Negotiation Versatility Part 1 Strategy and Tactics of Distributive Negotiation

1. Negotiation Versatility Part 1Strategy and Tactics of Distributive Negotiation Negotiation & Conflict Management PowerPoint 2 John D. Blair, PhD Georgie G. & William B. Snyder Professor in Management

2. The Distributive Negotiation 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 Preparation—set a • Target point (aspiration point) • Resistance point (walkaway point) • Asking price (initial offer)

3. The Distributive Bargaining Situation—Walk Away etc. Party A - Seller Walkaway Point Target Point Asking Price Zone of Potential Agreement Intense Area of Negotiation Initial Offer Target Point Walkaway Point Party B - Buyer

4. The Role of Best Alternatives to a Negotiated Agreement (BATNAs) • Good “best” alternatives can give the negotiator power to walk away from the negotiation • If best alternatives are attractive, negotiators can: • Set their goals higher • Make fewer concessions • If there are no attractive best alternatives: • Negotiators have much less bargaining power

5. The Distributive Bargaining Situation—Both Have Weak BATNAs Party A - Seller Walkaway Point Target Point Asking Price Zone of Potential Agreement Seller’s BATNA Intense Area of Negotiation Buyer’s BATNA Initial Offer Target Point Walkaway Point Party B - Buyer

6. The Asymmetrical Distributive Bargaining Situation—Only One Party Has Very Good BATNA Party A - Seller Walkaway Point Target Point Asking Price Zone of Potential Agreement Seller’s BATNA Intense Area of Negotiation Buyer’s BATNA Initial Offer Target Point Walkaway Point Party B - Buyer Potential Area of Negotiation

7. Fundamental Strategies • Push for settlement near opponent’s resistance (walkaway)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

8. 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

9. Tactical Tasks of Negotiators • Assess outcome values and the costs of termination for the other party • Manage the other party’s impressions of you • Modify the other party’s perceptions of your offers • Manipulate the actual costs of delay or termination to you or to the other party

10. 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

11. Manage the Other Party’s Impressions of You • Screen your behavior: • Say and do as little as possible • Direct action to alter impressions • Present facts that enhance one’s position

12. Manage the Other Party’s Perceptions of You & Your Offers • 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

13. 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

14. 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?

15. Positions Taken During Negotiations—Concessions etc. • 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”

16. Commitments: Tactical Considerations • Establishing a commitment • Three properties: • Finality • Specificity • Consequences • Preventing the other party from committing prematurely • Their commitment reduces your flexibility

17. Abandoning Commitments • 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

18. Closing the Deal • Provide alternatives (2 or 3 packages) • Assume the close • Split the difference • Exploding offers • Deal sweeteners

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

20. Dealing with Typical Hardball Tactics • Four main options: • Ignore them • Discuss them • Respond in kind • Co-opt the other party (befriend them)