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Strategies and tactics of

INTEGRATIVE BARGAINING
In partial fulfillment of the course titled Negotiation Skills

Submitted to: Prof.Arun Nabar

Submitted by: Group 10

Sagar Yerunkar (61)

Aditya Agrawal (108)

Varun Anand (204)

Vinay Chokhra(209)

Anvesha Poswalia (228)

Amitesh Singh (236)

Amar Bhartia (255)


CONTENTS

1. INTRODUCTION..............................................................................................................................3

1.1 WHY INTEGRATIVE BARGAINING?...............................................................................................3

1.2 ESSENTIALS FOR A “WIN-WIN” BARGAINING..............................................................................4

1.3 THOMPSON’S PYRAMID MODEL.................................................................................................5

2. THE PROCESS OF INTEGRATIVE BARGAINING.................................................................................7

3. USING INTEGRATIVE AND DISTRIBUTIVE BARGAINING TOGETHER...............................................10


1. INTRODUCTION

“Integrative refers to the potential for the parties' inte rests to be combined in ways that create
joint value or enlarge the pie."- Brad Spangler

Integrative bargaining, also called interest-based or win-win bargaining is a negotiation strategy


in which parties collaborate to find a mutually beneficial (win-win) solution to their dispute.
This strategy focuses on developing mutually beneficial agreements based on the interests of
the disputants. Interests may include the needs, desires, concerns, and fears important to each
side. They are the underlying reasons why people become involved in a conflict.

Potential for integration only exists when there are multiple issues involved in the negotiation.
This is because the parties must be able to make trade-offs across issues in order for both sides
to be satisfied with the outcome.

The true meaning of a win-win settlement is a negotiated agreement where the agreement


reached cannot be improved further by any discussions. So your outcome cannot be improved
for your benefit, and similarly, the agreement for the other party cannot be improved further
for their benefit either. By definition, there is no value left on the table and all creative options
have been thoroughly explored and exploited.

1.1 WHY INTEGRATIVE BARGAINING?

Integrative bargaining is important because it usually produces more satisfactory outcomes for
the parties involved than does positional bargaining. Positional bargaining is based on fixed,
opposing viewpoints (positions) and tends to result in compromise or no agreement at all.
Oftentimes, compromises do not efficiently satisfy the true interests of the disputants. Instead,
compromises simply split the difference between the two positions, giving each side half of
what they want. Creative, integrative solutions, on the other hand, can potentially give
everyone all of what they want.

There are often many interests behind any one position. If parties focus on identifying those
interests, they will increase their ability to develop win-win solutions. The essence of the
integrative process is sometimes attributed to the work of Mary Parker Follet in the 1920s, who
described the classic story of two sisters who each coveted the same orange. They decided to
share it and used the distributive tactic of splitting it in half. After each sister took half of the
orange home, one sister who wanted only the juice, squeezed out the juice, drank it, and threw
out the peel. The other sister, who wanted only the peel for a cake she was baking, threw out
the pulp and added her half of the peel to her cake batter. Neither sister considered expressing
her true interest in the orange, but rather chose to negotiate for as much of the total orange as
possible. Both sisters would have realized a greater settlement if only they had chosen to be
open and truthful about their interests.

Integrative solutions are generally more gratifying for all involved in negotiation, as the true
needs and concerns of both sides will be met to some degree. It is a collaborative process and
therefore the parties actually end up helping each other. This prevents ongoing ill will after the
negotiation concludes. Instead, interest-based bargaining facilitates constructive, positive
relationships between previous adversaries.

Integrative negotiators generally strive to achieve two goals:

1. To create as much value as possible for both sides


2. To claim as much value as possible for their own interests

1.2 ESSENTIALS FOR A “WIN-WIN” BARGAINING

There are differing opinions as to which party actually benefits more from a course of action
designed to be beneficial to both parties.  Do both parties really win in “win-win” bargaining?

The concept of win-win is actually rooted in game theory.  It is a term that refers to the possible
outcome of a game involving two parties.  The other two potential results are win-lose and
lose-lose.  Context is important here.  How each party perceives its outcome relative to its
standing before the game will go a long way toward determining who “won” when the game is
over. Expectations going into the game matter; lowered expectations can reframe the game.
When applied to contract negotiations, the basic game theory concepts described above still
apply.  Both parties could perceive that they won, both parties could perceive that they lost, or
one party could feel like a winner while the other feels as though it lost.  Expectations going in
do make a difference.  If either party begins a round of bargaining expecting to get “its way” on
all targeted issues, irrespective of what matters to the other party, then it will be all but
impossible to feel like a winner when bargaining concludes.

