Negotiation Versatility Parts 1-
Strategy and Tactics of Distributive
Negotiation
Negotiation & Conflict Management
PowerPoint 2
John D. Blair, PhD
Georgie G. & William B. Snyder Professor in Management
The Distributive Negotiation
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
Preparation—set a
 Target point (aspiration point)
 Resistance point (walkaway point)
 Asking price (initial offer)
2
The Distributive Bargaining
Situation—Walk Away etc.
Party A - Seller
Walkaway Point
Target Point
Asking Price
Potential Area of Negotiation
Most Likely
Area of
Negotiation
Initial Offer
Target Point
Walkaway Point
Party B - Buyer
3
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
4
The Asymmetrical Distributive
Bargaining Situation—
Only One Party Has Very Good BATNA
Party A - Seller
Walkaway Point
Target Point
Asking Price
Potential Area of Negotiation Alternative
Most Likely
Area of
Negotiation
Alternative
Initial Offer
Target Point
Walkaway Point
Party B - Buyer
5
The Distributive Bargaining
Situation—Both Have Weak BATNAs
Party A - Seller
Walkaway Point
Target Point
Potential Area of Negotiation
Most Likely
Area of
Negotiation
Asking Price
Weak Alternative
Zone of
Potential
Agreement
Weak Alternative
Initial Offer
Target Point
Walkaway Point
Party B - Buyer
6
QUANTITATIVE STRUCTURE OF THE NEGOTIATION—A Specific Example
Note: Aspirations shown here are for illustration; the actual aspirations formulated by participants
will vary. Reservation prices are given fairly precisely in role instructions.
ZOPA = Zone of Potential Agreement
Goals/Interests:
-Purchase 10,000-18,000 units
-One Shot Deal
BATNA = No Alternative Source
Buyer’s
Aspiration
Buyer (AccelMedia)
5
15
10
Buyer’s
Reservation Price
20
25
30
35
40
45
ZOPA
Seller (GTechnica)
Seller’s
Aspiration
Seller’s
Reservation Price
Goals/Interests:
-Sell up to 15,000 units
-One Shot Deal
BATNA = No Alternative Buyer
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Fundamental Strategies
 Push for settlement near opponent’s
resistance (walkaway)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
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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
9
Tactical Tasks of Negotiators
 Assess outcome values and the costs of
termination for the other party
 Manage the other party’s impressions of
you
 Modify the other party’s perceptions of
your offers
 Manipulate the actual costs of delay or
termination to you or to the other party
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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
11
Manage the Other Party’s
Impressions of You
 Screen your behavior:
 Say and do as little as possible
 Direct action to alter impressions
 Present facts that enhance one’s
position
12
Manage the Other Party’s
Perceptions of You & Your Offers
 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
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
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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?
15
Positions Taken During
Negotiations—Concessions etc.
 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”
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Commitments:
Tactical Considerations
 Establishing a commitment
 Three properties:
 Finality
 Specificity
 Consequences
 Preventing the other party from
committing prematurely
 Their commitment reduces your flexibility
17
Abandoning Commitments
 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
18
Closing the Deal
 Provide alternatives (2 or 3
packages)
 Assume the close
 Split the difference
 Exploding offers
 Deal sweeteners
19
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)
 Chicken
 Intimidation
 Aggressive Behavior
 Snow Job (overwhelm the other party
with information)
20
Dealing with Typical
Hardball Tactics
 Four main options:




Ignore them
Discuss them
Respond in kind
Co-opt the other party (befriend them)
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