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TYPES OF NEGOTIATION

Dr. MANORANJAN DHAL

TYPES OF NEGOTIATION
Distributive

compete over the


distribution of fixed sum of values

Integrative

negotiation in which
parties cooperate to achieve
maximum benefits by integrating
their interest into an agreement.

DISTRIBUTIVE NEGOTIATION
No

relationship
All that matter is the price
Each side haggle for the best deal
Gain by one party represent the loss
to the other.

Example
Sales negotiation
Wage negotiation

DISTRIBUTIVE NEGOTIATION
Relationship and reputation mean little in this
tug of war
Seller is a total stranger and remain so after
the transaction takes place.
The less the other side knows about your
weakness and real preferences, and the more it
knows about your bargaining strength, the better
will be your position

HOW TO ACHIEVE SUCCESS IN


DISTRIBUTIVE NEGOTIATION?
The first offer becomes a strong psychological anchor
point , one that sets the bargaining range.
Negotiation outcomes often correlates with the first
offer.
Do not disclose any significant information about
your circumstances.

Why do you want to make a deal?


Your real interest or business constraint
Your prefernces among issues or options
Point of walk away

Let the other side feel that you have good option if the
deal falls through.

HOW TO ACHIEVE SUCCESS IN


DISTRIBUTIVE NEGOTIATION?
Learn

as much as possible about the


other party

Other sides circumstances and


preferences
Why they want to make a deal?
Their real interest and business
constraint
Their preferences among issues and
options

HOW TO ACHIEVE SUCCESS IN


DISTRIBUTIVE NEGOTIATION?
Exploit what you learn about the other side in
setting your first offer or demand
Dont overshoot
If you claim aggressively or greedily the other
side may walk away.
You might loose the opportunity to make a deal.

INTEGRATIVE NEGOTIATION
The parties cooperate to achieve maximum
benefits by integrating their interests
Create value and claim it
Think more about the relationships and less
about winning
Example - original equipment manufacturing
collaborate on quality control and product
development
Few suppliers long term relationship
orientation

INTEGRATIVE NEGOTIATION
It might be win-win
Trade off to get things you value most
Go beyond price delivery date, quality etc.
Creative options understand each others key
interest

HOW TO ACHIEVE SUCCESS IN


INTEGRATIVE NEGOTIATION?
Provide significant information about their
circumstances
Explain why they want to make a deal
Talk about their real interest or business
constraints
Reveal and explain their preferences among
issues and options
Additional capabilities or resources which can
add value to the deal
Find creative options that will meet the interest
of both parties.

MULTIPLE PHASES
Early

phase allow parties to


build trust by performing
agreements
Care enforcement mechanism
Early phase allow parties to be
familiar about each others
communication and negotiation
style

MULTIPLE PARTIES
Coalition

can form among the parties


Weaker party can gather strength
Natural coalition or single issue
coalition
Hard to break natural coalition.