How to engage in Distributive
Bargaining
• http://youtu.be/HBSsbWVZzto
Agenda
 Definition of distributive bargaining
 Contrast with integrative
 Why use it
 Terms used in Distributive bargaining





Strategies
Tactical Tasks
Positions
Commitment
Closing
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
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
When to use Distributive Bargaining?
 Single issue
 e.g., this session’s exercise
 Relationship is not important
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
• http://youtu.be/5fmY3JV6iNI (the basics of distributive
bargaining)
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 Resistance Point
Seller’s Target
Seller’s Initial Offer
ZOPA = Zone of Potential Agreement.
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
Plan your side & guess other party’s side
Target
Point
Your side
Other party’s
side
Opening
Offer
Resistance
Point
BATNA
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
Plan/Guess ZOPA & Settlement Points
Strategy vs. Tactics
• Strategy
– 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
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
Four Tactical Tasks in Distributive Bargaining
1. Assess Other Party’s resistance point, target point, and costs
for stopping Negotiation
2. Manage Other’s Impressions of your target point, your
resistance point and the cost of stopping negotiation
3. Modify Other’s Perceptions
4. Manipulate Actual Costs of Delay or Termination
1st Tactic:
Assess other party’s resistance point
Factors affecting other party’s resistance point
Other party’s resistance point
+
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!
+/Other’s party’s
perception of how
much you value issue
First
Offer
Opening Stance
Concessions
Steps in
Distributive Bargaining
Final Offer
How First Offers Work
First Offer
Anchoring
Final outcome of
First Offer maker
How to mitigate the effect of First Offers
First Offer
Other Party’s
Focus on own
target point
Anchoring
Final Outcome of
First Offer maker
Other party’s
focus on first offer
maker’s
resistance point
• 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
• 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
• 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
• 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
• 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…
Last points…
• http://www.youtube.com/watch?v=4XizDMfgVjM
(Jack failed to negotiate well with his nanny on her
salary)