MODULE FIVE

NEGOTIATIONS AND BUSINESS COMMUNICATION

5.0 Learning Objectives

By the end of this chapter, learners should be able to:

i. Explain key negotiation strategies and tactics in business.

ii. Compare traditional and modern business communication methods.
iii. Apply effective communication skills in negotiation scenarios.
iv. Develop a negotiation plan using appropriate communication tools.
v. Assess cultural and ethical factors in Nigerian business negotiations.

5.1 Introduction

Business negotiations are a diversified process, which combine different, and at the same time
conflicting, interests of the negotiating parties. The success of business negotiations and
meetings is highly dependent on communication competence, knowing the psychology of the
other person or negotiating partner and, at the same time, keeping in mind the interests of the
organization each person is representing. To manage this process properly, one needs to
understand the basics of communication, as well as be able to value verbal and non-verbal
communication signs and expressions. At the same time, one must be able to arrange a system
to prepare interviews and negotiations, in addition to receiving and providing information to
demonstrate one’s positions. Negotiation and communication are foundational skills every
entrepreneur must master to start, grow, and sustain a venture. This module explores
negotiation strategies and tactics, differences between traditional and modern business
communication methods, and practical applications relevant to Nigerian entrepreneurs, with
international perspectives where appropriate.

5.2 Negotiation in Business

Meaning and Purpose of Negotiation

Negotiation is a structured interaction between two or more parties aimed at reaching a

mutually acceptable agreement on one or more issues. It is a fundamental business process
used when interests are divergent but a mutual outcome is beneficial. Negotiation in business
is about reaching an agreement where both parties accept outcomes that help their core
interests. This suggest therefore that a negotiating entity had to know how to find a compromise
option which could best meet their goals and interests. Negotiating parties must know how to
seek alternative solutions, evaluate them, compare with each other, and select the best,
acceptable for both sides (Bailenson et al. 2005). It is then imperative for parties to manage the
process of negotiating, prepare for the negotiations as a process of finding solutions, to be able
to choose the most effective negotiating strategies and tactical marketing steps to plan the
negotiation phases and stages.

Key Negotiation Strategies

Negotiation as highlighted is a process where every party seek the best available option for
itself. In the bid to reach that goal, they must select the best strategy that assist them in
achieving that goal. Here are practical strategies entrepreneurs can use:

i. Integrative Strategy: This strategy is called a win-win strategy because it allows

for both parties to collaborate and expand mutual value. A good example would be
that of a Nigerian SME in Lagos negotiating a distribution deal with a retail chain
while focusing on quantity and distribution logistics rather than just price to create
joint growth opportunities.
ii. Distributive Strategy: Known also as the win-lose whereby one party maximizes
its share of limited resources. This could be useful in one-off commodity price
negotiations e.g., negotiating commodity prices in the market
iii. Relationship-Building Strategy: In Nigeria, relationships often precede business
decisions. Entrepreneurs invest time in personal interactions before formal
negotiations. Building trust signals respect and improves deal outcomes.
iv. Patience as Strategy: Successful negotiators understand that in Nigerian culture
negotiations may take multiple meetings over weeks. Patience is a practical
advantage, signaling respect and commitment to partnership.

5.4 Negotiation Tactics

Tactics are actions and micro-behaviors used within the negotiation process. These should be
adopted to help the parties achieve their objectives. They include:

a) Anchoring: by anchoring, we mean being the first to make an offer. This is very
essential to a negotiating party because it serves as a reference point.
b) Alternative: Knowing your fallback option in the event of non-agreement gives
confidence and leverage.
c) Active Listening: Giving full attention to uncover hidden interests or priorities.
d) Concessions and Reciprocity: Making small initial concessions to build goodwill
and expect reciprocation. Offering certain terms can lead to better pricing or priority
delivery from suppliers.
e) Delaying Tactics: Delaying decisions strategically creates leverage or additional
information flow when beneficial.

