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CHAPTERTWOStrategyandTacticsofDistributiveBargainingMcGraw-Hill/IrwinCopyright?2011byTheMcGraw-HillCompanies,Inc.Allrightsreserved.2-2ThreeReasonsNegotiatorsShouldBeFamiliarwithDistributiveBargainingIndependentsituationsrequireknowinghowthisworksinordertodowellNeedtoknowhowtocountertheeffectsofthestrategiesEverysituationhasthepotentialtorequireskillsatthe“claiming-value”stage2-3TheDistributiveBargainingSituationGoalsofonepartyareinfundamental,directconflicttoanotherpartyResourcesarefixedandlimitedMaximizingone’sownshareofresourcesisthegoalforbothparties2-4TheDistributiveBargainingSituationSituationincludes:Startingpoints(initialoffers)TargetpointsResistancepoints(walkaway)Alternativees2-5TheDistributiveBargaining

Situation

PartyB-BuyerPartyA-SellerWalkawayPointTargetPointAskingPriceInitialOfferTargetPointWalkawayPoint2-6TheRoleofAlternativestoaNegotiatedAgreementAlternativesgivethenegotiatorpowertowalkawayfromthenegotiationIfalternativesareattractive,negotiatorscan:SettheirgoalshigherMakefewerconcessionsIftherearenoattractivealternatives:Negotiatorshavemuchlessbargainingpower2-7TheDistributiveBargaining

Situation

PartyB-BuyerPartyA-SellerWalkawayPointTargetPointAskingPriceInitialOfferTargetPointWalkawayPointAlternativeAlternative2-8FundamentalStrategiesPushforsettlementnearopponent’sresistancepointGettheotherpartytochangetheirresistancepointIfsettlementrangeisnegative,either:GettheothersidetochangetheirresistancepointModifyyourownresistancepointConvincetheotherpartythatthesettlementisthebestpossible2-9KeystotheStrategiesThekeystoimplementinganyofthefourstrategiesare:Discoveringtheotherparty’sresistancepointInfluencingtheotherparty’sresistancepoint2-10TacticalTasksofNegotiatorsAssessevaluesandthecostsofterminationfortheotherpartyManagetheotherparty’simpressionsModifytheotherparty’sperceptionsManipulatetheactualcostsofdelayortermination2-11AssesstheOtherParty’sTarget,ResistancePoint,andCostsofTerminatingNegotiationsIndirectlyDetermineinformationopponentusedtoset:TargetResistancepointsDirectlyOpponentrevealstheinformation2-12ManagetheOtherParty’sImpressionsScreenyourbehavior:SayanddoaslittleaspossibleDirectactiontoalterimpressionsPresentfactsthatenhanceone’sposition2-13ModifytheOtherParty’sPerceptionsMakeesappearlessattractiveMakethecostofobtaininggoalsappearhigherMakedemandsandpositionsappearmoreorlessattractivetotheotherparty–whicheversuitsyourneeds2-14ManipulatetheActualCostsof

DelayorTerminationPlandisruptiveactionRaisethecostsofdelaytotheotherpartyFormanalliancewithoutsidersInvolve(orthreatentoinvolve)otherpartieswhocaninfluencetheeinyourfavorSchedulemanipulationsOnepartyisusuallymorevulnerabletodelayingthantheother2-15PositionsTaken

DuringNegotiationsOpeningoffersWherewillyoustart?OpeningstanceWhatisyourattitude?Competitive?Moderate?InitialconcessionsShouldanybemade?Ifso,howlarge?2-16PositionsTaken

DuringNegotiationsTheroleofconcessionsWithoutthem,thereiseithercapitulationordeadlockPatternsofconcessionmakingThepatterncontainsvaluableinformationFinaloffers(makingacommitment)“ThisisallIcando”2-17Commitments:

TacticalConsiderationsEstablishingacommitmentThreeproperties:

FinalitySpecificityConsequencesPreventingtheotherpartyfromcommittingprematurelyTheircommitmentreducesyourflexibility2-18WaystoCreateaCommitmentPublicpronouncementLinkingwithanoutsidebaseIncreasetheprominenceofdemandsReinforcethethreatorpromise2-19Commitments:

TacticalConsiderationsWaystoabandonacommittedpositionPlanawayoutLetitdiesilentlyRestatethecommitmentinmoregeneraltermsMinimizethedamagetotherelationshipiftheotherbacksoff2-20ClosingtheDealProvidealternatives(2or3packages)AssumethecloseSplitthedifferenceExplodingoffersDealsweeteners2-21DealingwithTypical

HardballTacticsFourmainoptions:IgnorethemDiscussthemRespondinkindCo-opttheotherparty(befriendthem)2-22TypicalHardballTacticsGoodCop/BadCopLowball/HighballBogey(playingupanissueoflittleimportance)TheNibble(askingforanumberofsmallconcessionsto)2-23TypicalHardballTacticsChickenIntimidationAggressiveBehaviorSnow

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