Negotiation / Bargaining

NEGOTIATION / BARGAINING
We will define negotiation as a process in which two or more parties exchange goods or services and attempt to agree on the exchange rate for them. Note that we will use the terms negotiation and bargaining interchangeably.
Bargaining Strategies
There are two general approaches to negotiation distributive bargaining and integrative bargaining. Distributive and integrative bargaining differs in their goal and motivation, focus, interest, information sharing, and duration of relationship.
Distributive Versus Integrative Bargaining
Bargaining
Characteristic Goal
Distributive
Bargaining
Integrative
Bargaining
Get as much of the pie as Expand the pie so that both possible parties are satisfied Win-Lose Win-Win
Motivation Focus
Position (I cant go beyond Interests ( Can you explain why this issue is so important this point on this issue.) to you?) Opposed Harmonious
Interests Information sharing
Low (sharing information will High (sharing information will only allow other party to take allow each party to find ways advantage) to satisfy interests of each party) Short term Long term
Duration of relationship
Distributive Bargaining
You see a use car advertised for sale in the newspaper. You go out to se the car. It is great and you want it. The owner tells you the asking price. You dont want to pay that much. The two of you then negotiate over the price. The negotiating strategy you are engaging in is called distributive bargaining. That is, any gain I make is at your expense, and vice versa. every rupee you can get the seller to cut from the cars price is a rupee you save. Conversely, every rupee more the seller can get from you comes at your expense.
So the essence of distributive bargaining is negotiating over who gets what share of a fixed pie. By fixed pie we mean that the bargaining parties believe there is only a set amount of goods or services to be divided up. Therefore fixed price are zero-sum games in that every rupee in on partys pocket is a rupee out of their counterparts pocket. When parties believe the pie is fixed, they tend to bargain distributively. the most widely cited example of distributive bargaining is in labourmanagement negotiations over wages. labours representatives come to the bargaining table determined to get as much money as possible out of management. Because every paisa more that labour negotiates increases managements costs, each party bargains aggressively and treats the other as an opponent who must be defeated.
Staking out of Bargaining Zone
Party As aspiration range
Party Bs aspiration range
Settlement range
Party As target point
Party B s resistance point
Party A s resistance point
Party Bs target point
Parties A and B represent two negotiators. Each has a target point that defines what he or she would like to achieve. Each also has a resistance point, which marks the lowest outcome that is acceptable the point below which they would break off negotiations rather than accept a less-favourable settlement. The area between these two points makes up each ones aspiration range. As long as there is some overlap between As and Bs aspiration ranges, there exists a settlement range in which each ones aspirations can be met.
When engaged in distributive bargaining, ones tactics focus on trying to get ones opponent to agree to a specific target point or to get as close to it as possible. For examples of such tactics are persuading your opponent of the impossibility of getting to his or her target point and the advisability of accepting a settlement near yours; arguing that your target is fair, while your opponent is not; and attempting to get your opponent to feel emotionally generous toward you and thus accept an outcome close to your target point.
Another distributive bargaining tactic is revealing a deadline. Consider the following example. Nisha is a human resources manager. She is negotiating salary with Saurabh, who is a highly sought after new hire. Because Saurabh knows the company needs him, he decides to play hardball and ask for an extraordinary salary and many benefits. Nisha tells Saurabh that the company cant meet his requirement. Saurabh tells Nisha he is going to have think things over. Worried the company is going to lose Saurasbh to a competitor, Nisha decides to tell Sarabh that she is under time pressure and that she needs to reach an agreement with him immediately or she will have to offer the job to another candidate. Negotiators who reveal deadlines speed concession from their negotiating counterparts, making them reconsider their position. And even though negotiators dont think this tactic works, in reality negotiators who reveal deadlines do better.

Negotiation / Bargaining

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Negotiation / Bargaining

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NEGOTIATION / BARGAINING

Distributive Versus Integrative Bargaining

Interests Information sharing

Staking out of Bargaining Zone

Party As aspiration range

Party Bs aspiration range

Party As target point

Party B s resistance point

Party A s resistance point

Party Bs target point

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