Negotiation - Distributive Bargaining


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Siena Heights University graduate class on Negotiation as Process based on text (2011) from Lewicki, Saunders and Barry (McGraw-Hill).

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Negotiation - Distributive Bargaining

  1. 1. Negotiating Strategy and Tactics of gy Distributive Bargaining Siena Heights University Professor Wallace(Lewicki, Saunders & Barry. 2011)
  2. 2. 2-2 Importance of Understanding g Distributive Bargaining 1. 1 Multiple situations 2. Counter strategies g 3. Skills potential for “ l i i l ” “claiming-value” stage(Lewicki, Saunders & Barry. 2011)
  3. 3. 2-3 Situations Goals of one party are in fundamental & direct conflict to another party Resources are fixed and limited Maximizing one’s own share of h f resources is the goal for both f b th parties ti(Lewicki, Saunders & Barry. 2011)
  4. 4. 2-4 The Distributive Bargaining g g Situation Situation includes: Starting i t St ti points (initial offers) Target points Resistance points (walkaway) Alternative outcomes(Lewicki, Saunders & Barry. 2011)
  5. 5. The Distributive Bargaining 2-5 Situation Party A - SellerWalkaway Point Target Point Asking Price Initial Offer Target Point Walkaway Point Party B - Buyer(Lewicki, Saunders & Barry. 2011)
  6. 6. 2-6 The Role of Alternatives to a Negotiated Agreement Alternatives give the negotiator power to walk away from the negotiation If attractive negotiators attractive, can: Set their goals higher Make fewer concessions If unattractive : tt ti Negotiators have much less bargaining power b i i(Lewicki, Saunders & Barry. 2011)
  7. 7. 2-7 The Distributive Bargaining g g Situation Party A - Seller Walkaway Point Target Point Asking Price Alternative Alternative Initial Offer Target Point Walkaway Point Party B - Buyer(Lewicki, Saunders & Barry. 2011)
  8. 8. 2-8 Fundamental Strategies Push for settlement near opponent’s resistance point p Get the other party to change their resistance point If settlement range is negative, either: G h h id h h i i Get the other side to change their resistance point Modify M dif your own resistance point it i t Convince the other party that the settlement is the best possible(Lewicki, Saunders & Barry. 2011)
  9. 9. 2-9 Keys to the Strategies The keys to implementing any an of the fo r strategies four are: Discovering the other party’s resistance point party s Influencing the other party’s resistance point ’ i i(Lewicki, Saunders & Barry. 2011)
  10. 10. 2-10 Tactical Tasks of Negotiators Assess outcome values and the th costs of termination for t ft i ti f the other party Manage the other party’s impressions p Modify the other party’s perceptions Manipulate the actual costs of d l or termination f delay i i(Lewicki, Saunders & Barry. 2011)
  11. 11. 2-11 A Assess th Oth P t the Other Party Target, Resistance Point, and Costs of Terminating Negotiations Indirectly Determine data used to set: T Targett Resistance points Directly Opponent reveals the pp information(Lewicki, Saunders & Barry. 2011)
  12. 12. 2-12 Manage Impressions Filter your behavior: Say and do as little as possible Direct action to alter impressions Present facts that enhance one’s position(Lewicki, Saunders & Barry. 2011)
  13. 13. 2-13 Modify Perceptions Make outcomes appear less attractive i Make the cost of obtaining g goals appear higher M k d d Make demands and d positions appear more or less attractive to the other p y party – whichever suits your y(Lewicki, Saunders & Barry. 2011) needs
  14. 14. 2-14 Manipulate Costs of p Delay or Termination Plan disruptive action Raise the costs of delay to the other party Form an alliance with outsiders Involve (or threaten to involve) other parties who can influence the outcome in your favor Schedule S h d l manipulations i l i One party is usually more vulnerable to p y y delaying than the other(Lewicki, Saunders & Barry. 2011)
  15. 15. 2-15 Positions Opening offers Where will you start? Opening stance Attitude? Competitive? Moderate? Initial concessions Should any be made? If so, how large? so(Lewicki, Saunders & Barry. 2011)
  16. 16. 2-16 Positions D i N ti ti P iti During Negotiations The role of concessions Without them, there is either Wi h h h i ih capitulation or deadlock Patterns of concession The pattern contains valuable information Final offers (commitment) “This is all I can do”(Lewicki, Saunders & Barry. 2011)
  17. 17. 2-17 C Commitments: T ti l it t Tactical Establishing a commitment Three Th properties:i Finality Specificity Consequences Preventing premature commitment i Their commitment reduces your flexibility(Lewicki, Saunders & Barry. 2011)
  18. 18. 2-18 C ti Commitment Creating C it t Public pronouncement Linking with an outside base Increase the i prominence off demands Reinforce the threat or promise(Lewicki, Saunders & Barry. 2011)
  19. 19. 2-19 Commitments: Tactical Ways to abandon a committed position Plan a way out Let it die silently Restate the commitment in more general terms Minimize the damage to the relationship if the other backs off(Lewicki, Saunders & Barry. 2011)
  20. 20. 2-20 Closing the Deal Provide alternatives (2 or 3 packages) Assume the close Split the difference Exploding offers Deal sweeteners s eeteners(Lewicki, Saunders & Barry. 2011)
  21. 21. 2-21 H db ll T ti Hardball Tactics Four main options: Ignore them Discuss them Respond in kind Co-opt the other p y (befriend party ( them)(Lewicki, Saunders & Barry. 2011)
  22. 22. 2-22 Typical Hardball Tactics Good Cop/Bad Cop Lowball/Highball b ll/ i hb ll Bogey (playing up an issue of little importance) The Nibble (asking for a number of small concessions to) )(Lewicki, Saunders & Barry. 2011)
  23. 23. 2-23 Typical H db ll T i T i l Hardball Tactics Chicken Intimidation i id i Aggressive Behavior S Snow J b Job (overwhelm the other party with information))(Lewicki, Saunders & Barry. 2011)
  24. 24. 2-24 S Summary Negotiators need to: Set a clear target and resistance points Understand and work to improve their BATNA p Start with good opening offer Make appropriate concessions Manage the commitment(Lewicki, Saunders & Barry. 2011) process