Business Negotiation Skills
Strategy and Tactics of
Distributive Bargaining
Presented by :
Jaideip Khaatak
Research Scholar
IMSAR, MDU, Rohtak
Feedback:
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[email protected]
Contents
• Distributive Bargaining
• Bargaining Zone
• Fundamental Strategies
• Bargaining Zone
• Tactical Task
• Commitment
• Closing the Deal
• Hardball Tactics
Distributive bargaining
• Distributive bargaining is a competitive bargaining strategy
in which one party gains only if the other party loses
something.
• It is used as a negotiation strategy to distribute fixed
resources such as money, resources, assets, etc. between
both the parties.
Distributive Bargaining
• Target Point
– The Negotiator’s optimal goal
• Also called as Negotiator’s
Aspiration
• Resistance Point
– Negotiator’s bottom line
• Sometimes referred to as a
Reservation Price
• Asking Price
– The initial price set by seller
• Buyer may counter with initial offer
Distributive Bargaining
Goals of one party are in fundamental,
direct conflict to another party
Resources are fixed and limited
Maximize the value obtained in a single deal
Long term relationship not important
Distributive Bargaining
Buyers = as low as possible
Sellers = as high as possible
Claiming as much value as possible
in the negotiation
Bargaining Zone
• The range between one party’s
reservation point and the other
party’s reservation point.
• A positive bargaining zone exists
when the two parties’ points
overlap.
• A positive bargaining zone
provides room for negotiation.
Positive Bargaining Zone
Negative Bargaining Zone
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
• If there are no attractive alternatives:
Negotiators have much less bargaining power
Fundamental Strategies
1. Push for settlement near opponents
resistance point
2. Get the other party to reduce their
resistance point
3. If settlement range is negative either:
o Get the other side to reduce their resistance point
o Modify your own resistance point
4. Convince the other party that settlement is
the best possible
Keys to 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
The 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
Assess Outcome Values and the Costs of
Termination for the Other Party
• Indirectly:
Determine information opponent used
to set :
• Target
• Resistance points
• Directly:
Ask the information of opponent
Manage the Other Party’s Impressions
• Screening activities:
Say and do as little as possible
• Direct action to alter impressions:
Present facts that enhance one’s position
Modify the Other Party’s Perceptions
• Make Outcome 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
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 that can
influence the outcome in your favor Manipulate the Actual
Costs of Delay or Termination
• Manipulate the scheduling of negotiations
• One party is usually more vulnerable to delaying than the
other
Closing the Deal
• Provide alternatives (2 or 3 packages)
• Assume the close
• Split the difference
Closing the Deal
• Exploding offers
• Deal Sweeteners
• Closing the Deal
Hardball Tactics Outline
• What are Hardball Tactics?
• Typical Hardball Tactics
• Dealing with Typical Hardball Tactics
• Summary
What are Hardball Tactics?
• They are designed to pressure targeted parties
to do things they would not other wise do.
• They are tactics which result in a change out
come of Distributive Bargaining Process.
• They are tactics which work on poorly
prepared negotiators.
Typical Hardball Tactics
• Good Guy/Bad Guy
• Highball/Lowball
• Bogey
• Nibble
• Chicken
• Intimidation
• Snow Job
• Aggressive Behavior
Good Guy/Bad Guy
• Named after police interrogation technique.
• It is relatively transparent, especially with
repeated use.
• Negotiators using this tactic can become so
involve with their game and act they fail to
concentrate on obtaining their goals.
Highball/Lowball
• Starts with a ridiculously high/low opening
offer that know they will never achieve.
• The tactics goal is have the other party
reevaluate their opening offer and move
closer to the resistance point.
• The risk is the other party will think
negotiating is a waste of time.
Bogey
• When a negotiator pretends an issue
important and it is not.
• It only works well IF they pick a issue that is
important to the other side.
• The book says this can be a difficult tactic to
enact.
Nibble
• Is a tactic used to get small concession
without negotiating.
• The concession is too small to lose the deal
over, but large enough to upset the other side.
• It is felt that nibble tactic is not in good faith
and may seek revenge in future negotiations.
Chicken
• Negotiators who use this tactic combine a
large bluff and threaten actions.
• A high stakes gamble.
Intimidation / Aggressive Behavior
• It is guilt, anger, legitimacy, fear, what ever gives
you power over the other party.
• If you are making a concession, because you
assume the other party is more powerful, or
simply accepts the legitimacy of the other
negotiator, as the books says you are
INTIMIDATED.
• Aggressive behavior is similar accept it is the
relentless pushing.
Snow Job
• Is the Governments favorite tactic when
releasing information to the public.
• It is the overwhelming of information that you
have trouble determining which facts are real
or important.
Dealing with Typical Hardball Tactics
• Good Guy/Bad Guy
– Especially if you call them out on it at the
beginning.
• Highball/Lowball
– The best way to deal is not to counter the offer.
– Be prepared to leave to demonstrate
dissatisfaction of using this tactic.
Dealing with Typical Hardball Tactics Cont….
• Bogey
– Is difficult tactic to defend against; however, being will
prepared for negotiation will make you less susceptible to
it.
– Also watch out for sudden reversals in positions.
• Nibble
– Before closing a deal ask “What else do you want?” giving
both parties a chance to negotiate in good faith.
– Always have a your own list of nibble prepared to offer in
exchange.
Dealing with Typical Hardball Tactics Cont….
• Chicken
– Is very difficult to defend against.
– Preparation and a through understanding of the situation.
– Use external experts to help weigh your options.
• Intimidation
– If the other negotiator is acting aggressively, then
discussion the negotiation process.
– Another effective strategy is the use of a team, usually not
everyone is intimidated by the same thing and they offer
support if the intimidation is uncomfortable.
Dealing with Typical Hardball Tactics Cont….
• Snow Job
– Listen for consistent and inconsistent information.
Do not be afraid to ask questions until you
understand the answer.
– If the matter is highly technical suggest for a
technical expert to look over the technical issues.
– Again, preparation is the key to dealing with a
snow job tactic.
Thank You !
