Negotiations are a part of life, from deciding where to go on holiday with your family to making a multi-million dollar deal in business. We negotiate everyday.

In the modern world, where companies do business in different countries, it is important for you to not only know how to negotiate in English, but also to know the meaning of the vocabulary which is used when doing it.

In this first of two online exercises on business negotiation vocabulary, we will both look at and I will explain the meaning of fundamental/essential vocabulary in English for negotiations. In addition, we will also look at the names of basic negotiation strategies and tactics.

Click here to go to the second part of this 'Essential negotiation vocabulary' exercise

In addition, if you want to improve your knowledge of both strategies and the English phrases to use in different negotiation situations, have a look at our other online exercises. These include exercises on delaying in neogiations and making a deal in neogiations and convincing people to buy and finally dealing with unreasonable demands in negotiations.

Exercise: Negotiation advice

In the following conversation, Sally the sales manager for a large English company advises Geoff a new sales executive what he should do in his first negotiation.

From the context, try to guess what the meaning of the words/phrases in bold are. Then do the quiz at the end to check if you are right.

Geoff:'Hi Sally, you wanted to have a word.'

Sally:'Yes Geoff, take a seat. I know that you are going to enter your first negotiation next week and I just wanted to go over a few things with you. I know it's obvious, but the main purpose of a negotiation is to make a deal with the other company. Remember, anything can happen until you have that signed contract in your hands. So be prepared and do your homework about the company, what they want, what they need and who our competitors are before you start.

Also, be aware that you're representing our company and that both our and your reputation is very important. I don't want you being aggressive and bullying them into signing the contract. It's not good business. Try to persuade them that they are getting the best service from ourselves. In this type of negotiation, we're not looking for one-off deals, we're looking to build up trust and confidence with them and obtain follow on business in the future with them. So don't try to negotiate for a zero-sum game.'

Geoff:'Sorry Sally, but what does zero-sum game mean?'

Sally:'It means that one side wins and the other side loses. It's good for one-off deals but it's the worst thing you can do when you want to build up a relationship. So negotiate for a win-win result, where we both benefit from the deal.

Because we're looking for follow on business from them, our margin on the deal doesn't need to be very high. But do not make a deal where we make a loss. All negotiations are about give and take, they will make a demand for more than we offer and you'll agree to it if they do something in exchange. I have no problem in you doing that. They will certainly ask for a reduction in the price they will pay for the whole project.

When they do, tell them the price is the price. That we can only do it for the price they want to pay if there is a reduction in either the services they'll receive or in the scope or size of the project. Make them aware that there will be a trade-off between the price they are willing to pay and the level of support, service or functionalities we can provide. This is normal when negotiating and it usually ends with each side reaching a compromise, in which both parties are satisfied, although both haven't got their ideal price or service level.'

So just keep me updated on what happens. And if you have any problems, let me know.'



Quiz:

Below is a definition/description of each of the words/phrases in bold from the above text (which you can also find in the grey box below). Answer each question with one of these words/phrases in bold. Only use one word/phrase once and write it as it is in the text. Click on the "Check" button at the bottom of the quiz to check your answers.

When the answer is correct, two icons will appear next to the answer. The icon contains extra information on the word/phrase. In the icon, you can listen to the pronunciation of the word/phrase.

Words/phrases to use in the quiz

1. When both sides/parties benefit in a deal/agreement, is a/an

         

Win-win:
(adjective) This is normally called in negotiations a 'win-win situation'. It means that both sides/parties have achieved benefits from an agreement or contract they have signed. The opposite is a 'zero-sum game', where one side/party benefits a lot more than the other in an agreement or contract. In Spanish: "situatión donde todos salen ganando".

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2. Another word for an agreement, is

         

Deal:
(noun) 'Deal' and 'agreement' are basically the same. It is when two different sides/parties agree to do something (e.g. one buys something from the other). 'Deal' is more commonly used in the sales environment than agreement. Normally the purpose of negotiations is for a deal or agreement. To say that this has been achieved, both deal and agreement are used with the verbs 'to reach' or 'to make', e.g. 'We've made a deal about the house price'. In Spanish: "trato/acuerdo".

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Deal:
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3. When two companies reach an agreement by making concessions, they make a/an

         

Compromise:
(noun) A 'compromise' has a similar meaning to a 'concession'. In business negotiations most agreements are reached after both parties have made compromises. This is when the two side/parties sacrifice some things they would like to have, in order to make a deal. The verb 'to reach' is used with compromise to mean 'to achieve' or 'to agree', e.g. 'Both sides have now reached a compromise'. It is also a verb 'to compromise'. It does not mean 'commitment'. In Spanish: "un arreglo".

