CHAPTER 2

STRATEGY AND 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.

2
The Distributive Bargaining Situation

 Target Point: The point at which a

negotiator would like to conclude
negotiations-his optimal goal. Sometimes
referred to as negotiator's aspiration.
 Resistance Point: The price beyond
which the negotiator will not go-the most
he will pay as a buyer.

3
The Distributive Bargaining Situation

 Asking price: The initial price set by the

seller.
 Initial Offer: The first number the buyer
will quote to the seller.

4
The Buyer’s view of the house
negotiation
Megan’s Larry’s Larry’s Megan’s Megan’s Larry’s
Resistance Initial Target Target asking Resistance
Point Offer Point Point Price Point
(inferred) (Public) (Private) (Inferred) (Public) (private)
135000 133000 135000 140000 145000 150000

5
ZOPA (Zone of Potential
Agreement)
 The spread between the resistance
points.
 In this area the actual bargaining takes
place, for anything outside these points
will be summarily rejected by one of the
two negotiators.
 Positive Bargaining Range: When the
buyer’s resistance point is above the
seller’s.

6
ZOPA (Zone of Potential Agreement

 Negative Bargaining Point: The seller’s

resistance point is above the buyer’s,
and the buyer wont pay more than the
seller will minimally accept.
 Such negotiations are likely to stalemate.
 They can be resolved if one or both the
parties change their resistance point.

7
BATNA

 Alternatives are important because they

give negotiators the power to walk away
from any negotiation when the emerging
deal is not very good.

8
SETTLEMENT 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 party’s resistance
point as possible.

9
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.

10
TACTICAL TASKS

 Assess the other party’s target,

resistance point, and cost of
terminating negotiation
1. Indirect Assessment
2. Direct Assessment

11
TACTICAL TASKS

 Manage the other party’s impression of

the negotiator’s target.
1. Screening activities
2. Direct Action to alter impressions

12
TACTICAL TASKS

 Modify the other party’s perceptions by

making outcomes appear less attractive
or by making the cost of obtaining them
appear higher.
 The negotiator may also try to make
demands and positions appear more
attractive or less unattractive to the other
party.

13
TACTICAL TASKS

 Manipulate the actual costs of Delay or

Termination
1. Plan Disruptive Action.
2. Form an alliance with outsiders.
3. Manipulate the scheduling of
negotiations

14
PSITIONS TAKEN DURING
NEGOTIATION
 Opening Offer
 Opening Stance
 Initial Concessions
 Role of Concessions
 Pattern of Concession making
 Final Offer

15
OPENING OFFER

 It can be exaggerated or modest.

 Exaggerated Offer is advantageous as
it allows room for movement and acts
as a metamessage.

16
ADVANTAGES OF
EXAGGERATED OPENING OFFER
 It may create in the other party’s mind the
impression that
1. There is a long way to go before a reasonable
settlement will be achieved
2. More concessions than originally intended
may have to be made to bridge the difference
between the two opening positions
3. The other may have incorrectly estimated his
or her resistance point.

17
DISADVANTAGES OF
EXAGGERATED OPENING OFFER
 It may be summarily rejected by the
other party.
 It communicates an attitude of
toughness that may be harmful to long
term relationships.

18
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.

19
INITIAL CONCESSIONS

 The opening offer might face

disapproval from the other party and one
has to make concessions.
 The first concession conveys a
message, a symbolic one, to the other
party about how you would proceed.

20
ROLE OF CONCESSION

 Without concessions negotiations would

not exist.
 Good distributive bargainers will not start
negotiations with an opening offer too
close to their own resistance point.

21
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.

22
PATTERN OF CONCESSION
MAKING
 It contains valuable information but it is
not easy to interpret.
 When successive concessions get
smaller and concession maker’s position
gets firmer then the resistance point is
being approached.

23
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.

24