Negotiation Skill Development
Workshop
Lecture 02
Topic: Distributive Bargaining
Dated: 19.10.2020
The Distributive Bargaining Situation
• Goals of one party are in fundamental,direct
conflict to another party
• Resources are fixed and limited
• Maximizing one’s own share of resources is the
goal
The Distributive Bargaining Situation
• Preparation—set a
▫ Target point, aspiration point
▫ Walkaway, resistance point
▫ Asking price, initial offer
The Distributive Bargaining
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
Party B - Buyer
The Role of Alternatives to a
Negotiated Agreement
• 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
The Distributive Bargaining
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Alternative
Alternative
Initial Offer Target Point Walkaway Point
Party B - Buyer
Fundamental Strategies
• Push for settlement near opponent’s resistance
point
• Get the other party to change their resistance
point
• If settlement range is negative, either:
▫ Get the other side to change their resistance point
▫ Modify your own resistance point
• Convince the other party that the settlement is
the best possible
Keys to the Strategies
• The keys to implementing any of the four
strategies are:
• Discovering the other party’s resistance point
• Influencing the other party’s resistance point
Tactical Tasks of Negotiators
• 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
Assess Outcome Values and the Costs
of Termination for the Other Party
• Indirectly
▫ Determine information opponent used to set:
Target
Resistance points
• Directly
▫ Opponent reveals the information
Manage the Other Party’s Impressions
• Screen your behavior:
▫ Say and do as little as possible
• Direct action to alter impressions
▫ Present facts that enhance one’s position
Modify the Other Party’s Perceptions
• 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
Manipulate the Actual Costs of
Delay or Termination
• Plan disruptive action
▫ Raise the costs of delay to the other party
• Form an alliance with outsiders
▫ Involve (or threaten to involve) other parties who
can influence the outcome in your favor
• Schedule manipulations
▫ One party is usually more vulnerable to delaying
than the other
Positions Taken During Negotiations
• Opening offer
▫ Where will you start?
• Opening stance
▫ What is your attitude?
Competitive? Moderate?
• Initial concessions
▫ Should any be made? If so, how large?
Positions Taken During Negotiations
• The role of concessions
▫ Without them, there is either capitulation or
deadlock
• Patterns of concession making
▫ The pattern contains valuable information
• Final offer (making a commitment)
▫ ―This is all I can do‖
Commitments: Tactical Considerations
• Establishing a commitment
▫ Three properties:
Finality
Specificity
Consequences
• Preventing the other party from committing
prematurely
▫ Their commitment reduces your flexibility
Commitments: Tactical Considerations
• Ways to abandon a committed position
▫ Plan a way out
▫ Let it die silently
▫ Restate the commitment in more general terms
▫ Minimize the damage to the relationship if the
other backs off
Closing the Deal
• Provide alternatives (2 or 3 packages)
• Assume the close
• Split the difference
• Exploding offers
• Deal sweeteners
Dealing with Typical Hardball Tactics
• Four main options:
▫ Ignore them
▫ Discuss them
▫ Respond in kind
▫ Co-opt the other party (befriend them)
Typical Hardball Tactics
• Good Cop/Bad Cop
• Lowball/Highball
• Bogey (playing up an issue of little importance)
• The Nibble (asking for a number of small
concessions to)
Typical Hardball Tactics
• Chicken
• Intimidation
• Aggressive Behavior
• Snow Job (overwhelm the other party with
information)
Thank You…!
Please ask questions, if any….