Negotiation: Integrative and Distributive Bargaining

1. Negotiation: Integrative and Distributive Bargaining

2. Negotiation is an interpersonal decision-making process by which two or more people agree how to allocate scarce resources • Two Main Types of Negotiation: • Adversarial (Win-Lose): Negotiation is a contest. Each side pursues its own interests – at the expense of the other, if necessary. • Cooperative (Win-Win): Negotiation is a collaboration. Both sides work together for mutual satisfaction.

3. Distributive Bargaining: Slicing the Pie • also known as competitive, adversarial, or win-lose bargaining • the goals of one party are usually in fundamental and direct conflict with the goals of the other party • resources are fixed & limited, and both parties want to maximize their share of the resources • one party tries to give information to the other party only when it provides a strategic advantage

4. negotiation power depends on the information one can gather about the other party • negotiating parties focus much on their differences that they ignore what they have in common

5. Why study Distributive Bargaining? • Some interdependent situations you face ARE distributive and to do well you need to understand how they work. • Some negotiators will use DB strategies and tactics exclusively so need to know how to counter their effects.

6. Distributive Bargaining Problem: • DB can often be costly and counterproductive. Often cause the negotiating parties to focus so much on their differences that they ignore what they have in common. • People issues often arise as a result of “selfish” perception of negotiation (reputation and trust)

7. When is Distributive Bargaining effective for you: Distributive Bargaining strategies and tactics are quite useful when a negotiator wants to: • maximize the value obtained in a SINGLE DEAL • the relationship isUNIMPORTANT

8. Integrative Bargaining

9. Integrative Bargaining: • Expanding the Pie • also known as cooperative, collaborative, win-win, mutual gains, or problem solving bargaining • the goals of the parties are not mutually exclusive (i.e. one party’s gain is not at the other party’s expense) • negotiating parties focus on commonalities rather than differences

10. negotiators attempt to address needs and interests, not positions • both parties willingly exchange information and ideas • negotiators invent options for mutual gain • negotiators use objective criteria for standards of performance

11. Key Steps in the Integrative Negotiation Process: • Identify and define the problem • Understand the problem and bring interests and needs to the surface • Generate alternative solutions to the problem • Evaluate those alternatives and select among them

12. Brainstorming Guidelines: • Avoid judging or evaluating solutions • Separate the people from the problem • Be exhaustive in the brainstorming process • Ask outsiders

13. Overview Integrative Negotiation Process • Create a Free Flow of Information • Attempt to Understand the Other Negotiator’s Real Needs and Objectives (Interests-Positions) • Emphasize What is in Common Between Parties and Minimize the Differences • Search for Solutions That Meet Goals/Objectives of Both Sides

14. 10 Factor Framework • Negotiating goals • Attitudes to negotiation process • Personal styles • Styles of communication • Time sensitivity • Emotionalism • Agreement form • Agreement building process • Negotiation team organization • Risk taking

15. Negotiating Goals • Contract------------------Relationship Some cultures view contracts as a definitive set of rights and duties that strictly bind the two sides and determine their interaction thereafter while others view the contract as the beginning and the relationship dictates interaction thereafter.

16. Negotiating Attitudes Win/Lose-----------------------Win/Win 1/ negotiation is a win/win where both sides can win as both sides have compatible goals (integrative) 2/ negotiation is a win/lose where one side wins and other side loses as there are incompatible goals (distributive)

17. Personal Styles Informal-------------------------Formal Concerns the form a negotiation uses to interact with counterparts at the table Each culture has its own formalities and they have special meanings within that culture

18. Communication Direct---------------------------Indirect Indirect style often make assumptions about the level of knowledge possessed by their counterparts; communicate with veiled references, figurative and body language Direct style use clear and definitive responses to proposals and questions.

19. Sensitivity to Time High------------------------------Low Cultural discussions concerning time in negotiation often refer to two elements: • Promptness in meeting deadlines • Amount of time devoted to negotiation

20. Emotionalism High------------------------------Low Accounts of negotiation behavior almost always point to a particular groups tendency or lack thereof to display emotions Various cultures have different rules as to the appropriateness and forms of displaying emotion and these rule are brought to the negotiating table.

21. Agreement Form General------------------------------Specific Cultural factors may influence the form of written agreement that the parties make. Some prefer detailed contracts that attempt to anticipate all possible eventualities no matter how unlikely Some claim that essence of the deal is the relationship between parties, if unexpected circumstances arise parties should address the relationship and not the contract

22. Building an Agreement Bottom-up-------------------Top-down Related to the form of agreement, is it a inductive or deductive process Inductive (bottom-up)- does it begin with agreement on specifics (price, quantity) and the sum total of this becomes the contract. Deductive (top-down) does it begin with agreement in principle and proceed to specific items.

23. Team Organization One leader---------------------Group consensus Some cultures emphasize the individual while others stress the group and these values may influence the organization of the team

24. Risk Taking High------------------------------Low In negotiation the culture of negotiators can affect the willingness of one side to take risks in negotiation for example to divulge information, try new approaches, or to tolerate uncertainties in a proposed course of action.