Strategy & Tactics of Distributive Bargaining

Distributive Bargaining
Distributive bargaining and tactics are quite useful;
when a negotiator wants to maximize the value obtained in a single deal,
when the relationship with the other party is not important,
and when they are at the claiming value stage of negotiations
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Key Terms
Aspiration Point: The point at which the negotiator would ideally conclude negotiations.
Target Point: The point at which a negotiator would be likely to conclude negotiations, his
factual goal.
Resistance Point: The price beyond which the negotiator will not go.
Asking price: The initial price set by the seller.
Initial Offer: The first number the buyer will quote to the seller.
Zone of Potential Agreement: The spread between the resistance points.
Positive Bargaining Range: When the buyers resistance point is above the sellers.
Negative Bargaining Point: The sellers resistance point is above the buyers, and the buyer wont
pay more than the seller will minimally accept.
BATNA: Alternatives are important because they give negotiators the power to walk away
from any negotiation when the emerging deal is not very good.
Settlement Point: The point of agreement.







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Fundamental Strategies
1. Settlement through Pushing towards Resistance Point:
The fundamental process of distributive bargaining is to reach a settlement
within a positive bargaining range. Each party wants to reach an agreement as
close to the other partys resistance point as possible.
2. Change Resistance Point by Changing Others / Own Resistance
Point:
In case of a negative bargaining range, use information and tactics to change
the resistance point of the other party.
3. Improve the Bargaining Mix:
The package of issues for negotiation is the bargaining mix. Each item in the
mix has its own starting, target, and resistance point. Negotiators need to
understand what is important to them and to the other party.
4. Use Intangibles as well as Tangibles:
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Tactical Tasks
Assess the other partys target, resistance point, and cost of terminating negotiation
Indirect Assessment
Direct Assessment
Manage the other partys impression of the your target.
Screening activities
Direct action to alter impressions
Modify other partys perceptions about their own target.
Modify the other partys perceptions by making outcomes appear less attractive or by
making the cost of obtaining them appear higher.
A negotiator may also try to make demands and positions appear more attractive or
less unattractive to the other party.
Manipulate the actual costs of Delay or Termination
Plan Disruptive Action.
Form an alliance with outsiders.
Manipulate the scheduling of negotiations



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Opening Offer
It may create in the other partys mind the impression that
There is a long way to go before a reasonable settlement will be achieved
More concessions than originally intended may have to be made to bridge the difference
between the two opening positions
The other may have incorrectly estimated his or her resistance point.
It may be summarily rejected by the other party.
It communicates an attitude of toughness that may be harmful to long term
relationships.

Opening Stance
It is important for negotiators to think carefully about the message that they
wish to signal with their opening stance and subsequent concessions because
there is a tendency for negotiators to respond in kind to distributive tactics in
negotiation.

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Phases of Distributive Bargaining
Initial Concessions
The first concession conveys a message, a symbolic one, to the other party about how you would
proceed.
Boulwarism: Negotiators resent a take-it-or-leave-it approach. An offer that may have been
accepted had it emerged as a result of concession making may be rejected when it is thrown on
the table as a fait accompli.

Role of Concessions
Without concessions negotiations would not exist.
Good distributive bargainers will not start negotiations with an opening offer too close to their own
resistance point.

Pattern of Concession making
It contains valuable information but it is not easy to interpret.
When successive concessions get smaller and concession makers position gets firmer then the
resistance point is being approached.

Final Offer

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Phases of Distributive Bargaining
Hardball Tactics
When and how to use hardball tactics
Such tactics are to pressure negotiators to do things they would not otherwise do.
They work best against poorly prepared negotiators.
They can also backfire, and there is evidence that very adversarial negotiators are not
effective negotiators.

Types
Good cop / bad cop
Lowball / highball
Bogey
Nibble
Chicken
Intimidation
Snowing

Responding to hardball tactics

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Q&A
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