1. Chapter 5
Distributive Bargaining and Integrative Negotiation

2. Learning Objectives By the end of this chapter, you should –
be aware of the basic framework for negotiation (four arenas or fields)
be familiar with the definition and nature of distributive bargaining and integrative negotiation
know the strategies and tactics of the two kinds of negotiation

3. Distributive or competitive bargaining
According to Walton and McKersie ,it is a useful, practical framework to conceive of any negotiations as consisting of four arenas of activity occurring simultaneously, or at least simultaneously.
Distributive or competitive bargaining
Integrative or interest-based bargaining
Attitudes and relationship structuring
Internal or intra-organizational bargaining

4. Claiming and Creating Value
3-4

5. Attitudes and relationship structuring
Relationships can affect the process, and ultimately the outcome.
Organizational relationships
Personal characteristics and relationships

6. Internal or intra-organizational bargaining
In general terms, two things happening here: “boundary conflict” and “factional conflict”.
The negotiators or negotiating teams are , in effect, on the boundary between their own constituency and the party on the side of the bargaining table.
Key: audience expectations and evaluation

7. Distributive or competitive bargaining
the fixed-pie assumption or a fixed sum game: the more you win, the less that is left for me.
positional bargaining tactics
a power-based interaction

8. Competitiveness in negotiation
Four elements in being ‘competitive’
the outcome
the issue
the process
the desire to do well
A lawyer’s negotiating strategy: “go for the jugular and if that does not work, try something competitive”

9. The typical competitive situation
concessions
Walkaway
point
Opening
offer
SELLER
Target
Opening offer
Target
Walkaway
point
BUYER
concessions
The bargaining range谈判空间(P35) - starting points
The settlement range - walkaway points
Negative settlement range(消极的解决空间)?
Walkaway
point
Opening offer
SELLER
Target
Opening offer
Target
Walkaway
point
BUYER

10. The logic of competitive negotiation
The opening offer must be a ‘yesable proposition’
A final, committed offer ‘inside’ the other party’s walkaway or resistance point claims maximum value（P16）
A misplaced commitment loses control of the negotiation and outcome
concessions
Opening offer
Walkaway
point
SELLER
Target
Opening offer
Walkaway
point
BUYER
The settlement range, the ‘value’ on the table
Buyer’s final offer

11. Finding/Influencing their resistance point (p.38)
seller’s RP??
I’ll look at that
Got to be joking!
That’s pushing me
seller’s responses
<-->
trial offers by buyer

12. Competitive bargaining: preparation
Information
What do we know about them which will help us estimate their resistance point?
What information do we still need to get during the negotiation?
What questions are we going to ask to find out?
What are we prepared to reveal?
How are we going to resist their attempts to find out more about our resistance point?
Commitment
How are we going to convince them of our commitment offer? And maintain our commitment?
What are we going to do if they try to make a commitment offer?

13. Competitive negotiation behaviour
Other factors which increase competitive behaviour include
time pressure
presence of a constituency
the importance of the issue
the extremity of the other’s position
a ‘win’ orientation

14. Competitive negotiation (Pruitt et al, 1994)
Negotiators may use some of the following to get their opponent to agree:
ingratiation
gamesmanship
guilt
persuasive argument
threats, positive and negative
commitment

15. Competitive negotiation (Mnoonkin et al, 2000)
extreme claims followed by small, slow commitment tactics
take-it-or-leave-it offers
inviting unreciprocated offers
flinch
personal insults and feather ruffling
bluffing, puffing and lying
threats and warnings
belittling the other party’s alternatives
good cop, bad cop concessions

16. Competitive in whole or in part? - the competitive end game
According to our definition
Negotiation is … ... exchanging offers
The competitive end game to most negotiations
Creating, then claiming value (Lax and Sebenius, 1986)
The notion of phases
The notion of tit-for-tat & reciprocity
The importance of the BATNAs
Framing

17. The competitive end game
The notion of tit-for-tat & reciprocity
Friendly
Forgiving
Firm
Fair
Facilitating
cooperation through reciprocity?

18. The competitive end game
The importance of the BATNAs
what happens if we walk away?
can we improve this alternative?
what happens if they walk away?
can we worsen their alternative?
cooperation because we have to?

