Chapter 2
STRATEGY AND TACTICS OF
DISTRIBUTION BARGAINING
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THREE REASONS NEGOTIATORS SHOULD BE
FAMILIAR WITH DISTRIBUTIVE BARGAINING
1. Independent situations require knowing how
this works in order to do well
2. Need to know how to counter the effects of the
strategies
3. Every situation has the potential to require skills
at the “claiming-value” stage
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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 for both parties
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THE DISTRIBUTIVE BARGAINING SITUATION
Preparation—set a
• Starting/asking price, initial offer
• Target point, aspiration point
• Walkaway, resistance point (keep in secret)
• Alternative outcomes
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THE DISTRIBUTIVE BARGAINING SITUATION
(EXTENDED VIEW)
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
Party B - Buyer
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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:
Ø Set their goals higher
ØMake fewer concessions
§ If there are no attractive alternatives:
ØNegotiators have much less bargaining power
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THE DISTRIBUTIVE BARGAINING SITUATION
(EXTENDED VIEW WITH ALTERNATIVES)
Party A - Seller
Walkaway Point Target Point Asking Price
Alternative
Alternative
Initial Offer Target Point Walkaway Point
Party B - Buyer
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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
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KEYS TO THE STRATEGIES
The keys to implementing any strategies are:
• Discovering the other party’s resistance point
• Influencing the other party’s resistance point
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FOUR PROPOSITIONS THAT SUGGEST
HOW THE KEYS AFFECT THE PROCESS
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.
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.
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FOUR PROPOSITIONS THAT SUGGEST
HOW THE KEYS AFFECT THE PROCESS
3. The less the other party values an issue, the
lower their resistance point will be.
4. The more the other party believes that you
value an issue, the lower their resistance point
may be.
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TACTICAL TASKS OF NEGOTIATORS
• Assess the other party’s target and resistance
points 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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ASSESS THE OTHER PARTY’S TARGET, RESISTANCE
POINT, AND COSTS OF TERMINATING
NEGOTIATIONS
convince the other party
resistance point (this is not
valuable as you thought) and at
• Indirect Assessment the same time prevent ourself to
be explored by the other party
§ Determine information opponent used to set:
Ø Target
Ø Resistance points
• Direct Assessment
§ Opponent reveals the information
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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
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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
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MANIPULATE THE ACTUAL COSTS OF
DELAY OR TERMINATION
• Plan disruptive action
Ex. airline strike or public transportation
strike (the company raising the cost
whenever there is strike happening)
§ 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 might be careful with this cause it might cause a long term relationship
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POSITIONS TAKEN
DURING NEGOTIATIONS
• Opening offers
§ Where will you start? start with strong or high but not too exaggerated price.
• Opening stance
§ What is your attitude?
Ø Competitive? Moderate? in general, competitive is good, but still needs to be within reasonable range
• Initial concessions
§ Should any be made? If so, how large?
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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 offers (making a commitment)
§ “This is all I can do.” or “This is as far as I can go.”
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CLOSING THE DEAL
make other parties believe they had an options, but actually there not really an significant difference
• Provide alternatives (2 or 3 packages)
• Assume the close ex. iPhone series 15, 15 plus, 15 pro, 15 pro max
people tends to choose the middle offering, not the cheapest or the max
• Split the difference
• Exploding offers
• Deal sweeteners
ex. free bonuses after purchasing
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DEALING WITH TYPICAL
HARDBALL TACTICS
• Four main options for responding:
§ Discuss them
§ Ignore them
§ Respond in kind
§ Co-opt the other party (befriend them)
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TYPICAL HARDBALL TACTICS
• Good Cop/Bad Cop one or several person behave nice and others being agreesive
• Lowball/Highball
• Bogey (playing up an issue of little importance)
• The Nibble (asking for a number of small
concessions to closing the deal)
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TYPICAL HARDBALL TACTICS
• Chicken ex. a strike
• Intimidation
• Aggressive Behavior
• Snow Job (overwhelm the other party with
information)
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