CHAPTER TWO

Strategy and Tactics of

Distributive Bargaining

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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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 ones own share of resources is
the goal for both parties

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The Distributive Bargaining

Situation
Situation includes:
Starting points (initial offers)
Target points
Resistance points (walkaway)
Alternative outcomes

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The Distributive Bargaining

Situation
PartyASeller

WalkawayPointTargetPointAskingPrice

InitialOfferTargetPointWalkawayPoint
PartyBBuyer

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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:
Set their goals higher
Make fewer concessions

If there are no attractive alternatives:

Negotiators have much less bargaining power

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The Distributive Bargaining

Situation
PartyASeller

WalkawayPointTargetPointAskingPrice
Alternative

Alternative
InitialOfferTargetPointWalkawayPoint
PartyBBuyer

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Fundamental Strategies
Push for settlement near opponents 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 of the four
strategies are:
Discovering the other partys resistance
point
Influencing the other partys resistance
point

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Tactical Tasks of Negotiators

Assess outcome values and the costs of
termination for the other party
Manage the other partys impressions
Modify the other partys perceptions
Manipulate the actual costs of delay or
termination

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Assess the Other Partys Target,

Resistance Point, and Costs of
Terminating Negotiations
Indirectly
Determine information opponent used to set:
Target
Resistance points

Directly
Opponent reveals the information

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Manage the Other Partys

Impressions
Screen your behavior:
Say and do as little as possible

Direct action to alter impressions

Present facts that enhance ones position

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Modify the Other Partys

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
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

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Positions Taken
During Negotiations
Opening offers
Where will you start?

Opening stance
What is your attitude?
Competitive? Moderate?

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

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Commitments:
Tactical Considerations
Establishing a commitment
Three properties:
Finality
Specificity
Consequences

Preventing the other party from committing

prematurely
Their commitment reduces your flexibility

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Ways to Create a Commitment

Public pronouncement
Linking with an outside base
Increase the prominence of demands
Reinforce the threat or promise

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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

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Closing the Deal

Provide alternatives (2 or 3 packages)

Assume the close
Split the difference
Exploding offers
Deal sweeteners

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Dealing with Typical

Hardball Tactics
Four main options:
Ignore them
Discuss them
Respond in kind
Co-opt the other party (befriend them)

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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)

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Typical Hardball Tactics

Chicken
Intimidation
Aggressive Behavior
Snow Job (overwhelm the other party
with information)

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Summary
Negotiators need to:
Set a clear target and resistance points
Understand and work to improve their BATNA
Start with good opening offer
Make appropriate concessions
Manage the commitment process