• Document: Chapter 2 Strategy and Tactics of Distributive Bargaining
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Chapter 2 Strategy and Tactics of Distributive Bargaining Overview The basic elements of a distributive bargaining situation, also referred to as competitive or win- lose bargaining, will be discussed. In a distributive bargaining situation, the goals of one party are usually in fundamental and direct conflict with the goals of the other party. Resources are fixed and limited, and both parties want to maximize their share of the resources. One important strategy is to guard information carefully – one party tries to give information to the other party only when it provides a strategic advantage. Distributive bargaining is basically a competition over who is going to get the most of a limited resource. There are two reasons that every negotiator should be familiar with distributive bargaining. First, some interdependent situations that negotiators face are distributive, and to do well in them negotiators need to understand how they work. Second, because many people use distributive bargaining strategies and tactics almost exclusively, all negotiators will find it important to know how to counter their effects. Some of the tactics discussed in the chapter will also generate ethical concerns. Some tactics are ethically accepted behavior whereas other tactics are generally considered unacceptable. Learning Objectives 1. Describe how the distributive bargaining process works and learn the fundamental strategies of distributive bargaining. 2. Four important tactical tasks for a negotiator in a distributive bargaining situation. 3. Positions taken during negotiation. 4. Commitment in a bargaining position. 5. Closing the agreement. 6. Typical hardball negotiation tactics. 7. Distributive bargaining skills applicable to integrative negotiations. I. The Distributive Bargaining Situation A. Distributive bargaining strategies and tactics are useful when a negotiator wants to maximize the value obtained in a single deal, when the relationship with the other party is not important, and when they are at the claiming value stage of negotiations. 1. The target point is a negotiator’s optimal goal, or the point at which she/he would like to conclude negotiations. The optimal goal is also referred to as resistance. 2. The resistance point is a negotiator’s bottom line – the point beyond which a person will not go. This is not known to the other party and should be kept secret. The resistance point is a high price for the buyer and a low price for the seller. 8 3. The asking price is the initial price set by the seller, or the first number quoted by the seller. 4. Both parties to a negotiation should establish their starting, target, and resistance points before beginning a negotiation. 5. The spreads between the resistance points, called the bargaining range, settlement range, or zone of potential agreement are very important. It is the area where actual bargaining takes place. When the buyer’s resistance point is above the seller’s he is minimally willing to pay more than she is minimally willing to sell for, there is a positive bargaining range. B. The role of alternatives to a negotiated agreement. 1. Alternatives are important because they give negotiators the power to walk away from any negotiation when the emerging deal is not very good. a) The role of alternatives are two fold: (1) Reach a deal with the other party. (2) No settlement at all. C. Settlement point. 1. For agreement to occur, both parties must believe that the settlement is the best that they can get (within a positive bargaining range). D. Bargaining mix. 1. The agreement necessary on several issues: the price, the closing date of the sale, renovations to the condo, and the price of items that could remain in the condo (such as drapes and appliances). E. Discovering the other party’s resistance point. 1. Learning about the other party’s resistance point, target, motives, feelings of confidence, and so on, the more likely you will be able to have a favorable settlement. You do not want the other party to know your resistance point. Because each party wants to know the other’s resistance point, communication can become complex. F. Influencing the other party’s resistance point. 1. The following factors are important in attempting to influencing the other party’s resistance point: a) The value the other attaches to a particular outcome; b) The costs the other attaches to delay or difficulty in negotiations; c) The cost the other attaches to having the negotiations aborted. 9 2. Understanding your own situation, and the value of your particular outcome, will help you to understand the other person’s. Four major positions show how

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