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Distributive Negotiations (Role of Concessions (Concessions are central to…
Distributive Negotiations
Chapter Summary
The basic structure of competitive of distributive bargaining situations and some of the strategies and tactics used in distributive bargaining.
Distributive bargaining begins with
Target
Resistance points
Setting opening
The resistance points are the most critical
Defines the bargaining range
If positive, it defines the area of negotiation within which a settlement is likely to occur
If negative, successful negotiation may be impossible.
Bargaining mix
The bargaining mix may provide opportunities for bundling issues together, trading off across issues, or displaying mutually concessionary behavior.
The structure of distributive bargaining
To influence the other party's belief about what is posible
To learn as much as possible about the other paty's position
Is basically a conflict situation, wherein parties seek their own advantage
Is a process that requires careful planning, strong execution, and constant monitoring of the other party's reactions
Opening Stance
Negotiation is iterative
Changes in position are usually accompanied by new information concerning the other´s intentions, the value of outcomes, and likely zones for settlement.
At the beginning of negotiations, each party takes a position.
Negotiators need to be aware that parties may differ in noy only the value they place on different issues, but also how they construct the negotiation space itself.
Negotiators need to be sensitive to two factors when creating offers; 1.- Value characteristics and 2.- Content chacaractiristics
Opening Offers
While knowledge about the other party helps negotiators set their opening offers, it does not tell them exacly what to do
Negotiators who make exaggerated opening offers
It gives the negotiator room for movement and therefore allows him or her time to learn about the other party's priorities
An exaggerated opening offer acts as a meta-message and may create
Two disadvantages of an exaggerated opening offer are that
It may be summarily rejected by the other party and dalt negotiations prematurely
It Communicates an attitude of toughness that may be harmful to long-term relationships
Making the first offer in a negotiation is advantageous to the negotiator making the offer.
That higher initial offers have a strong effect on negotiation outcomes across a wide variety of distributive negotiation situations
In general, negotiators with better BATNAs are more likely to make the firts offer
Negotiators need to be cautios when they know the other party's BATNA
There is a tendency to make a more conservative first offer when the other party's BATNA is known
Opening Stance
Some negotiators adopt a position of moderation and understanding
It is important for negotiators to think carefully about the message that they wish to signal with their opening stance and subsequent concessions
That is, negotiators tend to match distributive tactics from the other party with their own distributive tactics
To communicate affectively
A negotiator should try to send a consistent message through both the opening offer and stance
A reasonable bargaining position is usually couple with a friendly stance
An exaggerated bargaining position is usually coupled with a tougher, more competitive stance
Initial Concessions
An opening offer is usually met with a counteroffer, and these two offers define the initiel bargaining ranger
Sometimes the other party will not counteroffer but will simply state that the first offer is unacceptable and aks the opener to come back with a more reasonable set of proposals
Negotiators can choose to make none, to hold firm and insist on the original position
Or to make some concessions
Initial concessions are elements at the beginning of a negotiation that parties can use to communicate how they intend to negotiate
very small initial concession signal a position of firmness
A reasonable initial concession communicate a basic stance of flexibilily
Firmness can also create a climate in which the other party may decide that concessions are so meager the he or she might as well capitulate and settle quickly rather than drag things out
There are several good reasons for adopting a flexible position
When taking different stances throughout a negotiation, one can leanr about the other party's targets and perceived possibilities by observing how he or she responds to different proposals.
Role of Concessions
Concessions are central to negotiation
Without them, in fact, negotiations would not exit
People enter negotiations expecting concessions
Immediate concessions are perceived less valuable than gradual, delayed concessions, which appear to increase the perceived value of the concession
That parties feel better about a settlement when the negotiation involved a progression of concessions that when it didn't
Because concession making indicates an acknowledgment of the other party and a movement toward the other's position, it implies recognition of that position and its legitimacy
Concession making also exposes the concession maker to some risk.
A reciprocal concession cannot be haphazard.
If one party has made a major concession on a significant point, it is expected that the return offer will be on the same item or one of similar weight and somewhat comparable magnitude
To make an additional concession when none has been received can imply weakness and can squander valuable maneuvering room
After receiving an inadequate concession, negotiators may explicitly state what they expect before offering further concession
Pattern of Concession Making
The pattern of concession a negotiator makes contains valuable information, but it is not always easy to interpret.
When the opening offer is exaggerated, the negotiator has considerable room available for packaging new offers, making it relatively easy to give fairly substantial concessions
A negotiator cannot always communicate such mechanical ratios in giving or interpreting concession
It is also important to justify concessions to the other party, especially those invoving price reductions
It is important to signal to the party whith both our actions and our worda that the concessions are almost over
Final Offers
One way negotiators may canvey the message that and offer is the last one is to make tha last concession more subtantial
This implies that the negotiator is throwing in the remainder of the negotiating range
The final offer has to be large wnough to be dramatic yet not so large that it creates the suspicion that the negotiator has been holding back and that there is more available on other issues in the barganing mix
A concession may also be personalized to the other party, which signals that this is the last concession the negotiator will make
Hardball Tactics
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
very adversarial negotiators are not effective negotiators
Many people find hardball tactics offensive and are motivated for revenge when such tactics are used against them.
