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20 views

Special Topics

*For reporting purposes

Uploaded by

Kevin Julius Lopez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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You are on page 1/ 22

2-1

CHAPTER TWO

Strategy and Tactics of


Distributive Bargaining

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-2

The Distributive Bargaining


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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-3

The Distributive Bargaining


Situation
Preparation—set a
• Target point, aspiration point
• Walkaway, resistance point
• Asking price, initial offer

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-4

The Distributive Bargaining


Situation
Party A - Seller

Walkaway Point Target Point Asking Price

Initial Offer Target Point Walkaway Point

Party B - Buyer
McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved
2-5

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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-6

The Distributive Bargaining


Situation
Party A - Seller

Walkaway Point Target Point Asking Price


Alternative

Alternative
Initial Offer Target Point Walkaway Point

Party B - Buyer
McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved
2-7

Fundamental Strategies
• Push for settlement near opponent’s 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
McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved
2-8

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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-9

Tactical Tasks of Negotiators

• Assess outcome values and the costs of


termination for the other party
• Manage the other party’s impressions
• Modify the other party’s perceptions
• Manipulate the actual costs of delay or
termination

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-10

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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-11

Manage the Other Party’s


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

• Direct action to alter impressions


– Present facts that enhance one’s position

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-12

Modify the Other Party’s


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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-13

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
McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved
2-14

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?

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-15

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 offer (making a commitment)
– “This is all I can do”

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-16

Commitments:
Tactical Considerations
• Establishing a commitment
– Three properties:
• Finality
• Specificity
• Consequences
• Preventing the other party from committing
prematurely
– Their commitment reduces your flexibility
McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved
2-17

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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-18

Closing the Deal


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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-19

Dealing with Typical


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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-20

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)

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-21

Typical Hardball Tactics


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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved


2-22

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

McGraw-Hill/Irwin ©2006 The McGraw-Hill Companies, Inc., All Rights Reserved

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