nogotiation tech 3-4

1. Strategy and Tactics of
Distributive Bargaining

2. Time to Negotiate….
The Car Dealers Game

4. The Distributive Bargaining
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

5. The Distributive Bargaining
Situation
Preparation—set a
• Target point, aspiration point
• Walkaway, resistance point
• Asking price, initial offer

6. The Distributive Bargaining
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
Party B - Buyer

7. 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

8. The Distributive Bargaining
Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Alternative
Alternative
Initial Offer Target Point Walkaway Point
Party B - Buyer

9. Fundamental Strategies
• Push for settlement near opponent’s resistance
point (extreme offers, small concessions)
• Get the other party to change their resistance
point (eg. say it is overpriced)
• 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 (ego satisfaction )

10. 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

11. The other’s understanding of your own
situation
• Higher the estimation of your cost of delay or
impasse (termination) – higher RV
• Higher the estimation of his cost of delay or
impasse – lower RV
• The less the other party values an issue –lower
RV
• The more the estimation of the value of an
issue for you –lower RV

12. 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

13. 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

14. Manage the Other Party’s
Impressions
• Screen your behavior:
– Say and do as little as possible (Silence is
golden!)
• Direct action to alter impressions
– Present facts that enhance one’s position

15. Modify the Other Party’s
Perceptions
• 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

16. Manipulate the Actual Costs of
Delay or Termination
• Plan disruptive action
– Raise the costs of delay to the other party (eg. strike)
• 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 (eg. reschedule, give shorter time to decide)

17. Positions Taken
During Negotiations
• Opening offer
– Where will you start? (anchoring!!!)
• Opening stance
– What is your attitude?
• Competitive? Moderate?
• Initial concessions
– Should any be made? If so, how large?

18. Positions Taken
During Negotiations
• The role of concessions
– Without them, there is either capitulation or
deadlock
• Patterns of concession making
– The pattern contains valuable information (make
lower concessions to signal that you are
approaching your RV)
• Final offer (making a commitment)
– “This is all I can do”

19. Closing the Deal
• Provide alternatives (2 or 3 packages)
• Assume the close
• Split the difference
• Exploding offers (offer is relevant for a
short period)
• Deal sweeteners

20. Dealing with Typical
Hardball Tactics
• Four main options:
– Ignore them
– Discuss them (“I know what you are doing”)
– Respond in kind
– Co-opt the other party (befriend them)

21. Typical Hardball Tactics
• Good Cop/Bad Cop
• Lowball/Highball – ridicolously low (high)
opening
– The other party: “A waste of time”
– Ask for a more reasonable opening
• Bogey (playing up an issue of little importance)
• The Nibble (asking for a number of small
concessions to) eg. A scarf to go with the dress

22. Typical Hardball Tactics
• Chicken (bluffing)
• Intimidation (anger, guilt, legitimacy)
• Aggressive Behavior
• Snow Job (overwhelm the other party
with information)

23. Summary
Negotiators need to:
• Set a clear target and resistance points
• Understand and work to improve their BATNA
• Start with good opening offer
• Make appropriate concessions
• Manage the commitment process