This document discusses strategies and tactics for distributive bargaining. Distributive bargaining is a "win-lose" situation where the goals of each party are in conflict and the resources being negotiated are limited. Key strategies include assessing the other party's alternatives and resistance point in order to push for a settlement near their resistance point. Tactics discussed include managing impressions of offers, modifying the other party's perceptions, and manipulating costs of delay or termination. The document provides guidelines for concession making, establishing commitments, and dealing with hardball tactics like good cop/bad cop.

1. Strategy and Tactics of Distributive BargainingImportance of Negotiation Media\Importance Of Negotiation.flv

2. Foundational OverviewCross Cultural ComponentImportance of negotiation

3. The Distributive Bargaining SituationGoals of one party are in fundamental , direct conflict to another party“Win-Lose” -- “Slicing the Pie”Resources are fixed and limited“The more one gets, the less the other gets”Maximizing one’s own share of resources is the goal

4. Opinions on Distributive BargainingSome people like it: -- they define “Negotiation” as distributive.Others:Avoid it at all costsConfrontationalDestructiveRegardless, you need to know it because:Some situations require itNeeded when we Claim Value in “Win-Win” negotiationsSome like to use it against you.

5. Summary of UseWe use this strategy for:One-Time Deals: Car Purchase, CondoWhen:Relationship is not importantOr:When we reach the Claiming Value stage of other negotiation strategies

6. The Distributive Bargaining SituationNeed advance preparation to set a:Target point, aspiration pointWhat we would like to getWalk-away or resistance pointWhat price we will not go beyondAsking price or initial offerPeople expect a give and takeNeed to consider this activityDanger: too high or too low

7. The Distributive Bargaining SituationParty A - Seller Walkaway Point Target Point Asking PriceInitial Offer Target Point WalkawayParty B - Buyer

8. The Role of Alternatives to a Negotiated AgreementAlternatives = power to walk away from the negotiation If alternatives are attractive, negotiators can:Set their goals higherMake fewer concessionsIf there are no attractive alternatives:Negotiators have much less bargaining power

9. The Distributive Bargaining SituationParty A - SellerResistance Point Target Point Asking PriceAlternativeAlternativeInitial Offer Target Point Resistance Party B - Buyer

10. Fundamental StrategiesPush for settlement near opponent’s resistance point Get the other party to change their resistance pointConvince the other party that the settlement is the best possible

11. Keys to the StrategiesThe keys to implementing any of the four strategies are:Discovering the other party’s resistance pointInfluencing the other party’s resistance pointInformation is valuable – target price, RP, motives, feelings, confidence…

12. …How do you influence the other party in your negotiations???

13. Tactical Tasks of NegotiatorsAssess outcome values and the costs of termination for the other partyManage the other party’s impressionsWhat they think about your offerModify the other party’s perceptionsWhat they think about their situationManipulate the actual costs of delay or termination

14. Assess Outcome Values and the Costs of Termination for the Other PartyHow?IndirectlyDetermine information the opponent used to set their:Target pointResistance pointsDirectlyOpponent reveals the information

15. The Piano…What was the value of information in this example?

16. Manage the Other Party’s ImpressionsScreen your behavior:Say and do as little as possibleSelective presentation:Use a representative (realtors, car dealers, one way information)Snow Job/ Kitchen Sink (unrelated information, used to hide important info)Direct action to alter impressions:Present facts that enhance one’s position“If I accept / implement your offer, these are my costs/risks”Use emotion or time to show/hide importance

17. Modify the Other Party’s PerceptionsMake outcomes appear less attractiveAdd the extra activities, risksMake the cost of obtaining goals appear higherMake demands and positions appear more or less attractive to the other party –whichever suits your needs

18. Manipulate the Actual Costs of Delay or TerminationAs everyone has deadlines…Plan disruptive actionRaise the costs of delay to the other party (coffee drinkers in restaurant)Form an alliance with outsidersInvolve (or threaten to involve) other parties who can influence the outcome in your favor ( BBB or Government Regulator)Schedule manipulationsOne party is usually more vulnerable to delay than the otherPlace items where you have an advantage (beginning or end)

19. Positions Taken During NegotiationsOpening offer – Who?First offer generally has advantage…sets anchor.Opening stance -- what is your attitude? (competitive, moderate)Belligerent - powerfulMatching stance - equal”Lets be reasonable people who can solve the problem”Where will you start? (modest or exaggerated)Exaggerated:Room to negotiateSignal a lot of work to progress/ signal need for concessionsError in planning by other side (they estimated wrong)Foolish, rejected, may damage relationshipModerate (expected)

20. Positions Taken During NegotiationsThe role of concessions:Without them, there is either capitulation or deadlockPatterns of concession making:The pattern contains valuable informationPeople expect a progression, shows willingness to cooperatePackaged offers (a&b for c&d)Final offer (making a commitment)“This is all I can do”Pre-prepared final offers- Mgmt calculates offer & dictates:Lack of two way communicationNo listening, respect or legitimacy for other side.