In the national bestseller “Getting to Yes: Negotiating Agreement Without Giving In,” Roger
Fisher and William Ury delineate five distinguishing characteristics of a win-win bargaining:

 Bargaining over positions is avoided


 People are separated from the problem
 Focus is placed on interests, not positions
 Options for mutual gain are created and
 Objective criteria are used to select the appropriate resolution to an issue.

1.3 THOMPSON’S PYRAMID MODEL

Integrative negotiation, according to negotiation researcher Leigh Thompson of Northwestern


University, can be described as both a process and an outcome of negotiation.

The parties involved seek to integrate their interests and therefore produce negotiated
outcomes that exceed those normally achieved through distributive bargaining. Thompson
further suggests a pyramid model of integrative agreements, as illustrated below.

Fig 1. A Pyramid Model of Integrative Agreements

In the model, Level 1 agreements are those in which both parties achieve an outcome that is
better than their reservation point, and thus is within the ZOPA, which is a "Zone of Possible
Agreement" which exists if there is a potential agreement that would benefit both sides more
than their alternative options do.

Level 2 agreements produce an outcome that is even better for both parties than Level 1
agreements, possibly by introducing a new issue for which both parties have a similar objective.
Finally, Level 3 agreements are those for which it is impossible to improve the outcome from
the perspective of both parties, one in which any change that would benefit one party would
harm the other party. Parties ideally seek to reach Level 3 agreements, and therefore “leave
nothing on the table.” Integrative negotiators do not stop at Level 1; they seek to gain the
benefits of higher, mutually beneficial levels 2 and 3.
In reality it is more likely that negotiators can achieve Level 1 agreements in which both parties
exceed their reservation points and BATNAs(best alternative to a negotiated agreement ) or,
through the development of new options, that they can negotiate Level 2 agreements that
create additional value for both parties above the minimums achieved in Level 1. Level 3
agreements can be described as pareto optimal because they represent improvements above
Level 2 for both parties and achieve an agreement that cannot be improved for one party
without harming the other party.

Thus the outcome of any level of an integrative negotiation is superior to that of a distributive
negotiation.

2. THE PROCESS OF INTEGRATIVE BARGAINING

Integrative Bargaining primarily consists of two methods: The Categorization Method and
Interest-Based Bargaining (IBB)

The Categorization Method

The steps involved in this method are:

Step 1: Exchange information and identify all of the issues to be negotiated. Each side explains
its interests and concerns on the issues.
Step 2: Develop a common list of all issues that were discussed by either side during the first
step, and seek to classify each issue as (1) compatible—similar interests; (2) exchange—
approximately equal value, which may be traded; or (3) distributive—not compatible, cannot be
traded, and therefore whose value must be distributed.

Step 3: Reach final agreement on each of the compatible issues and remove them from further
negotiation.

Step 4: Trade or exchange issues of approximately equal value—in some cases including several
issues in a single exchange.

Step 5: Resolve any remaining issues—often accomplished through distributive bargaining on


each separate issue.

Disadvantages of the Categorization Method are:

1. The inability of the parties to look for and recognize the compatible and exchange issues
and thus realize maximum gain for both sides is a common mistake made by novice
negotiators—possibly 50% of all negotiators!
2. If the balance of power is perceived by the parties to lean heavily to one side, then the
integrative process may easily slide into a distributive process on each issue
3. Negotiators, like most people in society, believe they know what the other party will
accept on a given issue. Then, due to this overconfidence in their knowledge of the
other party, they fail to listen carefully and learn the other side’s underlying interests,
and therefore fail to adjust their belief of what is acceptable.

Interest Based Bargaining

Interest-based bargaining(IBB) has a different philosophy from that of distributive or traditional


integrative methods of negotiation. At the core, it requires negotiators to think of themselves
as joint problem solvers who seek solutions to mutual problems or issues of interest. The
Federal Mediation and Conciliation Service (FMCS) is often credited as having developed the
basic principles and steps of IBB. A 2000 report by the FMCS noted that IBB was the training
method most requested by new negotiators. The principles and steps of IBB are as follows:

