Negotiating Negotiating Negotiating Negotiating

Strategy and Tactics of Strategy and Tactics of gy

Distributive Bargaining
gy
Distributive Bargaining
Siena Heights University Siena Heights University
Professor Wallace Professor Wallace
(Lewicki, Saunders & Barry. 2011)
Importance of Understanding Importance of Understanding
2-2
g
Distributive Bargaining
g
Distributive Bargaining
1 Multiplesituations 1 Multiplesituations 1. Multiple situations
2. Counter strategies
1. Multiple situations
2. Counter strategies g
3. Skills potential for
l i i l
g
3. Skills potential for
l i i l claiming-value
stage
claiming-value
stage
(Lewicki, Saunders & Barry. 2011)
Situations Situations
2-3
Situations Situations
Goals of one party are
infundamental &
Goals of one party are
infundamental & in fundamental &
direct conflict to
another party
in fundamental &
direct conflict to
another party another party
Resources are fixed
andlimited
another party
Resources are fixed
andlimited and limited
Maximizing ones
h f
and limited
Maximizing ones
h f own share of
resources is the goal
f b th ti
own share of
resources is the goal
f b th ti
(Lewicki, Saunders & Barry. 2011)
for both parties for both parties
The Distributive Bargaining The Distributive Bargaining
2-4
g g
Situation
g g
Situation
Situation includes:
St ti i t
Situation includes:
St ti i t Starting points
(initial offers)
Starting points
(initial offers)
Target points
Resistancepoints
Target points
Resistancepoints Resistance points
(walkaway)
Resistance points
(walkaway)
Alternative
outcomes
Alternative
outcomes
(Lewicki, Saunders & Barry. 2011)
outcomes outcomes
The Distributive Bargaining The Distributive Bargaining
2-5
Situation Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point
Walkaway Point
(Lewicki, Saunders & Barry. 2011)
Party B - Buyer
The Role of Alternatives to a The Role of Alternatives to a
2-6
Negotiated Agreement Negotiated Agreement
Alternatives give the negotiator
power towalkawayfromthe
Alternatives give the negotiator
power towalkawayfromthe power to walk away from the
negotiation
If attractive negotiators
power to walk away from the
negotiation
If attractive negotiators If attractive, negotiators
can:
Set their goalshigher
If attractive, negotiators
can:
Set their goalshigher Set their goals higher
Make fewer concessions
If tt ti
Set their goals higher
Make fewer concessions
If tt ti If unattractive :
Negotiators have much less
b i i
If unattractive :
Negotiators have much less
b i i
(Lewicki, Saunders & Barry. 2011)
bargaining power bargaining power
The Distributive Bargaining The Distributive Bargaining
2-7
g g
Situation
g g
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Alternative Alternative
Alternative
PartyB Buyer
Initial Offer Target Point Walkaway Point
(Lewicki, Saunders & Barry. 2011)
Party B - Buyer
Fundamental Strategies Fundamental Strategies
2-8
Fundamental Strategies Fundamental Strategies
Push for settlement near opponents
resistance point
Push for settlement near opponents
resistance point p
Get the other party to change their
resistancepoint
p
Get the other party to change their
resistancepoint resistance point
If settlement range is negative, either:
G h h id h h i i
resistance point
If settlement range is negative, either:
G h h id h h i i Get the other side to change their resistance
point
M dif i t i t
Get the other side to change their resistance
point
M dif i t i t Modify your own resistance point
Convince the other party that the
Modify your own resistance point
Convince the other party that the
(Lewicki, Saunders & Barry. 2011)
settlement is the best possible settlement is the best possible
Keys to the Strategies Keys to the Strategies
2-9
Keys to the Strategies Keys to the Strategies
