Negotiation: Integrative and Distributive Bargaining

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Negotiation Integrative and Distributive
Bargaining
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• Negotiation is an interpersonal decision-making
  process by which two or more people agree how to
  allocate scarce resources
• Two Main Types of Negotiation
• Adversarial (Win-Lose) Negotiation is a contest.
  Each side pursues its own interests at the
  expense of the other, if necessary.
• Cooperative (Win-Win) Negotiation is a
  collaboration. Both sides work together for
  mutual satisfaction.

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• Distributive Bargaining Slicing the Pie
• also known as competitive, adversarial, or
  win-lose bargaining
• the goals of one party are usually in fundamental
  and direct conflict with the goals of the other
  party
• resources are fixed limited, and both parties
  want to maximize their share of the resources
• one party tries to give information to the other
  party only when it provides a strategic advantage

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• negotiation power depends on the information one
  can gather about the other party
• negotiating parties focus much on their
  differences that they ignore what they have in
  common

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Why study Distributive Bargaining?

1. Some interdependent situations you face ARE
   distributive and to do well you need to
   understand how they work.
2. Some negotiators will use DB strategies and
   tactics exclusively so need to know how to
   counter their effects.

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Distributive Bargaining Problem

• DB can often be costly and counterproductive.
  Often cause the negotiating parties to focus so
  much on their differences that they ignore what
  they have in common.
• People issues often arise as a result of
  selfish perception of negotiation (reputation
  and trust)

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When is Distributive Bargaining effective for you

• Distributive Bargaining strategies and tactics
  are quite useful when a negotiator wants to
• maximize the value obtained in a SINGLE DEAL
• the relationship is UNIMPORTANT

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Integrative Bargaining
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• Integrative Bargaining
• Expanding the Pie
• also known as cooperative, collaborative,
  win-win, mutual gains, or problem solving
  bargaining
• the goals of the parties are not mutually
  exclusive (i.e. one partys gain is not at the
  other partys expense)
• negotiating parties focus on commonalities rather
  than differences

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• negotiators attempt to address needs and
  interests, not positions
• both parties willingly exchange information and
  ideas
• negotiators invent options for mutual gain
• negotiators use objective criteria for standards
  of performance

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• Key Steps in the Integrative Negotiation Process
• Identify and define the problem
• Understand the problem and bring interests and
  needs to the surface
• Generate alternative solutions to the problem
• Evaluate those alternatives and select among
  them

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• Brainstorming Guidelines
• Avoid judging or evaluating solutions
• Separate the people from the problem
• Be exhaustive in the brainstorming process
• Ask outsiders

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Overview Integrative Negotiation Process

1. Create a Free Flow of Information
2. Attempt to Understand the Other Negotiators Real
   Needs and Objectives (Interests-Positions)
3. Emphasize What is in Common Between Parties and
   Minimize the Differences
4. Search for Solutions That Meet Goals/Objectives
   of Both Sides

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10 Factor Framework

• Negotiating goals
• Attitudes to negotiation process
• Personal styles
• Styles of communication
• Time sensitivity
• Emotionalism
• Agreement form
• Agreement building process
• Negotiation team organization
• Risk taking

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Negotiating Goals

• Contract------------------Relationship
• Some cultures view contracts as a definitive set
  of rights and duties that strictly bind the two
  sides and determine their interaction thereafter
  while others view the contract as the beginning
  and the relationship dictates interaction
  thereafter.

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Negotiating Attitudes

• Win/Lose-----------------------Win/Win
• 1/ negotiation is a win/win where both sides can
  win as both sides have compatible goals
  (integrative)
• 2/ negotiation is a win/lose where one side wins
  and other side loses as there are incompatible
  goals (distributive)

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Personal Styles

• Informal-------------------------Formal
• Concerns the form a negotiation uses to interact
  with counterparts at the table
• Each culture has its own formalities and they
  have special meanings within that culture

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Communication

• Direct---------------------------Indirect
• Indirect style often make assumptions about the
  level of knowledge possessed by their
  counterparts communicate with veiled references,
  figurative and body language
• Direct style use clear and definitive responses
  to proposals and questions.

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Sensitivity to Time

• High------------------------------Low
• Cultural discussions concerning time in
  negotiation often refer to two elements
• Promptness in meeting deadlines
• Amount of time devoted to negotiation

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Emotionalism

• High------------------------------Low
• Accounts of negotiation behavior almost always
  point to a particular groups tendency or lack
  thereof to display emotions
• Various cultures have different rules as to the
  appropriateness and forms of displaying emotion
  and these rule are brought to the negotiating
  table.

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Agreement Form

• General------------------------------Specific
• Cultural factors may influence the form of
  written agreement that the parties make.
• Some prefer detailed contracts that attempt to
  anticipate all possible eventualities no matter
  how unlikely
• Some claim that essence of the deal is the
  relationship between parties, if unexpected
  circumstances arise parties should address the
  relationship and not the contract

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Building an Agreement

• Bottom-up-------------------Top-down
• Related to the form of agreement, is it a
  inductive or deductive process
• Inductive (bottom-up)- does it begin with
  agreement on specifics (price, quantity) and the
  sum total of this becomes the contract.
• Deductive (top-down) does it begin with agreement
  in principle and proceed to specific items.

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Team Organization

• One leader---------------------Group consensus
• Some cultures emphasize the individual while
  others stress the group and these values may
  influence the organization of the team

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Risk Taking

• High------------------------------Low
• In negotiation the culture of negotiators can
  affect the willingness of one side to take risks
  in negotiation for example to divulge
  information, try new approaches, or to tolerate
  uncertainties in a proposed course of action.