Chapter 2: Strategy and Tactics of Distributive Bargaining

Chapter 2: Strategy and Tactics of Distributive Bargaining

In a distributive bargaining situation, the goals of one party are usually in fundamental and direct conflict with the goals of the other party. Resources are fixed and each party will use a set of strategies to maximize their share of resources to be obtained. While distributive strategies are useful, they can also be counterproductive and costly. Often they cause the negotiating parties to focus so much on their differences that they ignore what they have in common. These negative effects notwithstanding, distributive bargaining strategies are quite useful when a negotiator wants to maximize the value obtained in a single deal and when the relationship with the other party is not important.

Both parties to a negotiation should establish their starting, target and resistance points before beginning a negotiation. Starting points are usually in the opening statements each party makes. The target point is usually learned or inferred as negotiations get under way. The resistance point, the point beyond which a person will not go and would rather break off negotiations. The spread between the resistance points, called bargaining range, settlement range or zone of potential agreement, is particularly important. In this area the actual bargaining takes place, for anything outside these point will be summarily rejected by one of the two negotiators.

It is rare that a negotiation includes only one item; more typically there is a set of items, referred to as a bargaining mix. Each item in a bargaining mix can have opening, target and resistance points. The bargaining mix may provide opportunities for bundling issues together, logrolling or displaying mutually concessionary behavior.

Negotiators by employing strategies attempt to influence each other perceptions of what is possible through the exchange of information and persuasion. Regardless of the general strategy taken, two tasks are important in all distributive bargaining situations: discovering the other party’s resistance point and influencing the other party’s resistance point. The negotiator’s basic goal is to reach a final settlement as close to the other party’s resistance point as possible. Four tactical tasks are suggested for a negotiator in a distributive bargaining:

(1) To assess the other party’s outcome values and the costs of terminating negotiations

(2) To manage the other party’s impressions of the negotiator’s outcome values

(3) To modify the other party’s perception of his or her own outcome values

(4) To manipulate the actual costs of delaying or aborting negotiation The other decision to be made at the outset of distributive bargaining concerns the stance to adopt during negotiations. A reasonable bargaining position is usually coupled with a friendly stance and an extreme position is usually couple with a tougher, more competitive stance.

A key concept in creating a bargaining position is that of commitment. The purpose of a commitment is to remove ambiguity about the actor’s intended course of action. There are several ways to create a commitment: public pronouncement, link with an outside ally, increase the prominence of demands, reinforce the treat or promise.

There are a set of hardball tactics to beat the other party. Such tactics are designed to pressure targeted parties to do things they would not otherwise do, and their presence usually disguises the user’s adherence to a decidedly distributive bargaining approach. Some of them are: good guy/bad guy, highball/lowball, bogey, the nibble, chicken, intimidation, aggressive behavior, snow job. The authors suggested three ways for responding to typical hardball tactics, including ignore them, discuss them and respond in kind.

Question

1. What is best alternative to a negotiated agreement (BATNA)?

BATNA (best alternative to a Negotiated Agreement) is a better alternative to a negotiation (the alternative that one would take in case of not reaching an agreement). Before any negotiation, we must determine our BATNA and thus know when no agreement is better and retire (when possible agreement less favorable than our BATNA), for example, if we calculate that we can charge a client 1000, that amount will be our BATNA when negotiating with a second client, in this case, our goal is to reach an agreement where we pay 1000 or more and preferably, should offer a lower figure, we know that it is preferable to a non- agreement and seek the first customer.
Some peculiarities of BATNA is dynamic, ie constantly changing, and it is psychological, ie based on a personal perspective, which tends to be subjective (eg, a seller might consider that his product is worth much more than actually worth).

2. What is Hardball Tactics?

We now turn to a discussion of hardball tactics in negotiation. Many popular books of negotiation discuss using hardball negation tactics to beat the other party. 16 Such tactics are designed to pressure negotiators to do things they would not otherwise do and their presence usually disguises the user’s adherence to a decidedly distributive bargaining approach. They also can backfire, and there is evidence that every adversarial negotiator is not effective negotiators. 17 Many negotiators consider these tactics out-of-bounds for any negotiation situation. 18 The followings are the hardball tactics

·        Dealing with Typical Hardball Tactics

·        Ignore Them

·        Discuss Them

·        Respond in Kind

·        Co-opt the Other Party

·        Typical Hardball Tactic

·        Good Cop-Bad Cop

·        Lowball/Highball

·        Bogey

·        The Nibble

·        Chicken

·        Intimidation

·        Aggressive Behavior

·        Snow Job