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Negotiation > Chapter 2: Strategy and Tactics of distributive bargaining > Flashcards

Chapter 2: Strategy and Tactics of distributive bargaining Flashcards

1
Q

Why do negotiators need to be familiar with distributive bargaining? (List 3)

A
  1. Interdependent situations may be distributive
    e.g. At Wedding Banquet, the banquet manager gives you problems by wanting to charge extra for wine. This was not previously agreed upon. You may have to be distributive
  2. Need to know how to counter the effects of the distributive bargaining strategies
  3. Distributive bargaining skills are needed at the “claiming-value” stage
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2
Q

Explain context of a distributive bargaining situation

(List 3)

A
  1. Goals of one party is in fundamental, direct conflict to another party
  2. Resources are fixed and limited
  3. Maximizing one’s own share of resources is the goal for both parties
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3
Q

The distributive bargaining situation:

What kind of points do you need to know? (know 3 things)

A
  • Target point
  • Reservation price (RP) or Resistance point
  • Asking price

(EXAMPLE)
* Sofia: the seller of condominium
Asking price = 145k

  • Barry: the buyer
    Reservation price (highest price Barry will pay) = 150k Target price = 135k
  • What is Sofia’s Reservation price (lowest price Sofia will sell at)?
    Barry believes it is = 130k
     So his opening offer price should be….?
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4
Q

What you need to know about reservation price? (list 3)

A
  1. Parties will never know each other RP
  2. Do not share RP with opposite party
  3. Spread between RP known as (Zone of Potential Agreement)
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5
Q

Positive ZOPA vs Negative ZOPA

A

Positive ZOPA:
- you can see it as buyer RP (highest price willingness to buy) > Seller RP (lowest price willingness to sell) –> therefore deal

Negative ZOPA:
- you can see it as buyer RP (highest price willingness to buy) < Seller RP (lowest price willingness to sell) –> therefore no deal

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6
Q

What role do alternatives play in a negotiated agreement

A
  1. 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
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7
Q

What is BATNA and WATNA? Need to look at other factors too

A

Best alternative to a negotiated agreement
 Worst alternative to a negotiated agreement

Barry’s BATNA: alternative 142k condo elsewhere
Other factors
What if Sofia offers at 143k?

Buyer Target price < 143k < Buyer RP
Distance to work
Condition of apartment

Sofia’s BATNA: another buyer offering 134k
Other factors
What if Barry offers at 133k? Seller Target price > 133k > Seller RP Is new buyer serious? Lead time?
When will Barry need apartment?
Delay too long, you lose both

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8
Q

What are keys to distributive bargaining

A

*Discovering the other party’s Reservation Price
*Influencing the other party’s Reservation Price

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9
Q

What are the propositions that suggest how the keys affect the process*** (list 4)

A
  1. The higher the other party’s estimate of (your) cost of delay or impasse, the stronger the other party’s resistance point will be.
    * (If you have time pressures or cannot delay, they have the advantage)
  2. The higher the other party’s estimate of his or her (own) cost of delay or impasse, the weaker the other party’s resistance point will be.
    * (If time is not an issue, you have the upper hand)
  3. The less the other party values an issue, the lower their resistance point will be.
     If the issue is unimportant to them, RP goes down
  4. The more the other party believes that you value an issue, the lower their resistance point may be.
     If other party knows you value an item, they will moderate RP
    REALLY?
     Is this applicable in an Asian context?
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10
Q

What are some of the tactical tasks of negotiators

(4 step process)

A
  • 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
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11
Q

How should you manage the other party’s impressions

A
  1. Screen your behavious
    - dont say much to not give away anything
    - known as calculated incompetence: limit information released
  2. Direct actions to alter impressions
    - selective presentation: present facts that may enhance one’s position or manage impression of RP
    - “If you were in my shoes”
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12
Q

How can you modify the other party’s perceptions (list 4)

A
  • 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
  • Conceal vital information
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13
Q

Positions you can take during negotiations

A

Considerations:
* Opening offer
Where will you start?
* Opening stance
What is your attitude?
Competitive? Moderate?
* Initial concessions
Should any be made? If so, how large?

Understanding the role of concessions
- without them, either capitulation or deadlock

Patterns of concession making
- pattern contains valuable information

showing your final offer
-“that is all i can do”

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14
Q

Why are concessions important?

A
  • Vital
  • In reality, we have wishlist (for what we want); and concessions
    list (what we can give away)
  • Shows that you are serious about deal – reciprocity
  • You cannot:
     Make concession that is of perceptually lower value
     Not make a concession after other party has done so
     Make additional/exaggerated concessions if other party has not done so – does not show credibility
  • How you frame the giving of concessions is important
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15
Q

How should you close the deal (list 5)

(PASED)

A
  • Provide alternatives (2 or 3 packages)
     Give opposite side opportunity to present to upper
    management
  • Assume the close
    Taking liberties to influence in a slightly assertive manner
  • Split the difference
  • Exploding offers Usually with deadline
  • Deal sweeteners
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16
Q

What are some typical hardball tactics (list 8)

A
  • Good Cop/Bad Cop
  • Lowball/Highball
  • Bogey
     Feign importance on small item to trade it for more important item (eg. Tyres not important, but feign. Actually you want sun roof . So you play up wanting top tyres. After sensing resistance, you say you ‘settle’ for sun roof)
  • The Nibble
    I will take the suit if you give me a tie
  • Chicken
     Calling a large bluff, see who blinks
  • Intimidation
  • Aggressive Behavior
  • Snow Job
    Overload with information
    “If I cannot convince you, I confuse you.”
17
Q

How to deal with hardball tactics (List 4)

A

Ignore them
Discuss them
Respond in kind
Co-opt the other party (befriend them)

Negotiation (17 decks)

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