integrative versus distributive negotiation
DESCRIPTION
Learn the difference between integrative and distributive negotiation and strategies on how to cope them.TRANSCRIPT
Negotiation skills
Patricia Maguet Levy
February – May 2014
What does negotiating mean?
“Negotiating is not listening to what they say, but
finding out what they want“. Reinhard Selten.
Economics Nobel Prize.
http://movieclips.com/B3FM-intolerable-cruelty-
movie-its-a-negotiation/
George Clooney no se prepara
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
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
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$
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?
Tips and Tricks
Distributive negotiation
Use the information to set your first offer or
demand
Don’t overshoot: don’t be aggressive or greed
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
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
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
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
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
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
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
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
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?
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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