Negotiation - Distributive Bargaining

NegotiatingNegotiatingNegotiatingNegotiating

Strategy and Tactics of Strategy and Tactics of gyDistributive Bargaining

gyDistributive Bargaining

Siena Heights UniversitySiena Heights UniversityProfessor WallaceProfessor Wallace

(Lewicki, Saunders & Barry. 2011)

Importance of Understanding Importance of Understanding 2-2 gDistributive Bargaining

gDistributive Bargaining

1 Multiple situations1 Multiple situations1. Multiple situations2. Counter strategies1. Multiple situations2. Counter strategiesg3. Skills potential for

“ l i i l ”

g3. Skills potential for

“ l i i l ”“claiming-value” stage“claiming-value” stage


SituationsSituations2-3

SituationsSituations

Goals of one party are in fundamental &Goals of one party are in fundamental &in fundamental & direct conflict to another party

in fundamental & direct conflict to another partyanother partyResources are fixed and limited

another partyResources are fixed and limitedand limitedMaximizing one’s

h f

and limitedMaximizing one’s

h fown share of resources is the goal f b th ti

own share of resources is the goal f b th ti


for both partiesfor both parties

The Distributive Bargaining The Distributive Bargaining 2-4g gSituation

g gSituation

Situation includes:St ti i t

Situation includes:St ti i tStarting points (initial offers)Starting points (initial offers)Target pointsResistance pointsTarget pointsResistance pointsResistance points (walkaway)Resistance points (walkaway)Alternative outcomesAlternative outcomes


outcomesoutcomes

The Distributive Bargaining The Distributive Bargaining 2-5

SituationSituation

Party A - Seller

Walkaway Point Target Point Asking Price

Initial Offer Target Point Walkaway Point


Party B - Buyer

The Role of Alternatives to a The Role of Alternatives to a 2-6

Negotiated AgreementNegotiated AgreementAlternatives give the negotiator power to walk away from theAlternatives give the negotiator power to walk away from thepower to walk away from the negotiation

If attractive negotiators

power to walk away from the negotiation

If attractive negotiatorsIf attractive, negotiators can:

Set their goals higher

If attractive, negotiators can:

Set their goals higherSet their goals higherMake fewer concessions

If tt ti

Set their goals higherMake fewer concessions

If tt tiIf unattractive :Negotiators have much less b i i

If unattractive :Negotiators have much less b i i


bargaining powerbargaining power

The Distributive Bargaining The Distributive Bargaining 2-7g gSituation

g gSituation

Party A - Seller

Walkaway Point Target Point Asking Price

AlternativeAlternative

Alternative

Party B Buyer

Initial Offer Target Point Walkaway Point


Party B - Buyer

Fundamental StrategiesFundamental Strategies2-8

Fundamental StrategiesFundamental Strategies

Push for settlement near opponent’s resistance pointPush for settlement near opponent’s resistance pointpGet the other party to change their resistance point

pGet the other party to change their resistance pointresistance pointIf settlement range is negative, either:

G h h id h h i i

resistance pointIf settlement range is negative, either:

G h h id h h i iGet the other side to change their resistance pointM dif i t i t

Get the other side to change their resistance pointM dif i t i tModify your own resistance point

Convince the other party that the Modify your own resistance point

Convince the other party that the


settlement is the best possiblesettlement is the best possible

Keys to the StrategiesKeys to the Strategies2-9

Keys to the StrategiesKeys to the Strategies

The keys to implementing an of the fo r strategiesThe keys to implementing an of the fo r strategiesany of the four strategies are:any of the four strategies are:

Discovering the other party’s resistance pointDiscovering the other party’s resistance pointparty s resistance pointInfluencing the other

’ i i

party s resistance pointInfluencing the other

’ i iparty’s resistance pointparty’s resistance point


Tactical Tasks of NegotiatorsTactical Tasks of Negotiators2-10

Tactical Tasks of NegotiatorsTactical Tasks of Negotiators

Assess outcome values and th t f t i ti fAssess outcome values and th t f t i ti fthe costs of termination for the other partythe costs of termination for the other partyManage the other party’s impressionsManage the other party’s impressionspModify the other party’s perceptions

pModify the other party’s perceptionsperceptionsManipulate the actual costs f d l i i

perceptionsManipulate the actual costs f d l i i


of delay or terminationof delay or termination

A th Oth P tA th Oth P t2-11

Assess the Other PartyAssess the Other Party

Target, Resistance Point, and Costs of Terminating Negotiations

IndirectlyDetermine data used to

IndirectlyDetermine data used to

Negotiations

Determine data used to set:

T t

Determine data used to set:

T tTargetResistance pointsTargetResistance points

DirectlyOpponent reveals the

DirectlyOpponent reveals the


ppinformation

ppinformation

Manage ImpressionsManage Impressions2-12

Manage ImpressionsManage Impressions

Filter your behavior:Filter your behavior:Say and do as little as possibleSay and do as little as possible

Direct action to alter Direct action to alter impressions

Present facts that enhanceimpressions

Present facts that enhancePresent facts that enhance one’s positionPresent facts that enhance one’s position