The keys to implementing
an of thefo r strategies
The keys to implementing
an of thefo r strategies any of the four strategies
are:
any of the four strategies
are:
Discovering the other
partysresistancepoint
Discovering the other
partysresistancepoint party s resistance point
Influencing the other
i i
party s resistance point
Influencing the other
i i partys resistance point partys resistance point
(Lewicki, Saunders & Barry. 2011)
Tactical Tasks of Negotiators Tactical Tasks of Negotiators
2-10
Tactical Tasks of Negotiators Tactical Tasks of Negotiators
Assess outcome values and
th t f t i ti f
Assess outcome values and
th t f t i ti f the costs of termination for
the other party
the costs of termination for
the other party
Manage the other partys
impressions
Manage the other partys
impressions p
Modify the other partys
perceptions
p
Modify the other partys
perceptions perceptions
Manipulate the actual costs
f d l i i
perceptions
Manipulate the actual costs
f d l i i
(Lewicki, Saunders & Barry. 2011)
of delay or termination of delay or termination
A th Oth P t A th Oth P t
2-11
Assess the Other Party Assess the Other Party
Target, Resistance Point, and Costs of Terminating
Negotiations
Indirectly
Determinedatausedto
Indirectly
Determinedatausedto
Negotiations
Determine data used to
set:
T t
Determine data used to
set:
T t Target
Resistance points
Target
Resistance points
Directly
Opponent reveals the
Directly
Opponent reveals the
(Lewicki, Saunders & Barry. 2011)
pp
information
pp
information
Manage Impressions Manage Impressions
2-12
Manage Impressions Manage Impressions
Filter your behavior: Filter your behavior:
Say and do as little as possible Say and do as little as possible
Direct action to alter Direct action to alter
impressions
Present factsthat enhance
impressions
Present factsthat enhance Present facts that enhance
ones position
Present facts that enhance
ones position
(Lewicki, Saunders & Barry. 2011)
Modify Perceptions Modify Perceptions
2-13
Modify Perceptions Modify Perceptions
Make outcomes appear less
i
Make outcomes appear less
i attractive
Make the cost of obtaining
attractive
Make the cost of obtaining g
goals appear higher
M k d d d
g
goals appear higher
M k d d d Make demands and
positions appear more or
Make demands and
positions appear more or
less attractive to the other
party whichever suits your
less attractive to the other
party whichever suits your
(Lewicki, Saunders & Barry. 2011)
p y y
needs
p y y
needs
Manipulate Costs of Manipulate Costs of
2-14
p
Delay or Termination
p
Delay or Termination
Plan disruptive action Plan disruptive action
Raise the costs of delay to the other party
Formanalliancewithoutsiders
Raise the costs of delay to the other party
Formanalliancewithoutsiders Form an alliance with outsiders
Involve (or threaten to involve) other
partieswhocaninfluencetheoutcomein
Form an alliance with outsiders
Involve (or threaten to involve) other
partieswhocaninfluencetheoutcomein parties who can influence the outcome in
your favor
S h d l i l i
parties who can influence the outcome in
your favor
S h d l i l i Schedule manipulations
One party is usually more vulnerable to
Schedule manipulations
One party is usually more vulnerable to
(Lewicki, Saunders & Barry. 2011)
p y y
delaying than the other
p y y
delaying than the other
Positions Positions
2-15
Positions Positions
Opening offers Opening offers
Where will you start?
Openingstance
Where will you start?
Openingstance Opening stance
Attitude?
Opening stance
Attitude?
Competitive? Moderate?
Initial concessions
Competitive? Moderate?
Initial concessions
Should any be made? If
so howlarge?
Should any be made? If
so howlarge?
(Lewicki, Saunders & Barry. 2011)
so, how large? so, how large?
