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In partial fulfillment of the course titled Negotiation Skills
24-Aug-2010 Submitted to: Prof.Arun Nabar
Submitted by: Group 10 SagarYerunkar (61) AdityaAgrawal (108) Varun Anand (204) VinayChokhra(209) AnveshaPoswalia (228) Amitesh Singh (236) Amar Bhartia (255)
................................................. INTRODUCTION .............................................. 7 3.................................... USING INTEGRATIVE AND DISTRIBUTIVE BARGAINING TOGETHER ............3 THOMPSON S PYRAMID MODEL ............................................................................................... 5 2...........................................................................1 WHY INTEGRATIVE BARGAINING? . 9 .......... THE PROCESS OF INTEGRATIVE BARGAINING ...................... 4 1....................................... 3 1.......................2 ESSENTIALS FOR A WIN-WIN BARGAINING ........................................CONTENTS 1.................... 3 1....................................................................
1. The true meaning of a win-win settlement is a negotiated agreement where the agreement reached cannot be improved further by any discussions.1 WHY INTEGRATIVE BARGAINING? Integrative bargaining is important because it usually produces more satisfactory outcomes for the parties involved than does positional bargaining. can potentially give everyone all of what they want. concerns. They decidedto share it and used the distributive tactic of splitting it in half. desires. threwout . By definition. giving each side half of what they want. and threw out the peel. There are often many interests behind any one position. drank it. squeezed out the juice.Brad Spangler Integrative bargaining. and similarly. If parties focus on identifying those interests. Aftereach sister took half of the orange home. INTRODUCTION Integrative refers to the potential for the parties' interests to be combined in ways that create joint value or enlarge the pie. Theother sister. and fears important to each side. Positional bargaining is based on fixed. Oftentimes. So your outcome cannot be improved for your benefit. The essence of the integrative process is sometimes attributed tothe work of Mary Parker Follet in the 1920s. on the other hand. compromises simply split the difference between the two positions. This strategy focuses on developing mutually beneficial agreements based on the interests of the disputants. compromises do not efficiently satisfy the true interests of the disputants. the agreement for the other party cannot be improved further for their benefit either. one sister who wanted onlythe juice. there is no value left on the table and all creative options have been thoroughly explored and exploited. Instead. opposing viewpoints (positions) and tends to result in compromise or no agreement at all. Interests may include the needs. who wanted only the peel for a cake she was baking. Potential for integration only exists when there are multiple issues involved in the negotiation.". 1. 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. who described the classicstory of two sisters who each coveted the same orange. they will increase their ability to develop win-win solutions. They are the underlying reasons why people become involved in a conflict. integrative solutions. 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. Creative.
Neithersister considered expressing her true interest in the orange. 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. but ratherchose to negotiate for as much of the total orange as possible. positive relationships between previous adversaries. interest-based bargaining facilitates constructive. both parties could perceive that they lost.the pulp and added her half of the peel to her cake batter. If either party begins a round of bargaining expecting to get its way on all targeted issues. Bothsisters would have realized a greater settlement if only they had chosento be open and truthful about their interests. Expectations going into the game matter. It is a term that refers to the possible outcome of a game involving two parties. When applied to contract negotiations. To create as much value as possible for both sides 2. then it will be all but impossible to feel like a winner when bargaining concludes. Integrative negotiatorsgenerally strive to achieve two goals: 1. Context is important here. It is a collaborative process and therefore the parties actually end up helping each other. 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. This prevents ongoing ill will after the negotiation concludes. the basic game theory concepts described above still apply. The other two potential results are win-lose and lose-lose.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. To claim as much value as possible for their own interests 1. Expectations going in do make a difference. or one party could feel like a winner while the other feels as though it lost. lowered expectations can reframe the game. irrespective of what matters to the other party. Instead. Both parties could perceive that they won. Roger Fisher and William Ury delineate five distinguishing characteristics of a win-win bargaining: y Bargaining over positions is avoided . In the national bestseller Getting to Yes: Negotiating Agreement Without Giving In. Do both parties really win in win-win bargaining? The concept of win-win is actually rooted in game theory.
