ZOPA – “Zone of Potential Agreement”
-
Upload
jermaine-riviere -
Category
Documents
-
view
113 -
download
3
description
Transcript of ZOPA – “Zone of Potential Agreement”
![Page 1: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/1.jpg)
![Page 2: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/2.jpg)
ZOPA – “Zone of Potential
Agreement”What is a ZOPA?The area where two or more parties to a negotiation have common ground, in which an agreement can be met. In other words, where a deal or settlement is possible.
Outside of the zone, no amount of negotiation will yield an agreement.
![Page 3: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/3.jpg)
Example: Buying a carOn one side, you have the sellerOn the other, you have the buyer
The seller is looking to sell a car for $4,500 or more
The buyer is looking to buy a car for $5,000 or less
Notice that there is an area of overlap between the buyer and seller's interest. This overlap of $500 represents the "Zone of Potential Agreement."
![Page 4: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/4.jpg)
Price
Inte
rest
Rate
Seller’s Reservation Line
![Page 5: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/5.jpg)
Price
Inte
rest
Rate
Buyer’s Reservation Line
![Page 6: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/6.jpg)
Price
Inte
rest
Rate
ZOPA – “Zone of Potential Agreement”
![Page 7: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/7.jpg)
Price
Inte
rest
Rate
Seller’s First Offer
Buyer’s First Offer
![Page 8: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/8.jpg)
Price
Inte
rest
Rate
Seller’s First Offer
Buyer’s First Offer
Feasible Deal Structures
Happy AgreementFace
![Page 9: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/9.jpg)
Identifying the ZOPA is important for effectively reaching an agreement.
Going into a negotiation, you probably have a good idea of how much or how little you are willing to spend; however, you need an idea of what your counterpart's highs and lows are to determine the ZOPA. Exploring or investigating your counterpart's interests or options will help you determine the ZOPA. Once the ZOPA is identified, the negotiation has a better chance of reaching an agreement.
Consider the Following Video...
![Page 10: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/10.jpg)
http://www.youtube.com/watch?v=MTf3YDNAT70
WARNING: The follow video contains language that may be offensive.
![Page 11: ZOPA – “Zone of Potential Agreement”](https://reader030.fdocuments.in/reader030/viewer/2022012400/568130a1550346895d969e4d/html5/thumbnails/11.jpg)
ZOPA