This document discusses strategies for distributive bargaining situations where the goals of parties are in conflict over limited resources. It outlines preparing with target and resistance points, assessing the other party's alternatives and costs, managing impressions, and using tactics like opening offers, concessions, and closing deals. The key is discovering the other's resistance point and influencing it through perception modification and manipulating delay costs. Typical hardball tactics include lowballing/highballing and playing up unimportant issues.

1. Strategy and Tactics of
Distributive Bargaining

2. Time to Negotiate….
The Car Dealers Game

4. The Distributive Bargaining
Situation
• Goals of one party are in fundamental, direct
conflict to another party
• Resources are fixed and limited
• Maximizing one’s own share of resources is
the goal

5. The Distributive Bargaining
Situation
Preparation—set a
• Target point, aspiration point
• Walkaway, resistance point
• Asking price, initial offer

6. The Distributive Bargaining
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
Party B - Buyer

7. The Role of Alternatives to a
Negotiated Agreement
• Alternatives give the negotiator power to walk
away from the negotiation
– If alternatives are attractive, negotiators can:
• Set their goals higher
• Make fewer concessions
– If there are no attractive alternatives:
• Negotiators have much less bargaining power

8. The Distributive Bargaining
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Alternative
Alternative
Initial Offer Target Point Walkaway Point
Party B - Buyer

9. Fundamental Strategies
• Push for settlement near opponent’s resistance
point (extreme offers, small concessions)
• Get the other party to change their resistance
point (eg. say it is overpriced)
• If settlement range is negative, either:
– Get the other side to change their resistance point
– Modify your own resistance point
• Convince the other party that the settlement is
the best possible (ego satisfaction )

10. Keys to the Strategies
The keys to implementing any of the four
strategies are:
• Discovering the other party’s resistance
point
• Influencing the other party’s resistance
point

11. The other’s understanding of your own
situation
• Higher the estimation of your cost of delay or
impasse (termination) – higher RV
• Higher the estimation of his cost of delay or
impasse – lower RV
• The less the other party values an issue –lower
RV
• The more the estimation of the value of an
issue for you –lower RV

12. Tactical Tasks of Negotiators
• Assess outcome values and the costs of
termination for the other party
• Manage the other party’s impressions
• Modify the other party’s perceptions
• Manipulate the actual costs of delay or
termination

13. Assess Outcome Values and the Costs of
Termination for the Other Party
• Indirectly
– Determine information opponent used to set:
• Target
• Resistance points
• Directly
– Opponent reveals the information

14. Manage the Other Party’s
Impressions
• Screen your behavior:
– Say and do as little as possible (Silence is
golden!)
• Direct action to alter impressions
– Present facts that enhance one’s position

15. Modify the Other Party’s
Perceptions
• Make outcomes appear less attractive
• Make the cost of obtaining goals appear higher
• Make demands and positions appear more or
less attractive to the other party –whichever
suits your needs

16. Manipulate the Actual Costs of
Delay or Termination
• Plan disruptive action
– Raise the costs of delay to the other party (eg. strike)
• Form an alliance with outsiders
– Involve (or threaten to involve) other parties who can
influence the outcome in your favor
• Schedule manipulations
– One party is usually more vulnerable to delaying than
the other (eg. reschedule, give shorter time to decide)

17. Positions Taken
During Negotiations
• Opening offer
– Where will you start? (anchoring!!!)
• Opening stance
– What is your attitude?
• Competitive? Moderate?
• Initial concessions
– Should any be made? If so, how large?

18. Positions Taken
During Negotiations
• The role of concessions
– Without them, there is either capitulation or
deadlock
• Patterns of concession making
– The pattern contains valuable information (make
lower concessions to signal that you are
approaching your RV)
• Final offer (making a commitment)
– “This is all I can do”

19. Closing the Deal
• Provide alternatives (2 or 3 packages)
• Assume the close
• Split the difference
• Exploding offers (offer is relevant for a
short period)
• Deal sweeteners

20. Dealing with Typical
Hardball Tactics
• Four main options:
– Ignore them
– Discuss them (“I know what you are doing”)
– Respond in kind
– Co-opt the other party (befriend them)

21. Typical Hardball Tactics
• Good Cop/Bad Cop
• Lowball/Highball – ridicolously low (high)
opening
– The other party: “A waste of time”
– Ask for a more reasonable opening
• Bogey (playing up an issue of little importance)
• The Nibble (asking for a number of small
concessions to) eg. A scarf to go with the dress

22. Typical Hardball Tactics
• Chicken (bluffing)
• Intimidation (anger, guilt, legitimacy)
• Aggressive Behavior
• Snow Job (overwhelm the other party
with information)

23. Summary
Negotiators need to:
• Set a clear target and resistance points
• Understand and work to improve their BATNA
• Start with good opening offer
• Make appropriate concessions
• Manage the commitment process