2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedCHAPTER TWOStrategy and Tactics of Distributive Bargaining

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedThe Distributive Bargaining SituationGoals of one party are in fundamental,direct conflict to another partyResources are fixed and limitedMaximizing ones own share of resources is the goal

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedThe Distributive Bargaining SituationPreparationset aTarget point, aspiration pointWalkaway, resistance pointAsking price, initial offer

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedThe Distributive Bargaining Situation

Party B - BuyerParty A - Seller Walkaway Point Target Point Asking Price Initial Offer Target Point Walkaway Point

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedThe Role of Alternatives to a Negotiated AgreementAlternatives give the negotiator 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

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedThe Distributive Bargaining Situation

Party B - BuyerParty A - Seller Walkaway Point Target Point Asking Price Initial Offer Target Point Walkaway PointAlternativeAlternative

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedFundamental StrategiesPush for settlement near opponents resistance pointGet the other party to change their resistance pointIf settlement range is negative, either:Get the other side to change their resistance pointModify your own resistance pointConvince the other party that the settlement is the best possible

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedKeys to the StrategiesThe keys to implementing any of the four strategies are:Discovering the other partys resistance pointInfluencing the other partys resistance point

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedTactical Tasks of NegotiatorsAssess outcome values and the costs of termination for the other partyManage the other partys impressionsModify the other partys perceptionsManipulate the actual costs of delay or termination

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedAssess Outcome Values and the Costs of Termination for the Other PartyIndirectlyDetermine information opponent used to set:TargetResistance pointsDirectlyOpponent reveals the information

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedManage the Other Partys ImpressionsScreen your behavior:Say and do as little as possible

Direct action to alter impressionsPresent facts that enhance ones position

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedModify the Other Partys PerceptionsMake outcomes appear less attractiveMake the cost of obtaining goals appear higherMake demands and positions appear more or less attractive to the other party whichever suits your needs

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedManipulate the Actual Costs of Delay or TerminationPlan disruptive actionRaise the costs of delay to the other partyForm an alliance with outsidersInvolve (or threaten to involve) other parties who can influence the outcome in your favorSchedule manipulationsOne party is usually more vulnerable to delaying than the other

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedPositions Taken During NegotiationsOpening offerWhere will you start?Opening stanceWhat is your attitude? Competitive? Moderate?Initial concessionsShould any be made? If so, how large?

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedPositions Taken During NegotiationsThe role of concessionsWithout them, there is either capitulation or deadlockPatterns of concession makingThe pattern contains valuable informationFinal offer (making a commitment)This is all I can do

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedCommitments: Tactical Considerations Establishing a commitmentThree properties: FinalitySpecificity ConsequencesPreventing the other party from committing prematurelyTheir commitment reduces your flexibility

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedCommitments: Tactical ConsiderationsWays to abandon a committed positionPlan a way outLet it die silentlyRestate the commitment in more general termsMinimize the damage to the relationship if the other backs off

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedClosing the DealProvide alternatives (2 or 3 packages)Assume the closeSplit the differenceExploding offersDeal sweeteners

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedDealing with Typical Hardball TacticsFour main options:Ignore themDiscuss themRespond in kindCo-opt the other party (befriend them)

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedTypical Hardball TacticsGood Cop/Bad CopLowball/HighballBogey (playing up an issue of little importance)The Nibble (asking for a number of small concessions to)

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedTypical Hardball TacticsChickenIntimidationAggressive BehaviorSnow Job (overwhelm the other party with information)

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2-*McGraw-Hill/Irwin2006 The McGraw-Hill Companies, Inc., All Rights ReservedSummaryNegotiators need to:Set a clear target and resistance pointsUnderstand and work to improve their BATNAStart with good opening offerMake appropriate concessionsManage the commitment process

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