21. Concession Patterns

22. Guidelines for Making Concessions

23. Commitments: Tactical Considerations Establishing a commitmentThree properties:Finality, Specificity, ConsequencesPreventing the other party from committing prematurely, why?Their commitment reduces your flexibilitySometimes viewed as a threatBoth parties may become stuck, deadlocked.

24. Commitments: Tactical ConsiderationsWays to abandon a committed position:Plan a way out“Given this new information, I may need to re-think my earlier position”Let it die silentlyRestate the commitment in more general termsMinimize the damage to the relationship if the other backs offUse technicalities: financing clause, quality discrepancy

25. Closing the DealProvide alternatives (2 or 3 equal value options)Assume the close (Start the paperwork)Split the difference (Assumes both sides started with fair initial offers)Exploding offers (expires in 24 hours, preventing party from developing other alternatives)Deal sweeteners (bonuses, furnishings for a condo, upgrades for a car)

26. Dealing with Typical Hardball TacticsFour main options:Ignore themDiscuss themRespond in kindCo-opt the other party (befriend them)

27. Typical Hardball TacticsGood Cop/Bad CopLowball/HighballBogey (playing up an issue of little importance)ChickenIntimidation Aggressive BehaviorSnow Job (overwhelm the other party with information)

28. Good Cop / Bad CopPolice interrogation techniqueOne rough, intimidatingOne helpful, kind; tries to reach a quick agreement before the other returns.Bad cop goes to cool off (make a phone call) and good cop negotiates a confession.Easy to identifyEasy to call-out – simply state that you know what they are up to.Difficult for negotiators to act out. Takes a lot of energy that might be used to capture information.

29. Low Ball / High BallStart with a ridiculously low (high) opening offer.Idea is that the extreme offer will cause negotiator to re-evaluate their opening offerRisk is that opponent will quit negotiating.Must be communication savvy in order to return to the negotiating table after a failed extreme offer.Don’t counter offer, ask opponent to make a more reasonable offer. Based on fair values (ch 4)

30. BogeyFocus on an issue that is not important to you. Pretend that it is critical. Get agreement… then later use it to trade off for something you really want.Very deceptive, may be difficult to act out.Both sides are arguing for something that they do not really want.Ask probing questions to avoid getting caught: “Why do they value that issue?” List all issues. Watch out for sudden reversals in positions.

31. Chicken: Two cars driving towards each other, who turns?A large bluff & threatIf the union does not concede the factory will shut down.High stakes gamble.Becomes a dangerous game instead of a calculated negotiation.May be more attractive when circumstances are dire.

32. US – Iraq Relations: International ChickenSaddam Hussein stopped UN Weapons Inspections ~ November 1, 1998US said (commitment) if UN inspectors could not continue, the US would bomb suspected chemical plants in Iraq.Un Envoy Shaw was waiting for Saddam’s response while US sent B52 Bombers towards Bagdad.Shaw received a letter, translated it and learned that Iraq would comply, minutes before the missiles / bombs were to be launched.4 weeks later, Iraq again stopped UN inspections and the US initiated a 4 day bombing attach. (follow thru)

33. Intimidation / Aggressive BehaviorForced agreement through fear, emotional ploy, anger.Increasing the appearance of legitimacy: written corporate forms, company policyGuilt: push negotiator to defend their honesty, integrity diverting attention away from real negotiating issues.2-33When it occurs:Explain that your policy is to bargain fairly, in a respectful manner. You expect the same in return.Authority carries no value in negotiations, you are equals. It does not deserve the emotional liability.

34. Snow JobOverwhelm the other party with too much information. Used as distractionsOften used by governments, in 1,000 page press releasesOn Friday afternoonsTo Counter:Ask questions until satisfied.Assign technical experts as necessary (separate meetings)Listen carefully to all statements and look for inconsistencies.

35. SummaryNegotiators need to:Set a clear target and resistance pointsUnderstand and work to improve their BATNAStart with good opening offerMake appropriate concessionsManage the commitment process

36. Based on: “Negotiation” 5/e Roy Lewicki, McGraw Hill (2005)S