1. How to engage in Distributive Bargaining

2. Agenda Definition of distributive bargaining Why use it
Contrast with integrative
Why use it
Terms used in Distributive bargaining
Strategies
Tactical Tasks
Positions
Commitment
Closing

3. Definition of Distributive Bargaining
Limited & fixed amount of resources
Goal conflict
Each maximizes getting share of resources available to oneself
No focus on relationship
Informational context
Each provides very little information while trying to extract the most from the other

4. Why learn about Distributive Bargaining?
Some situations demand it
Most people use it
Can be useful at the ‘end-stage’ of an integrative bargaining situation
Creating issues, creating value, claiming value

5. When to use Distributive Bargaining?
Single issue
e.g., this session’s exercise
Relationship is not important

6. Terms used in a Distributive Bargaining Situation
Target point
Resistance point
Initial offer
Bargaining range
Zone of potential agreement (ZOPA) or settlement range
Implications of Positive & negative bargaining range
Best Alternative to Negotiated Agreement
Settlement point
(the basics of distributive bargaining)

7. QUANTITATIVE STRUCTURE OF THE NEGOTIATION
Buyer’s Target
Buyer’s Resistance Price
Buyer’s Initial Offer 5 10 15 20 25 30 35
ZOPA
Seller’s Target
Seller’s Resistance Point
Seller’s Initial Offer
ZOPA = Zone of Potential Agreement.

8. Students write…..
On the basis of your role, and guessing things about the other role’s write out the following for each role on handout
Target point
Resistance point
Opening offer
Best Alternative to Negotiated Agreement

9. Plan your side & guess other party’s side
Target Point
Opening Offer
Resistance Point
BATNA
Your side
Other party’s side

10. Students write…..
Based on your plan, write out the following for the upcoming negotiation on a line graph
Target point
Resistance point
Opening offer
Bargaining range
Zone of potential agreement (ZOPA) or settlement range
Best Alternative to Negotiated Agreement
Settlement point

11. Plan/Guess ZOPA & Settlement Points

12. Strategy vs. Tactics Strategy Tactics
have a future long term relationship with the other party
How much and what kind of information you will share which will guide tactics of conceal vs. reveal
Tactics
Short-term, dynamic
Specific behaviors
types of questions used, listening behaviors, brainstorming options for mutual gain

13. Strategies used in Distributive Bargaining
Push for settlement near other’s resistance point
Make extreme offers and small concessions
Convince other to change his/her resistance point
Increase bargaining range
Create a positive settlement range
Convince other it was the best possible deal
Not that it is all they can get, or they are incapable of getting anymore, or they are losing

14. Four Tactical Tasks in Distributive Bargaining
Assess Other Party’s resistance point, target point, and costs for stopping Negotiation
Manage Other’s Impressions of your target point, your resistance point and the cost of stopping negotiation
Modify Other’s Perceptions
Manipulate Actual Costs of Delay or Termination
(key points to remember when negotiating with a car salesman)

15. Assess other party’s resistance point
1st Tactic:
Assess other party’s resistance point
Factors affecting other party’s resistance point
Other party’s resistance point
+/- +
+/-
Other’s party’s perception of how much you value issue
Other’s party’s lower value of a particular issue
Other’s vs. your cost to delaying/stopping negotiations
So ask and give information appropriately!

16. Distributive Bargaining
First
Offer
Opening Stance
Concessions
Steps in
Distributive Bargaining
Final Offer

17. How First Offers Work First Offer Anchoring
Final outcome of First Offer maker

18. How to mitigate the effect of First Offers
Anchoring
Final Outcome of First Offer maker
Other Party’s Focus on own target point
Other party’s focus on first offer maker’s resistance point

19. First Offers (FO) Creates advantage to offer maker
Exaggerated FO get higher settlements
Creates room for negotiation
Meta-messages to other party
(long way to go, needs to make more concessions, leads other to think they mis-perceived resistance point)
disadvantages=can be rejected, conveys attitude of toughness and breeds retailiation
Those with better BATNA make first offer

20. Opening Stance What you say…with your offer Competitive vs. moderate
Results in other party to respond in kind
Should be consistent with first offer or it could be confusing

21. Initial Concessions Initial Offer and counteroffer=bargaining range
Or reject initial offer
Symbolic messages in initial concessions
Packet of opening offer, opening stance, initial concessions display firm vs flexible stance
Firmness creates a climate of negotiation that is either reciprocated, or shortens negotiations

22. Concessions
Progression of Decreasing vs. increasing sizes of concessions and reciprocation
Across issues = logrolling in integrative bargaining
Size of concession & occurrence in negotiation sequence
Signals resistance point, target point, interpret ratios of concessions
Try out different packages, sweeten the end
Not all issues are worth the same to both negotiators = integrative bargaining skill

23. Final Offers Statement vs. using concession to convey ‘final offer’
Problem If other party does not recognize final offer ..
May lead to negative feelings
Can make the last concession more substantial to signal final offer stage…

24. http://www. youtube. com/watch
(Jack failed to negotiate well with his nanny on her salary)
3:45-5:12, 7:08-8:10