Leverage

In negotiation, leverage is the power that one side of a negotiation has to influence the other side to move closer to their negotiating position. A party's leverage is based on its ability to award benefits or impose costs on the other side. Another conceptualization holds that the party that has the most to lose from a "no deal" outcome has less leverage than the party that has the least to lose. Leverage has been described as "negotiation's prime mover," indicating its important role in bargaining and negotiation situations. Individuals with strong leverage can sometimes overcome weak negotiating skills, whereas those with poor leverage have a reduced likelihood of being successful even if they have strong negotiating skills. Bargaining power It is said that those that one has discretion over can provide leverage and this can be demonstrated in the way advertising time sellers have bargaining power at holiday time or television shows if their advertisement slots are full. In order for a negotiating side's leverage to work in their favor, the threats or promises they put forth must be perceived as credible by the opposing group. This does not mean that the threats and promises have to be based in facts, but the opposing group must believe that a specific threat or promise can be carried out and that it would make them better or worse off compared to the other side. Leverage can be measured qualitatively in terms of how much one side has to lose from not coming to an agreement. Generally, the side or group that is most in need of an agreement has the least leverage. The side or group that is willing to walk away (when this is a possibility) has the most leverage.