19. The competitive end game
Framing: points of comparison
cooperation by preferred choice
Their walkaway
point
Starting
point
SELLER
Target
Starting
point
Target
Walkaway
point
BUYER
£ my opening offer
£ my final offer
£ their latest offer
£ their opening offer
gain frame
loss frame

20. The competitive end game: the options
Successful, firm commitment (p.53) > concessions by the other party
Two committed positions > deadlock
Two committed positions > mutual concessions
Successful, firm commitment by the other party > concessions by self

21. The competitive end game - committed to the end
Clearly state your final position, making it clear that it is final
Check your BATNA
Emphasise the benefits to both parties of achieving an agreement
Allow the other party whatever rationale they chose
Allow the other party some behavioural scope
Apply pressure, but steadily
Leave the other party with the final choice, of accepting your offer or of walking away

22. The competitive end game - conceding without capitulating
Check that what you are about to agree to is better than your BATNA
Clearly state what you are agreeing to
Emphasise the benefits to both parties of agreement being achieved

23. Integrative or interest-based bargaining
potential for mutual gain
the parties can expand the sum total
Complementary priorities and values
Integrative, collaborative, interest-based bargaining strategies are appropriate

24. Where have we got to so far?
That negotiation is complex and messy
That we should make distinctions between how we manage the issue and how we manage the process and our behaviour
That we have to manage both competition and cooperation in the same negotiation So
How do we actually cooperate in practice?

25. What do we mean by ‘cooperation’?
According to our definition,
negotiation is … … … … though exploring options … …
so …
The integrative model
achieve the added value
underlying rationality of problem solving approach

26. Cooperation through an integrative problem solving approach
Lewicki et al, 2006 ch.3
Identify and define the problem
the ‘problem’ is that the other side won’t agree!!
Understand the problem fully
identification of interests is an iterative process 
Generate alternative solutions
adding value or just creative trading?
Evaluate and select alternatives
giving ‘objectivity’ to the end game?
Techniques from models of rational problem solving are expanded into a process of ‘integrative negotiation’

27. Cooperation through problem solving (Lewicki et al, 2006, p.93ff)
Create common goals or objectives
Have faith in own ability to solve problems
A belief in the validity of the other party’s opinion
Share the motivation and commitment to working together
Trust
Clear and accurate communication
An understanding of the process

28. Can I trust you? In the context of negotiation:
Are you telling me the truth?
If I provide information or make a concession will you reciprocate?
Can I believe that you will do what you are saying you will do?
Is it ok not to tell the truth in a negotiation?

29. Cooperative negotiation
‘If you are too honest and trustworthy, most people will take advantage of you.’
What has been your experience?
‘Fear is a stronger persuader than trust’
What do you think? ?

30. Trust
Trust:
A willingness to take unilateral action which might lead to exploitation but which anticipates a non-exploitive response from the other person.
Building trust:
Talk process - about the need for cooperation, trust etc and get some reciprocation - before actually taking the risky move on information exchange or on the issue itself.

31. Fisher, Ury and Patton’s ‘Getting to Yes’
Separate the people from the problem
Focus on interests, not positions
Generate a variety of options
Problem solving approach
Use objective criteria
When preparing, consider
Interests
Options
Alternatives
Legitimacy
Communication
Relationship
Commitment
(Fisher and Ertel, 1995

32. The interest based approach
Focus on interests, not positions (Getting to Yes)
define your interests! pursue and protect your needs, not your position (Lewicki et al, 1996)
Joint gains arise from differences, not just from commonalities
review resources, relative valuations, forecasts, risk preferences, time preferences for any differences (Lax and Sebenius, 1986; Mnoonkin et al, 2000)

33. Underlying interests at Rudall River
The issue: mining exploration access
Dept of Aboriginal Affairs
No access position
Dept of Conservation
Preserve the integrity of the land interest
Dept of Minerals and Energy
Access position
Dept of Premier and Cabinet
Increase the State’s wealth interest

34. Cooperation: issue, process and behavioural dimensions
contend: stand firm on interests
creative compromise - only if the other party is interested
clear cut concessions - not unless you have to
Issue
Process
Behaviour
discover interests (emergent)
information exchange (drip feed)
option generation (pragmatic)
ask questions and give good responses, to explore differences
take your time, allow repetition, expect partial answers
reflect, clarify, ask “why?” “why not?” summarise
put suggestions tentatively

35. The real problem with problem solving in negotiation - claiming value (p75)
Benefit to Party A A1 A2 B2 B1
Benefit to Party B

36. Walton and McKersie’s model of integrative bargaining: the strategic dilemma
The best strategy is integrative bargaining to establish the maximum total sum, accompanied by relatively hard distributive bargaining to claim your share.
‘if executed effectively, this strategy appears to be the most attractive; but unfortunately it is the most difficult to implement’ (p.165)
‘in brief, integrative bargaining is tentative and exploratory and involves open communication processes, whereas distributive bargaining involves adamant, directed and controlled information processes’ (p.166)
See also Lax and Sebenius, 1986 ch.6

37. So what do we mean by ‘cooperation’?
It does not mean making concessions!
It means standing firm on what is really important to you
It means uncovering and exploring interests
It means managing the process to create opportunities for new solutions to emerge and be explored
It means knowing what your walk away option is
and
It means being part of the inevitable competitiveness

38. A final task
What one thing did I learn about negotiation in this session?
and what difference is it going to make to how I negotiate?