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1
CHAPTER TWO
Strategy and Tactics of
Distributive Bargaining
(Slicing the Pie)
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The Distributive Bargaining
Situation• Goals of one party are in
fundamental, direct conflict to another party
• Resources are fixed and limited
• Maximizing one’s own share of resources is the goal
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The Distributive Bargaining Situation
Preparation—set a• Target point, aspiration point• Walkaway, resistance point• Asking price, initial offer
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The Distributive Bargaining
Situation
Party B - Buyer
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
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The Role of Alternatives to a Negotiated Agreement
• Alternatives give the negotiator power to walk away from the negotiation – If alternatives are attractive, negotiators
can:• Set their goals higher• Make fewer concessions
– If there are no attractive alternatives:• Negotiators have much less bargaining power
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The Distributive Bargaining
Situation
Party B - Buyer
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway PointAlternative
Alternative
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Negative Bargaining Zone
Seller’s Bargaining Range
Buyer’s Bargaining Range
$5 $10 $15 $20
Negative Bargaining Zone
BT, Buyer’s Target Point
BR, Buyer’s Walkaway
SR, Seller’s Walkaway
ST, Seller’s Target Point
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The Most Commonly Asked Questions• Should I reveal my reservation point?
• Should I lie about my reservation point?• Should I try to manipulate the other party’s
reservation point?• Should I make a “final offer” or commit to a
position?
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Fundamental Strategies
• Push for settlement near opponent’s resistance point
• Get the other party to change their resistance point
• If settlement range is negative, either:– Get the other side to change their
resistance point– Modify your own resistance point
• Convince the other party that the settlement is the best possible
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Keys to the Strategies
The keys to implementing any of the four strategies are:
• Discovering the other party’s resistance point
• Influencing the other party’s resistance point
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Tactical Tasks of Negotiators
• Assess outcome values and the costs of termination for the other party
• Manage the other party’s impressions• Modify the other party’s perceptions• Manipulate the actual costs of delay or
termination
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Assess Outcome Values and the Costs of Termination for
the Other Party• Indirectly
– Determine information opponent used to set:• Target• Resistance points
• Directly– Opponent reveals the information
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Manage the Other Party’s Impressions
• Screen your behavior:– Say and do as little as possible
• Direct action to alter impressions– Present facts that enhance one’s
position
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Modify the Other Party’s Perceptions
• Make outcomes appear less attractive
• Make the cost of obtaining goals appear higher
• Make demands and positions appear more or less attractive to the other party –whichever suits your needs
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Manipulate the Actual Costs of
Delay or Termination• Plan disruptive action– Raise the costs of delay to the other
party
• Form an alliance with outsiders– Involve (or threaten to involve) other
parties who can influence the outcome in your favor
• Schedule manipulations– One party is usually more vulnerable to
delaying than the other
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Positions Taken During Negotiations
• Opening offer– Where will you start?
• Opening stance– What is your attitude?
• Competitive? Moderate?
• Initial concessions– Should any be made? If so, how
large?
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Positions Taken During Negotiations
• The role of concessions– Without them, there is either capitulation
or deadlock
• Patterns of concession making– The pattern contains valuable information
• Final offer (making a commitment)– “This is all I can do”
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Thompson’s Pie-Slicing Strategies (I)
• Strategy 1: Assess your BATNA and improve it• Strategy 2: Determine your reservation point, but do
not reveal it• Strategy 3: Research the other party’s BATNA and
estimate their reservation point• Strategy 4: Set high aspirations (be realistic, but
optimistic)• Strategy 5: Make the first offer (if you are prepared)• Strategy 6: Immediately reanchor if the other party
opens first
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Thompson’s Pie-Slicing Strategies (II)
• Strategy 7: Plan your concessions• Pattern of concessions• Magnitude of concessions (GRIT model)• Timing of concessions
• Strategy 8: Use an objective-appearing rationale to support your offers
• Strategy 9: Appeal to norms of fairness• Strategy 10: Do not fall for the “even split” ploy
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Closing the Deal
• Provide alternatives (2 or 3 packages)
• Assume the close• Split the difference• Exploding offers• Deal sweeteners
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Dealing with Typical Hardball Tactics
• Four main options:– Ignore them– Discuss them– Respond in kind– Co-opt the other party (befriend
them)
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Typical Hardball Tactics
• Good Cop/Bad Cop• Lowball/Highball• Bogey (playing up an issue of
little importance)• The Nibble (asking for a
number of small concessions to)
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Typical Hardball Tactics
• Chicken• Intimidation• Aggressive Behavior• Snow Job (overwhelm the other
party with information)
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Summary
Negotiators need to:• Set a clear target and resistance points• Understand and work to improve their
BATNA• Start with good opening offer• Make appropriate concessions• Manage the commitment process