What does ‘bargaining power’ refer to in negotiations?

Bargaining power refers to the ability to influence the terms of a negotiation based on leverage. This concept is crucial because it reflects how much influence one party can exert over the other during negotiations. Factors contributing to bargaining power may include the necessity of the agreement, alternatives available to both parties, and the urgency of their needs. A party with strong bargaining power can negotiate more favorable terms, while a party with weaker bargaining power may have to concede more to reach an agreement. Understanding bargaining power helps identify strategies that can enhance one's position in negotiations, making it a fundamental aspect of effective negotiation tactics.