integrative versus distributive negotiation

17
Negotiation skills Patricia Maguet Levy February May 2014

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Learn the difference between integrative and distributive negotiation and strategies on how to cope them.

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Page 1: Integrative versus distributive negotiation

Negotiation skills

Patricia Maguet Levy

February – May 2014

Page 3: Integrative versus distributive negotiation

Kinds of Negotiation

Distributive or

Confrontational

Zero sum

Win - lose

The parties compete

over the distribution of

a fixed sum of value.

Harvard Business Essentials

Who will claim the most

value?

- Sale of a carpet, house,

car...

- Wage negotiations between

business owners and union

employees

Page 4: Integrative versus distributive negotiation

Kinds of Negotiation

Distributive

Winner takes it all

- Based on positions

- Based on differences

- Less flexible

- Relationship is not important

- Looks for short term gains risking long term losses

Page 5: Integrative versus distributive negotiation

Negotiation example

Distributive negotiation

Acme Manufacturing: as low a price

as possible (1,75$ per item)

The supplier Best Parts Company: as

high a price as possible (2$ per item)

Final deal point: 1,75$

Page 6: Integrative versus distributive negotiation

Tips and Tricks

Distributive negotiation

The less the other part knows about your weaknesses and preferences the better – do not reveal important information

Learn as much as you can about the other side Why they want to make a deal

Their interests and business constraints

The point at which they would walk away from the table

Do they have other option?

Page 7: Integrative versus distributive negotiation

Tips and Tricks

Distributive negotiation

Use the information to set your first offer or

demand

Don’t overshoot: don’t be aggressive or greed

Page 8: Integrative versus distributive negotiation

Kinds of Negotiation

Integrative or

Collaborative or

Interest based Can we create value? Who

will claim the most value?

The parties cooperate to

achieve maximum benefits

by integrating their

interests into an

agreement.

Integrative

Win - Win

- The relationship is more

important than winning

-Before you claim for value

you try to create value

Page 9: Integrative versus distributive negotiation

Kinds of Negotiation

Harvard Business Essentials

Cooperative We all can win

- Based on interests

- More flexibility in decision making

- More space for creativity

- Cares about the relationship

- Overcomes differences

- Agreements that really work

Page 10: Integrative versus distributive negotiation

Negotiation example

Integrative negotiation

Gomez Electronics needs 10.000

switches over a period of 6 months

The supplier Kraft Components

Company (2$ per switch)

They are long-term partners

Page 11: Integrative versus distributive negotiation

Negotiation example

Integrative negotiation

Creating extra value

Gomez Electronics pays 2$ per switch

Kraft Components gives Gomez sixty

days to pay

They agree to collaborate in a new

project

Page 12: Integrative versus distributive negotiation

Tips and Tricks

Integrative negotiation

Your goal is not to hurt your counterpart nor to

be coercive or exploitive.

Your goal is to help them at little cost to you

and to have them help you at little cost to

them.

You need to share your information

Page 13: Integrative versus distributive negotiation

Tips and Tricks

Integrative negotiation

Provide significant information about you

Explain why you want to make a deal

Talk about real interests and business

constraints

Reveal your preferences: issues and options

Reveal any other capacities or resources

USE ALL THESE ISSUES TO FIND CREATIVE

OPTIONS

Page 14: Integrative versus distributive negotiation

Tips and Tricks

How do we create value

Including not only prize but also:

Quality

Delivery terms

Payments

A common objective: To accomplish a particular task

Improving a relationship

Finding resources

Page 15: Integrative versus distributive negotiation

Tips and Tricks

Is win – win for real?

It doesn’t mean that both parties get what

they want

Sometimes the two side’s interests do not

compete at all

Win – Win means that every party should get

what they value most while giving up other,

less critical factors

Page 16: Integrative versus distributive negotiation

Tips and Tricks

The negotiator dilemma

Most negotiations are distributive and

integrative at a time

Should I

compete for

as a big

share of

this small

pie as

possible?

Should I

collaborate

in hopes of

doing well?

*

Page 17: Integrative versus distributive negotiation

Negotiation Quotes

“If there is a range of possible acceptable outcomes, then there is always a set of outcomes that will make both of us happier than the minimum acceptable outcome would”

Mark Gordon