Modify PerceptionsModify Perceptions2-13

Modify PerceptionsModify Perceptions

Make outcomes appear less i

Make outcomes appear less iattractive

Make the cost of obtaining attractiveMake the cost of obtaining ggoals appear higherM k d d d

ggoals appear higherM k d d dMake demands and positions appear more or Make demands and positions appear more or less attractive to the other party – whichever suits your less attractive to the other party – whichever suits your


p y yneedsp y yneeds

Manipulate Costs of Manipulate Costs of 2-14pDelay or Termination

pDelay or Termination

Plan disruptive actionPlan disruptive actionRaise the costs of delay to the other party

Form an alliance with outsidersRaise the costs of delay to the other party

Form an alliance with outsidersForm an alliance with outsidersInvolve (or threaten to involve) other parties who can influence the outcome in

Form an alliance with outsidersInvolve (or threaten to involve) other parties who can influence the outcome inparties who can influence the outcome in your favor

S h d l i l i

parties who can influence the outcome in your favor

S h d l i l iSchedule manipulationsOne party is usually more vulnerable to

Schedule manipulationsOne party is usually more vulnerable to


p y ydelaying than the other

p y ydelaying than the other

PositionsPositions2-15

PositionsPositions

Opening offersOpening offersWhere will you start?

Opening stanceWhere will you start?

Opening stanceOpening stanceAttitude?

Opening stanceAttitude?

Competitive? Moderate?

Initial concessionsCompetitive? Moderate?

Initial concessionsShould any be made? If so how large?Should any be made? If so how large?


so, how large?so, how large?

P iti D i N ti tiP iti D i N ti ti2-16

Positions During NegotiationsPositions During Negotiations

The role of concessionsWi h h h i i h

The role of concessionsWi h h h i i hWithout them, there is either capitulation or deadlockWithout them, there is either capitulation or deadlock

Patterns of concessionThe pattern contains valuable

Patterns of concessionThe pattern contains valuableThe pattern contains valuable information

Final offers (commitment)

The pattern contains valuable information

Final offers (commitment)Final offers (commitment)“This is all I can do”

Final offers (commitment)“This is all I can do”


C it t T ti lC it t T ti l2-17

Commitments: TacticalCommitments: Tactical

Establishing a commitmentTh i

Establishing a commitmentTh iThree properties:

FinalityThree properties:

FinalitySpecificity ConsequencesSpecificity ConsequencesConsequences

Preventing premature i

ConsequencesPreventing premature

icommitmentTheir commitment reduces

commitmentTheir commitment reduces


your flexibilityyour flexibility

C ti C it tC ti C it t2-18

Creating CommitmentCreating Commitment

Public pronouncementPublic pronouncementLinking with an outside baseLinking with an outside basebaseIncrease the

i f

baseIncrease the

i fprominence of demandsprominence of demandsReinforce the threat or promiseReinforce the threat or promise


promisepromise

Commitments: TacticalCommitments: Tactical2-19

Commitments: TacticalCommitments: Tactical

Ways to abandon a committed positionWays to abandon a committed positioncommitted position

Plan a way outcommitted position

Plan a way outLet it die silentlyRestate the commitment inLet it die silentlyRestate the commitment inRestate the commitment in more general termsMinimize the damage to the

Restate the commitment in more general termsMinimize the damage to theMinimize the damage to the relationship if the other backs off

Minimize the damage to the relationship if the other backs off


backs offbacks off

Closing the DealClosing the Deal2-20

Closing the DealClosing the Deal

Provide alternatives Provide alternatives (2 or 3 packages)Assume the close(2 or 3 packages)Assume the closeAssume the closeSplit the differenceAssume the closeSplit the differenceExploding offersDeal s eetenersExploding offersDeal s eetenersDeal sweetenersDeal sweeteners


H db ll T tiH db ll T ti2-21

Hardball TacticsHardball Tactics

Four main options:Four main options:Ignore themDiscuss themIgnore themDiscuss themDiscuss themRespond in kindDiscuss themRespond in kindCo-opt the other party (befriend Co-opt the other party (befriend p y (them)p y (them)


Typical Hardball TacticsTypical Hardball Tactics2-22

Typical Hardball TacticsTypical Hardball Tactics

Good Cop/Bad Copb ll/ i hb ll

Good Cop/Bad Copb ll/ i hb llLowball/Highball

Bogey (playing up anLowball/HighballBogey (playing up anBogey (playing up an issue of little importance)

Bogey (playing up an issue of little importance)importance)The Nibble (asking importance)The Nibble (asking for a number of small concessions to)for a number of small concessions to)


))

T i l H db ll T iT i l H db ll T i2-23

Typical Hardball TacticsTypical Hardball Tactics

Chickeni id i

Chickeni id iIntimidation

AggressiveIntimidationAggressiveAggressive BehaviorS J b

Aggressive BehaviorS J bSnow Job (overwhelm the Snow Job (overwhelm the other party with information)other party with information)


))

SS2-24

SummarySummary

Negotiators need to:Set a clear target and

Negotiators need to:Set a clear target andSet a clear target and resistance pointsSet a clear target and resistance pointsUnderstand and work to improve their BATNAUnderstand and work to improve their BATNApStart with good opening offer

pStart with good opening offerMake appropriate concessionsManage the commitmentMake appropriate concessionsManage the commitment


Manage the commitment processManage the commitment process

Negotiation - Distributive Bargaining

Education

Transcript of Negotiation - Distributive Bargaining