Business Negotiation Flashcards
Distributive Bargaining
Distributive bargaining, also known as “win-lose” negotiation, is a competitive approach where each party tries to maximize their own gains at the expense of the other party.
This approach assumes that there is a fixed amount of resources or value to be divided between the parties, and each party tries to claim as much of that value as possible for themselves.
In distributive bargaining, the focus is on getting the best possible deal for oneself, rather than trying to find mutually beneficial solutions
Integrative negotiation
Integrative negotiation, on the other hand, is a collaborative approach where both parties work together to create value and find mutually beneficial solutions
This approach assumes that there are opportunities for both parties to benefit from the negotiation, and that by working together, they can create more value than either party could achieve alone.
In integrative negotiation, the focus is on finding creative solutions that meet the needs and interests of both parties, rather than simply dividing a fixed amount of resources.
In summary, distributive bargaining is a competitive approach that focuses on maximizing individual gains, while integrative negotiation is a collaborative approach that focuses on creating mutual value. The choice of approach depends on the situation and the parties involved, as both approaches have their advantages and disadvantages.
When parties try to find a mutually acceptable Mutually acceptable solution to a complex conflict
When no to negotiate ?
- Nothing to gain
- Ethical concerns
- When you don’t care about the result
- When you don’t have time
- When time is on your side
- When you are not prepared in advance.
Tangible
Terms of agreement (Price, Quality, Length of Contract, Payment terms)
Intangible
Psychological motivations that influence a negotiation
- Need to win
- Need to look good
- Need to maintain relationships
- Fair
- Need to save “face”.
BATNA
Best Alternative To a Negotiated Agreement.
A pre-planned courses of action in the even of an agreement cannot be reached.
What is the most powerful tool for achieve ing a desired result?
The ability to walk away without a deal
Character of Distributive Bargaining
Win/lose: Goals of one party is directly conflict to another party.
Resources: Resources are fixed and limited.
Claiming Value: Maximizing one’s own share of resources is the goal for both parties.
Elements of bargaining range
Target points
Resistant point
Starting / asking price (initial offer)
Settlements point (ideally at or above target)
Why make the first offer?
Single issue negotiation:
Making the first offer can anchor the negotiation.
Some study shows making the first offer will yield a more positive outcome.
Study also shows those who make the first offer exhibited high level of anxiety.
Multiple issues negotiations.
First offer signal which issue i value most
May set an expectation that I will yield on subsequent issues.
Three principles of concession?
- Make concessions that diminish in size.
- Do not make unreciprocated concessions .
- Make concession contingent.
How to close the deal
Provide alternatives:
usually 2or 3 different solutions.
Assume the close (Now that we haven an agreement , let’s sign the contract)
Split the difference (compromise)
Exploding offers (Time is my ally)
Deal sweeteners (Throwing in the mud flaps)
How top deal with Good Cop /Bad Cop
Call them out
How to deal with lowball/high ball (the exaggerates open )
Please give another , more reasonable offer, ignoring and counter
How to deal with Bowery (Make concessions on items of little interest in exchange for a larger concessions on the issues.
Prepare and understand what is most important on both side.
How to deal with Nibble: one more concession
Response: What else do you want ?
