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Negotiation: Integrative and Distributive Bargaining PowerPoint PPT Presentation


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Negotiation: Integrative and Distributive Bargaining. Negotiation is an interpersonal decision-making process by which two or more people agree how to allocate scarce resources Two Main Types of Negotiation: - PowerPoint PPT Presentation

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Negotiation: Integrative and Distributive Bargaining

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Negotiation integrative and distributive bargaining

Negotiation: Integrative and Distributive Bargaining


Negotiation integrative and distributive bargaining

  • Negotiation is an interpersonal decision-making process by which two or more people agree how to allocate scarce resources

  • Two Main Types of Negotiation:

  • Adversarial (Win-Lose): Negotiation is a contest. Each side pursues its own interests – at the expense of the other, if necessary.

  • Cooperative (Win-Win): Negotiation is a collaboration. Both sides work together for mutual satisfaction.


Negotiation integrative and distributive bargaining

  • Distributive Bargaining: Slicing the Pie

  • also known as competitive, adversarial, or win-lose bargaining

  • the goals of one party are usually in fundamental and direct conflict with the goals of the other party

  • resources are fixed & limited, and both parties want to maximize their share of the resources

  • one party tries to give information to the other party only when it provides a strategic advantage


Negotiation integrative and distributive bargaining

  • negotiation power depends on the information one can gather about the other party

  • negotiating parties focus much on their differences that they ignore what they have in common


Why study distributive bargaining

Why study Distributive Bargaining?

  • Some interdependent situations you face ARE distributive and to do well you need to understand how they work.

  • Some negotiators will use DB strategies and tactics exclusively so need to know how to counter their effects.


Distributive bargaining problem

Distributive Bargaining Problem:

  • DB can often be costly and counterproductive. Often cause the negotiating parties to focus so much on their differences that they ignore what they have in common.

  • People issues often arise as a result of “selfish” perception of negotiation (reputation and trust)


When is distributive bargaining effective for you

When is Distributive Bargaining effective for you:

Distributive Bargaining strategies and tactics are quite useful when a negotiator wants to:

  • maximize the value obtained in a SINGLE DEAL

  • the relationship isUNIMPORTANT


Negotiation integrative and distributive bargaining

Integrative Bargaining


Negotiation integrative and distributive bargaining

  • Integrative Bargaining:

  • Expanding the Pie

  • also known as cooperative, collaborative, win-win, mutual gains, or problem solving bargaining

  • the goals of the parties are not mutually exclusive (i.e. one party’s gain is not at the other party’s expense)

  • negotiating parties focus on commonalities rather than differences


Negotiation integrative and distributive bargaining

  • negotiators attempt to address needs and interests, not positions

  • both parties willingly exchange information and ideas

  • negotiators invent options for mutual gain

  • negotiators use objective criteria for standards of performance


Negotiation integrative and distributive bargaining

  • Key Steps in the Integrative Negotiation Process:

  • Identify and define the problem

  • Understand the problem and bring interests and needs to the surface

  • Generate alternative solutions to the problem

  • Evaluate those alternatives and select among them


Negotiation integrative and distributive bargaining

  • Brainstorming Guidelines:

  • Avoid judging or evaluating solutions

  • Separate the people from the problem

  • Be exhaustive in the brainstorming process

  • Ask outsiders


Overview integrative negotiation process

Overview Integrative Negotiation Process

  • Create a Free Flow of Information

  • Attempt to Understand the Other Negotiator’s Real Needs and Objectives (Interests-Positions)

  • Emphasize What is in Common Between Parties and Minimize the Differences

  • Search for Solutions That Meet Goals/Objectives of Both Sides


10 factor framework

10 Factor Framework

  • Negotiating goals

  • Attitudes to negotiation process

  • Personal styles

  • Styles of communication

  • Time sensitivity

  • Emotionalism

  • Agreement form

  • Agreement building process

  • Negotiation team organization

  • Risk taking


Negotiating goals

Negotiating Goals

  • Contract------------------Relationship

    Some cultures view contracts as a definitive set of rights and duties that strictly bind the two sides and determine their interaction thereafter while others view the contract as the beginning and the relationship dictates interaction thereafter.


Negotiating attitudes

Negotiating Attitudes

Win/Lose-----------------------Win/Win

1/ negotiation is a win/win where both sides can win as both sides have compatible goals (integrative)

2/ negotiation is a win/lose where one side wins and other side loses as there are incompatible goals (distributive)


Personal styles

Personal Styles

Informal-------------------------Formal

Concerns the form a negotiation uses to interact with counterparts at the table

Each culture has its own formalities and they have special meanings within that culture


Communication

Communication

Direct---------------------------Indirect

Indirect style often make assumptions about the level of knowledge possessed by their counterparts; communicate with veiled references, figurative and body language

Direct style use clear and definitive responses to proposals and questions.


Sensitivity to time

Sensitivity to Time

High------------------------------Low

Cultural discussions concerning time in negotiation often refer to two elements:

  • Promptness in meeting deadlines

  • Amount of time devoted to negotiation


Emotionalism

Emotionalism

High------------------------------Low

Accounts of negotiation behavior almost always point to a particular groups tendency or lack thereof to display emotions

Various cultures have different rules as to the appropriateness and forms of displaying emotion and these rule are brought to the negotiating table.


Agreement form

Agreement Form

General------------------------------Specific

Cultural factors may influence the form of written agreement that the parties make.

Some prefer detailed contracts that attempt to anticipate all possible eventualities no matter how unlikely

Some claim that essence of the deal is the relationship between parties, if unexpected circumstances arise parties should address the relationship and not the contract


Building an agreement

Building an Agreement

Bottom-up-------------------Top-down

Related to the form of agreement, is it a inductive or deductive process

Inductive (bottom-up)- does it begin with agreement on specifics (price, quantity) and the sum total of this becomes the contract.

Deductive (top-down) does it begin with agreement in principle and proceed to specific items.


Team organization

Team Organization

One leader---------------------Group consensus

Some cultures emphasize the individual while others stress the group and these values may influence the organization of the team


Risk taking

Risk Taking

High------------------------------Low

In negotiation the culture of negotiators can affect the willingness of one side to take risks in negotiation for example to divulge information, try new approaches, or to tolerate uncertainties in a proposed course of action.