5.5 Stages of Negotiation

Negotiation is a process involving multiple stages

1. Preparation: Clavell (1983) said “If you know the enemy and know yourself, you need
not fear the result of a hundred battles. If you know yourself but not the enemy, for
every victory gained you will also suffer a defeat. If you know neither the enemy nor
yourself, you will succumb in every battle.” Persons who thoroughly prepare for
bargaining encounters generally achieve more beneficial results than those who do not,
because knowledge constitutes power at the bargaining. Well prepared negotiators
possess the knowledge they need to value their impending interactions, and they exude
a greater confidence in their positions than their adversaries.
2. Opening & Relationship Building: Negotiations typically begin with informal
conversations, greetings, and social interaction before business matters are discussed,
as this helps to establish trust and mutual respect. Parties may exchange pleasantries
 about family, health, or general wellbeing to create a friendly atmosphere. This stage is
critical because strong relationships often determine how flexible and successful later
negotiations will be.
3. Bargaining: At this stage, the parties formally exchange proposals, counter-offers, and
supporting arguments. Questions are asked to clarify interests, while negotiation tactics
such as concessions, anchoring, and persuasion are applied. Effective bargaining
focuses on reaching a balance between asserting one’s interests and maintaining
goodwill.
4. Agreement & Closure: Once consensus is reached, the agreement is confirmed
verbally to ensure mutual understanding and commitment. The terms are then
documented in written form such as contracts, memoranda of understanding, or letters
of agreement. Formal documentation reduces misunderstandings and provides legal
protection for all parties.
5. Implementation & Follow-Up: After the agreement, each party carries out its
obligations as specified in the contract. Performance is monitored to ensure compliance
with agreed terms and timelines. Continuous follow-up and communication help
sustain the relationship and address any emerging issues early.

5.6 Business Communication Methods

Meaning and Importance

Communication is the act of sending a message through different media; it can be verbal or
nonverbal, formal or non-formal so long as it transmits a thought provoking an idea, gesture,
action, etc. Business communication involves exchanging information inside and outside an
organization to achieve objectives like sales, partnerships, team cohesion, and customer
service. Good communication strategies improve negotiation success, employee coordination,
and customer satisfaction.

Traditional Business Communication Methods

Method Description Strengths Limitations

Face-to-Face Personal interaction in Builds trust; clarifies
Slow, costly.
Meetings real time. subtle cues.
Letters & Written, formal Slow, limited
Clear record.
Memos documentation. reach.
Real-time voice Fast; effective for quick
Telephone Calls No visual cues.
communication. discussions.
Group information in Uniform info Does not foster
Notice Boards
offices. dissemination. dialogue.

Modern Business Communication Methods

Method Description Value
Email Digital written communication. Fast, documented.
Video Conferencing Cross-geographic
Real-time face-to-face virtually.
(Zoom/Teams) collaboration.
Instant Messaging Immediate, informal
Quick messaging.
(WhatsApp) connections.
 Method Description Value
Track interactions with Improves relationship
CRM & Digital Channels
customers/partners. management.

5.6 Communication Skills for Entrepreneurs

For effective communication to take place, entrepreneurs should develop the following skills:

a) Clarity and conciseness.

b) Active listening.
c) Non-verbal awareness.
d) Cultural sensitivity, especially in Nigeria’s diverse context where indirect messaging
and context matter.
e) Multilingual skill, leveraging local languages to connect with customers and partners.

Comparative Analysis
The table below attempted to compare between tradition communication methods and modern
communication methods using five (5) key indicators. From the comparison, one can deduce
that the advantages of modern communications methods are enormous over the traditional
methods.

Aspect Traditional Modern

Speed Slow Fast
Reach Local Global
Record Keeping Manual Digital
Cost High Low
Feedback Delayed Instant

Conclusion
Mastering negotiation and communication enables entrepreneurs to secure better deals by
clearly articulating their interests, understanding the needs of others, and reaching mutually
beneficial agreements. Beyond deal-making, these skills strengthen business relationships,
foster trust, and improve coordination among employees, partners, and stakeholders. As a
result, effective negotiation and communication significantly enhance business growth,
competitiveness, and sustainability in both the Nigerian business environment and the global
marketplace.

References

Aguinis, H.; Simonsen, M. M.; and Pierce, C. A. (1998). Effects of nonverbal behavior on
perceptions of power bases, Journal of Social Psychology 138 (4): 455–469.
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Bailenson, J. N.; Beall, A. C.; Blascovich, J.; Loomis, J.; Turk, M. 2005. Transformed social
interaction, augmented gaze, and social influence in immersive virtual environments,
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Hecht, M. L.; DeVito, J. A.; Guerrero, L. K. (1999). Perspectives on nonverbal communication.
Codes, functions, and contexts. In L.K. Guerrero, J.A. DeVito, and M.L. Hecht (Eds.),
The nonverbal communication reader: Classic and contemporary readings. Prospect
Heights, IL: Waveland. pp. 3–18.