Many negotiators consider these tactics out-of-bounds for any negotiation situation
It is impor-tant that negotiators understand hardball tactics and how they work, however, so they can recognize if hardball tactics are used against them.
Dealing with Typical Hardball Tactics
The negotiator dealing with a party who uses hardball tactics has several choices about how to respond. A good strategic response to these tactics requires that the negotiator identify the tactic quickly and understand what it is and how it works. How best to respond to a tactic depends on your goals and the broader context of the negotiation
Ignore Them
It takes a lot of energy to use some of the hardball tactics described here, and while the other side is using energy to play these games. you can be using your energy to work on satisfying your needs
Not responding to a threat is often the best way of dealing with it.
Change the subject and get the other party involved in a new topic. Call a break and, upon returning, switch topics.
Respond In Kind
It is always possible to respond to a hardball tactic with one of your own.
Both parties will realize that they are skilled in the use of hardball tactics and may recognize that it is time to try something different
Responding in kind may be most useful when dealing with another party who is testing your resolve or as a response to exaggerated positions taken in negotiations.
Discuss Them
Label the tactic and indicate to the other party that you know what she is doing
Then offer to negotiate the negotiation process itself, such as behavioral expectations of the parties
Explicitly acknowledge that the other party is a tough negotiator but that you can be tough too
Negotiators separate the people from the problem and then be hard on the problem, soft on the people
Co-Opt the Other Party
Hardball tactics is to try to befriend them before they use the tactics on you.
This approach is built on the theory that it is much more difficult to attack a friend than an enemy.
Typical Hardball Tactics
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Good Cop/Bad Cop
Alternating between negotiators who use tough and more lenient negotiation approaches
The good cop/bad cop tactic is named after a police interrogation technique in which two officers (one kind, the other tough) take turns questioning a suspect
Although the good cop/bad cop tactic can be somewhat transparent, it often leads to concessions and negotiated agreements
Lowball/HighbalI
Using extreme offers to change the anchor of potential negotiation settlements.
The theory is that the extreme offer will cause the other party to reevaluate his or her own opening offer and move closer to or beyond their resistance point.
The risk of using this tactic is that the other party will think negotiating is a waste of time and will stop the process
Bogey
Pretending a low priority item is important in order to trade it for a concession on another item.
Negotiators wing the bogey tactic pretend that an issue of little or no importance to them is quite important
This tactic is most effective when negotiators identify an issue that is quite important to the other side but of little value to themselves.
Nibble
Asking for a proportionally small concession on a new item to close the deal.
Negotiators using the nibble tactic ask for a proportionally small concession on an item that hasn't been discussed previously in order to close the deal
First. respond to each nibble with the question "What else do you want?".
Second. have your own nibbles prepared to offer in exchange.
Chicken
Using a large bluff plus a threat to force the other party to concede.
Negotiators who use this lactic combine a large bluff with a threatened action to force the other party to "chicken out" and give them what they want.
In labor-management negotiations, management may tell the union representatives that if they do not agree to the current contract offer the company will close the factory and go out of business
Intimidation
Using emotional ploys such as anger and fear to force concessions.
Another form of intimidation includes increasing the appearance of legitimacy. Negotiators who do not have such policies or procedures available may try to invent them and then impose them on the other negotiator while making the process appear legitimate.
To deal with intimidation tactics, negotiators have several options. Intimidation tactics are designed to make the intimidator feel more powerful than the other party and to lead people to make concessions for emotional rather than objective reasons
Aggressive Behavior
Relentless requests for more concessions and better deals with an aggressive tone.
Aggressive behav-ior tactics include various ways of being aggressive to push your position or attack the other person's position.
Good preparation and understanding both one's own and the other party's needs and interests together make responding to aggressive tactics easier because negotiators can highlight the merits to both parties of reaching an agreement.
Snow Job
Overwhelming the other party with so much information they cannot make sense of it.
The snow job tactic occurs when negotiators overwhelm the other party with so much information that he or she has trouble determining which facts are real or impor-tant and which are included merely as distractions.
Negotiators trying to counter a snow job tactic can choose one of several alternative responses.
First, they should not be afraid to ask questions until they receive an answer they understand
Second, if the matter under discussion is in fact highly technical, then negotiators may suggest that technical experts get together to discuss the technical issues.
Finally, negotiators should listen carefully to the other party and identify consistent and inconsistent information.