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. and thus iswithin the ZOPA. asillustrated below. Fig 1. 1. Level 1 agreements are those in which bothparties achieve an outcome that is better than their reservation point. Level 3 agreements are those for which it is impossible to improve the outcome from . possibly by introducinga new issue for which both parties have a similar objective. Finally.y y y y People are separated from the problem Focus is placed on interests. Thompson further suggests a pyramid model of integrative agreements. Level 2 agreements produce an outcomethat is even better for both parties than Level 1 agreements.A Pyramid Model of Integrative Agreements In the model. The parties involved seek to integrate their interests and therefore producenegotiated outcomes that exceed those normally achieved through distributive bargaining. not positions Options for mutual gain are createdand Objective criteria are used to select the appropriate resolution to an issue. can be described as both a process and an outcome of negotiation.3 THOMPSON S PYRAMID MODEL Integrative negotiation. according to negotiation researcher Leigh Thompson ofNorthwestern University.
Parties ideally seek to reach Level 3 agreements. Integrative negotiators do not stop at Level 1.the perspective of both parties. Thus the outcome of any level of an integrative negotiation is superior to that ofa distributive negotiation. one in which any change that would benefit one party wouldharm the other party. that they can negotiate Level 2 agreements that createadditional value for both parties above the minimums achieved in Level 1. mutually beneficial levels 2 and 3. Level 3agreements can be described as pareto optimal because they represent improvements above Level 2 for both parties and achieve an agreement that cannot beimproved for one party without harming the other party. . In reality it is more likely that negotiators can achieve Level 1 agreements inwhich both parties exceed their reservation points and BATNAs(best alternative to a negotiated agreement) or. and therefore leave nothing on the table. through thedevelopment of new options. they seekto gain the benefits of higher.
Step 3:Reach final agreement on each of the compatible issues and removethem from further negotiation. andtherefore whose value must be distributed. If the balance of power is perceived by the parties to lean heavily to one side. (2) exchange approximately equal value. which maybe traded. Negotiators. Step 4:Trade or exchange issues of approximately equal value in somecases 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 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. and seek to classify each issue as (1) compatible similar interests. . Then.2. then the integrative process mayeasily slide into a distributive process on each issue 3. Step 2:Develop a common list of all issues that were discussed by either sideduring the first step. or (3) distributive not compatible. they fail to listen carefully and learn the other side s underlying interests. due to this overconfidence in their knowledge of the other party. 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 bynovice negotiators possibly 50% of all negotiators! 2. and therefore fail to adjusttheir belief of what is acceptable. cannot be traded.Each side explains its interests and concerns on the issues. believe they know what the other party will accept on a given issue. like most people insociety.
financial data. and seek to develop options that meet the mutual goals of both parties. as is common in traditional bargaining methods. 2. A2000 report bythe FMCS noted that IBB was the training method most requested by new negotiators. Sharing of information: Both sides fully share all relevant information including economic forecasts. Objective standards instead ofpower are used to evaluate options. and so forth. costs. take or leave it and because they must also attack thearbitrary positions of the other party. Focusing on issues. Expressing interests. Leaving past issues behind: Discussions are focused on current issues and howto resolve them. 4. because the bargainers must defendtheir own arbitrary positions saying things like I must have this price or This is my position. not personalities: By discussing the interests that underliethe issues. theparties engage in brainstorming sessions to identify new options to resolve theissues. use objective analysis. . Instead they ask probing questions. At the core. The Federal Mediation and Conciliation Service (FMCS) is oftencredited as having developed the basic principles and steps of IBB. 6.Interest Based Bargaining Interest-based bargaining(IBB) has a different philosophy from that of distributive or traditional integrative methods of negotiation. Willingness to forgo power or leverage: The parties strive to find mutuallyagreeable solutions to issues of concern and commit to not using their perceivedpower or leverage to sway the other party. it requires negotiators tothink of themselves as joint problem solvers who seek solutions to mutual problemsor issues of interest. The principles and steps of IBB are as follows: 1. rather than statetheir position or demand. These options are mutually agreeable to both parties. 3. IBB negotiators can treat others with dignity and courtesy becausethey are not focused on discrediting the position of the other party. industry reports. IBB advocates claim that in traditional negotiations. not positions: Once options are identified through brainstorming. Brainstorming to create options:When issues are presented. 7. and then try to exchange concessions until a middle ground is found. 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 thepast) and to accept and utilize the IBB process. 5. The parties agree to not bring up past disagreements or try tosettle old scores. they often must resort to yelling andthreatening as a means of making their points. the parties unlike the process in traditional negotiations do not each take a position and defend it.
