TYPES OF NEGOTIATION

Dr. MANORANJAN DHAL

TYPES OF NEGOTIATION

Distributive compete over the distribution of fixed sum of values

Integrative negotiation in which parties cooperate to achieve maximum benefits by integrating their interest into an agreement.

DISTRIBUTIVE NEGOTIATION

No relationshipAll that matter is the priceEach side haggle for the best dealGain by one party represent the loss

to the other. Example

Sales negotiationWage negotiation

Relationship and reputation mean little in this tug of war

Seller is a total stranger and remain so after the transaction takes place.

The less the other side knows about your weakness and real preferences, and the more it knows about your bargaining strength, the better will be your position

DISTRIBUTIVE NEGOTIATION

The first offer becomes a strong psychological anchor point , one that sets the bargaining range.

Negotiation outcomes often correlates with the first offer.

Do not disclose any significant information about your circumstances. Why do you want to make a deal? Your real interest or business constraint Your prefernces among issues or options Point of walk away

Let the other side feel that you have good option if the deal falls through.

HOW TO ACHIEVE SUCCESS IN DISTRIBUTIVE NEGOTIATION?

Learn as much as possible about the other party Other sides circumstances and

preferences Why they want to make a deal? Their real interest and business

constraint Their preferences among issues and

options

HOW TO ACHIEVE SUCCESS IN DISTRIBUTIVE NEGOTIATION?

Exploit what you learn about the other side in setting your first offer or demand

Dont overshoot If you claim aggressively or greedily the other

side may walk away. You might loose the opportunity to make a deal.

HOW TO ACHIEVE SUCCESS IN DISTRIBUTIVE NEGOTIATION?

INTEGRATIVE NEGOTIATION The parties cooperate to achieve maximum

benefits by integrating their interests Create value and claim it Think more about the relationships and less

about winning Example - original equipment manufacturing

collaborate on quality control and product development

Few suppliers long term relationship orientation

It might be win-win Trade off to get things you value most Go beyond price delivery date, quality etc. Creative options understand each others key

interest

INTEGRATIVE NEGOTIATION

Provide significant information about their circumstances

Explain why they want to make a deal Talk about their real interest or business

constraints Reveal and explain their preferences among

issues and options Additional capabilities or resources which can

add value to the deal Find creative options that will meet the interest

of both parties.

HOW TO ACHIEVE SUCCESS IN INTEGRATIVE NEGOTIATION?

MULTIPLE PHASES

Early phase allow parties to build trust by performing agreements

Care enforcement mechanismEarly phase allow parties to be

familiar about each others communication and negotiation style

MULTIPLE PARTIES

Coalition can form among the partiesWeaker party can gather strengthNatural coalition or single issue

coalition Hard to break natural coalition.