Negotiation is a part of everyday life. Whether you’re discussing a raise with your boss, convincing a supplier to lower prices, or simply deciding on a family vacation destination, you’re negotiating more often than you think! But not all negotiations are the same. Two major types exist: internal negotiations (within an organization or group) and external negotiations (with outside parties, such as clients, suppliers, or competitors). Understanding their differences can help you approach each more effectively.
What is Internal Negotiation?
Internal negotiation happens within a company, team, or organization. It usually involves colleagues, managers, or different departments working together to align interests and achieve a common goal.
Examples of Internal Negotiation:
- Budget Allocation – The marketing team negotiates with finance to get more budget for an ad campaign.
- Project Timelines – The engineering team negotiates with sales to adjust deadlines for product delivery.
- Salary Raises & Promotions – An employee discusses their raise with HR or their manager.
Challenges in Internal Negotiations:
- Power Dynamics – Negotiating with your boss is different from negotiating with a peer.
- Long-Term Relationships – You’ll still work with these people after the negotiation, so keeping relationships positive is crucial.
- Bureaucracy & Policies – Internal rules and approvals can limit negotiation flexibility.
Key Strategies for Internal Negotiation:
Focus on Collaboration – Since you’re all on the same team, work towards a win-win solution.
Use Data & Logic – Decisions in companies are often based on numbers, so present strong evidence.
Maintain Relationships – You’ll see these colleagues again, so keep it professional and positive.
What is External Negotiation?
External negotiation happens between an organization and outside parties such as customers, suppliers, business partners, or even competitors.
Examples of External Negotiation:
- Pricing Deals – A company negotiates bulk discounts with a supplier.
- Contract Agreements – A business discusses terms with a vendor before signing a contract.
- Sales Deals – A customer negotiates with a car dealer for a better price.
Challenges in External Negotiations:
- Lack of Trust – External parties may not share your interests or goals.
- Competitive Nature – Each side is trying to get the best deal for themselves.
- Legal & Contractual Constraints – Formal agreements make negotiations more complex.
Key Strategies for External Negotiation:
Know Your BATNA (Best Alternative to a Negotiated Agreement) – If the deal doesn’t work, what’s your next best option? Build Rapport & Trust – Strong relationships can lead to better deals and future partnerships. Be Willing to Walk Away – Sometimes, the best negotiation tactic is knowing when to say no.
Key Differences Between Internal & External Negotiations
| Feature | Internal Negotiation | External Negotiation |
|---|---|---|
| Who’s Involved? | Colleagues, managers, departments | Clients, suppliers, competitors |
| Relationship | Long-term, ongoing | Can be short-term or long-term |
| Goal | Aligning internal interests | Getting the best possible deal |
| Challenges | Office politics, bureaucracy | Lack of trust, competitive dynamics |
| Strategy Focus | Collaboration & compromise | Persuasion & leverage |
Final Thoughts
Both internal and external negotiations require different approaches, but mastering both can make you a strong negotiator in any situation. Internal negotiations demand teamwork and long-term thinking, while external negotiations require strategic positioning and the ability to advocate for your interests effectively. By understanding these differences and practicing key negotiation skills, you can navigate business (and life!) with confidence.
So next time you find yourself in a negotiation—whether with your boss or a vendor—pause and ask yourself: Is this an internal or external negotiation? Adjust your approach accordingly, and you’ll be in a much stronger position to succeed!
Photo by Pavel Danilyuk: https://www.pexels.com/photo/shallow-focus-of-two-people-handshaking-5520322/