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4. When you get less of one thing in order to get more of another, it is called a/an

         

Trade-off:
(noun) This has a similar meaning to 'compromise'. It means that you obtain less benefit from one thing in order to get more benefit from another. For example, when buying a computer there is a 'trade-off' between price and quality/speed. The more you pay, the quicker and better is the computer. So, although you have a better computer, you have spent more money. 'Trade-off' is normally followed by 'between' and then the objects, e.g. 'It's your choice, but remember there's a trade-off between the price and the quality of service' In Spanish: "intercambiar una cosa por otra".

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5. The name of a negotiation strategy where both sides make compromises/concessions, is

         

Give and take:
(phrase) This is a strategy or approach to negotiations where both sides/parties make concessions or compromises. It means that there is flexibility in what people will agree to. For example, If one side offers to pay $300,000 for a house, the seller may refuse and say $320,000 and then offer to now include the furniture in the price. In Spanish: "concesiones mutuas".

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6. The overall size and purpose of a project, is called its

         

Scope:
(noun) This is commonly used in business English to mean the size, extent, requirements and the aim/purpose of a project, e.g. 'the scope of the project will be to replace the existing equipment in the whole of Europe'. In Spanish: "ambitó".

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7. A commonly used word in negotiations that basically means 'the amount of profit', is

         

Margin:
(noun) 'Margin' is a short version of 'profit margin'. It means the percentage of profit after tax that is generated from a deal or sale. Generally, companies want to have a good profit margin on each deal they make. In Spanish: "margen de beneficio".

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Margin:
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8. When you try to intimidate or force somebody into making a deal, is

         

Bullying:
(noun) It is also a verb 'to bully'. In the context of negotiations, it means to be very aggressive with the other side/party and to intimidate or force them to make a deal. This is the opposite to 'persuade' or 'convince'. This is not a very common technique in business negotiations. In Spanish: "acoso".

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9. A very formal word to call the 'groups' and 'sides' in a negotiation, is

         

Parties:
(noun) Although 'side/sides' is more commonly used in business English to call the two groups involved in a negotiation, in legal documents, like contracts, they are always called 'party/parties'. In Spanish: "grupo/parte".

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10. Buying a house is normally this type of deal

         

One-off deals:
(noun) A 'one-off deal' is when there is no or little possibility of being involved in negotiations with the other side/party in the future. This is very common when you buy a house/flat or some other object for personal use. As a consequence, the negotiations can be very aggressive. In Spanish: "transacción/trato única".

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11. An informal way to say 'research', is

         

Homework:
(noun) 'Homework' is commonly used in business English to mean 'research' about a company, product, procedure etc... The reason you do it, is so you are prepared when you meet customers or others in meetings, negotiation, interviews etc... It is generally used with the verb 'to do', e.g. 'do your homework before you meet with them'. In Spanish: "investigación".

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Homework:
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12. The name of a legal document where an agreement is written, is a/an

         

Contract:
(noun) This legal document is used when two different sides/parties make an agreement. This document makes the agreement official and legal. In Spanish: "contrato".

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Contract:
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13. When one deal leads to more deals with the same person or company, is

         

Follow on business:
(phrase) It basically means to make 'additional deals' with the same company or person after signing the first contract. Most companies hope for this additional or 'follow on business' when they enter negotiations. As a consequence, in most business negotiations companies often use a win-win strategy in order to not annoy the other party and lose future business. In Spanish: "tratos/acuerdos comerciales adicionales".

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14. Another way to say 'convince', is

         

Persuade:
(verb) The infinitive is 'to persuade'. It means you convince somebody to do something by using a mixture of logic, reason and charm. 'Persuasion' is possibly the most important ability to have for a salesman or a negotiator. It's the opposite of 'bullying'. In Spanish: "persuadir".

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15. When one side benefits a lot more than the other in a deal, is a negotiation strategy called

         

Zero-sum game:
(noun) This is commonly used to describe the strategy or type of negotiation where one side/party wins (or benefits more than it should) and the other side/party loses (or benefits less than it should) in a deal or agreement. This type of strategy is very common in one-off negotiations, where there is little possibility of further deals in the future. In Spanish: "juego de suma cero".

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Practice

Now that you understand the meaning of the words/phrases and when to use them, practise using them by creating your own sentences with them in English. Also click on the icon next to each correct answer and listen how each is pronounced correctly.