The IBB method may waste a great deal of time as negotiators discuss interestsand possible options when a mutual solution could be quickly reached. according to the FMCS. In fact. money) between two negotiators . The standards suggested by IBB negotiators are often not precise. thus not easily agreed to by both parties 3. is a competitive negotiation strategy that is used to decide how to distribute a fixed resource (i. and are subjective. The growth of IBBas a bargaining method. it notes thatunless the parties have had a positive past relationship and have received joint IBBtraining. is likely due to the realization byboth labor and management leaders that they have a fundamental mutual interest inthe long-term success of the organization. "win-lose" bargaining. IBB negotiators may have difficulty transferring a proposed option into a practical. Disadvantages of the IBB are: 1. USING INTEGRATIVE AND DISTRIBUTIVE BARGAINING TOGETHER Distributive outcomes.The FMCS does not believe that IBB can become a universal bargaining method that replaces distributive. concrete solution. it is not likely to succeed in a given negotiation situation. or other traditional methods. 3. integrative.e. also called. 2.
but ultimately the parties must distribute the value that was created through negotiation. Consider the following example: Two sisters were fighting over the last orange in the fruit bowl. They must agree on who gets what. They went back and forth. This is because the interest-based approach is supposed to help create a cooperative working relationship. 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."In contrast. She turned to the girls and asked them each why they wanted the orange. each girl insisting that she should get it and both refusing to give up. they were able to "split" the orange in such a way that both got exactly what they wanted. The idea behind integrative bargaining is that this last step will not be difficult once the parties reach that stage. In distributive bargaining.so that the more one gets. the two are not mutually exclusive. For example.500 or the dealership does. each party tries to secure the most benefit for themselves. As it turns out. 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 parties should know who wants what by the time they split the pie. The girls were engaged in distributive negotiations (though it probably felt like bickering to them). The above explanation is summed up in the following table: Characteristics Outcome Motivation Interests Relationship Issues Integrative Negotiations Win-Win Joint Gain Congruent Long-Term Multiple issues Distributive Negotiation Win -Lose Individual Gain Opposed Short-Term Single issue Although distributive bargaining is frequently seen as the opposite of integrative bargaining. Once they realized this. when negotiating for a used car the buyer either gets that extra $2. Theoretically. he "lost. without regard for the other side's outcome. . They were about to agree on cutting the orange in half when their aunt walked in and realized what was going on. because ultimately "the pie" has to be split up. the less the other gets." If he walks away feeling like he paid too much money for that car. If the buyer feels that he got a good deal. he "won. and the other wanted the peel for an art project she was working on. one wanted to eat the orange. Distributive bargaining plays a role in integrative bargaining.
Brad(2003).wisegeek.com/journals. 3.htm?articleid=1660055&show=abstract http://www.com/what-is-integrative-negotiation.htm http://www.emeraldinsight. Spangler. Integrative or Interest-based bargaining http://www.REFRENCES 1.britannica.beyondintractability. 2. 5.org/essay/interest-based_bargaining/?nid=1283 http://www.com/EBchecked/topic/289718/integrative-bargaining . 4.
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