Chapter 2: Distributive Bargaining

Chapter 2: Distributive Bargaining

1. How the Distributive Bargaining process work?

   • 1. Starting point- Both parties should state their first opening stetement.
   • 2. Target point- Set the target point where it should be secret and as our own reference
   • 3. Resistance point- The point that determine the limit of both parties where if one of them come across the point it will break the negotiation process.
   • 4. Settlement point- Where both parties will try to reach the resistant point of other parties as much as possible
   • 5. Bargaining mix- The negotiator should also consider the package of issue of negotiation such as the cost of renovation and items left.

2. Basic element

   • Competitive
   • Win-lose
   • Bargaining
   • The goal of one party must opposite to other parties
   • Both parties want to maximize their value
   • Resources are limited

3. Tactic of distributive:

   • 1. Assess the other party targets, resistance and terminating cost.
   • 2. Manage their impression towards our target, resistance point & terminating cost.
   • 3. Modify their perception of their own target, resistance & terminating cost.
   • 4. Manipulate the the actual cost that can drag the time of the negotiation process.

4. Process of taking position during negotiation: (the process must be followed by the commitment)

   • 1. Making the first opening offer
     • Put the high value for opening offer
       • Give space for negotiator to move
       • Act as meta-message that create the impression in other negotiator mind.
   • 2. Make the first opening stance (how to react)
     • Competitive: Fight until you get what you want
     • Moderate: Be real and compromise with other party.
   • 3. Initial concession
     • Define the initial bargaining range
     • Communicate basic stance and be firm
     • The negotiator will attempt to capture suitable range for themselves to maximize the final outcome
     • At this stage, opening offer will meet the counteroffer
   • 4. Final offer
     • To convey message where there is no other offer and it will be the last concession
     • The offer must be large enough and dramatic
     • the negotiator need to throw the remainder of negotiating range

5. Role of concession

   • Central of negotiation process
   • One side must start with a first concession, if not negotiation will never happen.
   • To keep moving the concession, negotiator can link their concession with prior concession made by the other party
   • The best concession is when the negotiator can wrap it in a package

6. Hardball Tactics

   • Typical tactics
     • Goo/bad Cop
     • Low/highball
     • Bogey
     • Nibble
     • Chicken
     • Intimidation
     • Aggressive behaviour
     • Snow job
   • How to deal
     • Discuss
     • Ignore
     • Respond in kind
     • Co-Opt the other party

7. Closing deals

   • Provide alternative- Give 2/3 package for them to choose
   • Assume the close- Begin to collect personal information to fill a form
   • Split the differences- Give a brief summary
   • Exploding Offers- Tight a deadline for the deals
   • Sweeteners- Offer a special deal