottom to secure the ship firmly in position. We define anchoring as a reference point to outline basic constraints and certain values at the beginning of the negotiations and therefore to make adjustment based on the reference point. There are two type of anchor in sales negotiations, which is opening offer and non-opening offer, which normally often occurs during the first offer in the beginning of a negotiation.

We believe that the anchoring effect in negotiations is the situation where we estimate the item’s true value in our hand. “Anchoring” has the ability to greatly affect the true value of an item, in the other words, the concept of “anchoring” plays an important role in developing an induced starting point from which they are then able to affect the opponent’s offer.

The concept of ‘anchoring and adjusting’ is a key when using anchoring negotiations. We also call this ‘offering and counter offering’. In this process, the first offer (anchor) to be used in determining the adjustment to be made for the counter offer. Basically the process of ‘anchoring and adjusting’ to be carried out a few times before both party of negotiators achieve an agreement that reach the most mutually beneficial. However, most of the time, the initial offer (anchor) has the stronger...