R.

K Institute of Management & Research

2nd session –Types of Negotiation

 Types of Negotiation
Distributive Negotiation

Integrative Negotiation
 Distributive Negotiation

• There is giving out/scatterring of things

• Two parties strive to divide a finite/limited amount
of resources, each trying to maximise its share of the
distribution
• Referred to as ‘The Fixed Pie’ or a zero-sum process
• Outcome is typically a Win-Lose type
• Nature of bargaining is highly Competitive
• Examples- Buying a House/Labour union/Divorce etc
 Components of D.N

• Both parties involved view each other as

adversaries
• Objective is to maximise your interest/ share of pie
• Play your cards close to your vest –no information
to the other side
• Opposite is equally true-try to pry as much
information from the other side
• Let them make the 1st offer, as it will act as an
anchor
• Focus is on the current negotiation with no past or
future relationship
 Components of D.N

• Both parties involved view each other as

adversaries
• Objective is to maximise your interest/ share of pie
• Play your cards close to your vest –no information
to the other side
• Opposite is equally true-try to pry as much
information from the other side
• Let them make the 1st offer, as it will act as an
anchor
• Focus is on the current negotiation with no past or
future relationship
 Distributive Bargaining

• Determine a Reservation price (or BATNA by both)

• Use Bracketing technique of other party’s offer to
achieve your desired outcome
• Use common social norms/accepted practices to
evaluate offers, make counteroffers and reach
settlement
• Role of Framing used to influence negotiation offers
 Opening offers in D.B

• Anchoring or Opening offers –

Types: Fact-based- House value is maximum (90 lakhs)

Extreme offers - I should get a salary of Rs 2 cr
Precedent – I always get overtime wages

• Bracketing technique –used in both small and large

deals
 Final Negotiated Price

• Simple shaking of hands with no emotions attached

• Exchange of product for cash with no future liabilities

• Consider a Contingency contract which specifies

future changes, mutually agreed by both parties

• Outcome is typically ‘Win-Lose’ or Lose-Win’ situation

 D.N –Who wants the Orange

Can Distributive Negotiation be converted into a Integrative one …. ?

 D.N –Pizza –The last bite

Who wants the Last Bite of the Pizza …. ?

 Integrative Negotiation
• Integrate means several parts into a whole. Conceptually,
this implies a certain degree of cooperation, or a joining of
forces to achieve something together

• Both parties have a higher degree of trust, forming of

relationship and want to walk away feeling together

• Parties share information, work on mutual-gain objectives

and looking down the road with long-term relationship

• Both parties strive to integrate their interests as effectively

as possible in the final agreement
 Integrative Negotiation
• Parties involved strive to integrate their interests as
effectively as possible in the final agreement

• Negotiators strive to create and claim as much value as

possible for both sides for their own interests

• Less value is left on the table which is the Goal of

Integrative negotiation

• Negotiation outcome is typically a ‘Win-Win’ situation

 Components of I.N

• Focus on commonalities rather than differences

• Attempt to address needs & interests, not positions
• Commit to meeting the needs of all involved parties
• Exchange information and ideas
• Invent options for mutual gain
• Use objective criteria for standards of performance
 Integrative Negotiation process

1st step-begin by exchanging information, identify all

issues, listing them etc.

2nd step- reviewing the issues and classifying them into

compatible issues/ exchange issues/distributive issues

3rd step-reaching agreement on compatible issues and

develop a positive climate
 Categorization method -5 steps

4th step- involves the trade-off of issues, resulting in an

exchange of issues with equal values approximately

5th step-resolution of the last few minor issues, often

achieved through distributive bargaining; neither party is
likely to walk away from the table at this step
 Myths & Facts
 Good negotiators are born  Good negotiators make
concessions
 Experience is a great teacher
 Good negotiators never lie
 Good negotiators take risks
 Good negotiators look for
common interests
 Good negotiators rely on
intuition
 Everyone is a negotiator