P iti D i N ti ti P iti D i N ti ti
2-16
Positions During Negotiations Positions During Negotiations
The role of concessions
Wi h h h i i h
The role of concessions
Wi h h h i i h Without them, there is either
capitulation or deadlock
Without them, there is either
capitulation or deadlock
Patterns of concession
Thepatterncontainsvaluable
Patterns of concession
Thepatterncontainsvaluable The pattern contains valuable
information
Final offers(commitment)
The pattern contains valuable
information
Final offers(commitment) Final offers (commitment)
This is all I can do
Final offers (commitment)
This is all I can do
(Lewicki, Saunders & Barry. 2011)
C it t T ti l C it t T ti l
2-17
Commitments: Tactical Commitments: Tactical
Establishing a commitment
Th i
Establishing a commitment
Th i Three properties:
Finality
Three properties:
Finality
Specificity
Consequences
Specificity
Consequences Consequences
Preventing premature
i
Consequences
Preventing premature
i commitment
Their commitment reduces
commitment
Their commitment reduces
(Lewicki, Saunders & Barry. 2011)
your flexibility your flexibility
C ti C it t C ti C it t
2-18
Creating Commitment Creating Commitment
Public pronouncement Public pronouncement
Linking with an outside
base
Linking with an outside
base base
Increase the
i f
base
Increase the
i f prominence of
demands
prominence of
demands
Reinforce the threat or
promise
Reinforce the threat or
promise
(Lewicki, Saunders & Barry. 2011)
promise promise
Commitments: Tactical Commitments: Tactical
2-19
Commitments: Tactical Commitments: Tactical
Ways to abandon a
committedposition
Ways to abandon a
committedposition committed position
Plan a way out
committed position
Plan a way out
Let it die silently
Restatethecommitment in
Let it die silently
Restatethecommitment in Restate the commitment in
more general terms
Minimizethedamagetothe
Restate the commitment in
more general terms
Minimizethedamagetothe Minimize the damage to the
relationship if the other
backsoff
Minimize the damage to the
relationship if the other
backsoff
(Lewicki, Saunders & Barry. 2011)
backs off backs off
Closing the Deal Closing the Deal
2-20
Closing the Deal Closing the Deal
Provide alternatives Provide alternatives
(2 or 3 packages)
Assumetheclose
(2 or 3 packages)
Assumetheclose Assume the close
Split the difference
Assume the close
Split the difference
Exploding offers
Deal s eeteners
Exploding offers
Deal s eeteners Deal sweeteners Deal sweeteners
(Lewicki, Saunders & Barry. 2011)
H db ll T ti H db ll T ti
2-21
Hardball Tactics Hardball Tactics
Four main options: Four main options:
Ignore them
Discussthem
Ignore them
Discussthem Discuss them
Respond in kind
Discuss them
Respond in kind
Co-opt the other
party (befriend
Co-opt the other
party (befriend p y(
them)
p y(
them)
(Lewicki, Saunders & Barry. 2011)
Typical Hardball Tactics Typical Hardball Tactics
2-22
Typical Hardball Tactics Typical Hardball Tactics
Good Cop/Bad Cop
b ll/ i hb ll
Good Cop/Bad Cop
b ll/ i hb ll Lowball/Highball
Bogey(playingupan
Lowball/Highball
Bogey(playingupan Bogey (playing up an
issue of little
importance)
Bogey (playing up an
issue of little
importance) importance)
The Nibble (asking
importance)
The Nibble (asking
for a number of small
concessions to)
for a number of small
concessions to)
(Lewicki, Saunders & Barry. 2011)
))
T i l H db ll T i T i l H db ll T i
2-23
Typical Hardball Tactics Typical Hardball Tactics
Chicken
i id i
Chicken
i id i Intimidation
Aggressive
Intimidation
Aggressive Aggressive
Behavior
S J b
Aggressive
Behavior
S J b Snow J ob
(overwhelm the
Snow J ob
(overwhelm the
other party with
information)
other party with
information)
(Lewicki, Saunders & Barry. 2011)
))
SS
2-24
Summary Summary
Negotiators need to:
Set aclear target and
Negotiators need to:
Set aclear target and Set a clear target and
resistance points
Set a clear target and
resistance points
Understand and work to
improve their BATNA
Understand and work to
improve their BATNA p
Start with good opening offer
p
Start with good opening offer
Make appropriate concessions
Managethecommitment
Make appropriate concessions
Managethecommitment
(Lewicki, Saunders & Barry. 2011)
Manage the commitment
process
Manage the commitment
process