1. Sharing of information: Both sides fully share all relevant information including
economic forecasts, financial data, industry reports, costs, and so forth.
2. Willingness to forgo power or leverage: The parties strive to find mutually agreeable
solutions to issues of concern and commit to not using their perceived power or
leverage to sway the other party. Objective standards instead of power are used to
evaluate options.
3. Brainstorming to create options:When issues are presented, rather than state their
position or demand, as is common in traditional bargaining methods, the parties engage
in brainstorming sessions to identify new options to resolve the issues. These options
are mutually agreeable to both parties.
4. Focusing on issues, not personalities: By discussing the interests that underlie the issues,
IBB negotiators can treat others with dignity and courtesy because they are not focused
on discrediting the position of the other party. IBB advocates claim that in traditional
negotiations, because the bargainers must defend their own “arbitrary” positions—
saying things like “I must have this price” or “This is my position, take or leave it”—and
because they must also attack the arbitrary positions of the other party, they often must
resort to yelling and threatening as a means of making their points.
5. Leaving past issues behind: Discussions are focused on current issues and how to
resolve them. The parties agree to not bring up past disagreements or try to settle old
scores.
6. Expressing interests, not positions: Once options are identified through brainstorming,
the parties—unlike the process in traditional negotiations—do not each take a position
and defend it, and then try to exchange concessions until a middle ground is found.
Instead they ask probing questions, use objective analysis, and seek to develop options
that meet the mutual goals of both parties.
7. Both parties committing to IBB: An essential factor of most IBB negotiations is that both
parties agree at the start to receive IBB training (if they have not in the past) and to
accept and utilize the IBB process.

The FMCS does not believe that IBB can become a universal bargaining method that
replaces distributive, integrative, or other traditional methods. In fact, it notes that
unless the parties have had a positive past relationship and have received joint IBB
training, it is not likely to succeed in a given negotiation situation. The growth of IBB as a
bargaining method, according to the FMCS, is likely due to the realization by both labor
and management leaders that they have a fundamental mutual interest in the long-term
success of the organization.

Disadvantages of the IBB are:


1. The IBB method may waste a great deal of time as negotiators discuss interests and
possible options when a mutual solution could be quickly reached.
2. IBB negotiators may have difficulty transferring a proposed option into a practical,
concrete solution.
3. The standards suggested by IBB negotiators are often not precise, and are subjective,
thus not easily agreed to by both parties

3. USING INTEGRATIVE AND DISTRIBUTIVE BARGAINING TOGETHER


Distributive outcomes, also called, "win-lose" bargaining, is a competitive negotiation strategy
that is used to decide how to distribute a fixed resource (i.e. money) between two negotiators
so that the more one gets, the less the other gets. In distributive bargaining, each party tries to
secure the most benefit for themselves, without regard for the other side's outcome. For
example, when negotiating for a used car – the buyer either gets that extra $2,500 or the
dealership does. If the buyer feels that he got a good deal, he "won." If he walks away feeling
like he paid too much money for that car, he "lost." In contrast, Integrative bargaining is a
negotiation strategy in which all parties collaborate to find a "win-win" solution to their dispute
so that all parties achieve maximum mutual gains. The above explanation is summed up in the
following table:

Characteristics Integrative Negotiations Distributive Negotiation


Outcome Win-Win Win -Lose

Motivation Joint Gain Individual Gain

Interests Congruent Opposed

Relationship Long-Term Short-Term

Issues Multiple issues Single issue

Although distributive bargaining is frequently seen as the opposite of integrative bargaining,


the two are not mutually exclusive. Distributive bargaining plays a role in integrative bargaining,
because ultimately "the pie" has to be split up. Consider the following example:

Two sisters were fighting over the last orange in the fruit bowl. They went back and forth, each
girl insisting that she should get it and both refusing to give up. They were about to agree on
cutting the orange in half when their aunt walked in and realized what was going on. She
turned to the girls and asked them each why they wanted the orange. As it turns out, one
wanted to eat the orange, and the other wanted the peel for an art project she was working on.
Once they realized this, they were able to "split" the orange in such a way that both got exactly
what they wanted. The girls were engaged in distributive negotiations (though it probably felt
like bickering to them), while their aunt was suggesting an integrative solution

Integrative bargaining is a good way to make the pie (joint value) as large as it possibly can be,
but ultimately the parties must distribute the value that was created through negotiation. They
must agree on who gets what. The idea behind integrative bargaining is that this last step will
not be difficult once the parties reach that stage. This is because the interest-based approach is
supposed to help create a cooperative working relationship. Theoretically, the parties should
know who wants what by the time they split the pie.
REFRENCES

1. Spangler, Brad (2003). Integrative or Interest-based bargaining

2. http://www.beyondintractability.org/essay/interest-based_bargaining/?nid=1283

3. http://www.wisegeek.com/what-is-integrative-negotiation.htm

4. http://www.emeraldinsight.com/journals.htm?articleid=1660055&show=abstract

5. http://www.britannica.com/EBchecked/topic/289718/integrative-bargaining

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