1. Strategy and Tactics of Distributive Bargaining
CHAPTER TWO
Strategy and Tactics of Distributive Bargaining
(Slicing the Pie)

2. The Distributive Bargaining Situation
Goals of one party are in fundamental, direct conflict to another party
Resources are fixed and limited
Maximizing one’s own share of resources is the goal

3. The Distributive Bargaining Situation
Preparation—set a
Target point, aspiration point
Walkaway, resistance point
Asking price, initial offer

4. The Distributive Bargaining Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
Party B - Buyer

5. The Role of Alternatives to a Negotiated Agreement
Alternatives give the negotiator power to walk away from the negotiation
If alternatives are attractive, negotiators can:
Set their goals higher
Make fewer concessions
If there are no attractive alternatives:
Negotiators have much less bargaining power

6. The Distributive Bargaining Situation
Party A - Seller
Walkaway Point Target Point Asking Price
Alternative
Alternative
Initial Offer Target Point Walkaway Point
Party B - Buyer

7. Negative Bargaining Zone
Seller’s Bargaining Range
Buyer’s Bargaining Range $5
$10
$15
$20
Negative Bargaining Zone
BT, Buyer’s Target Point
BR, Buyer’s Walkaway
SR, Seller’s Walkaway
ST, Seller’s Target Point

8. The Most Commonly Asked Questions
Should I reveal my reservation point?
Should I lie about my reservation point?
Should I try to manipulate the other party’s reservation point?
Should I make a “final offer” or commit to a position?

9. Fundamental Strategies
Push for settlement near opponent’s resistance point
Get the other party to change their resistance point
If settlement range is negative, either:
Get the other side to change their resistance point
Modify your own resistance point
Convince the other party that the settlement is the best possible

10. Keys to the Strategies
The keys to implementing any of the four strategies are:
Discovering the other party’s resistance point
Influencing the other party’s resistance point

11. Tactical Tasks of Negotiators
Assess outcome values and the costs of termination for the other party
Manage the other party’s impressions
Modify the other party’s perceptions
Manipulate the actual costs of delay or termination

12. Assess Outcome Values and the Costs of Termination for the Other Party
Indirectly
Determine information opponent used to set:
Target
Resistance points
Directly
Opponent reveals the information

13. Manage the Other Party’s Impressions
Screen your behavior:
Say and do as little as possible
Direct action to alter impressions
Present facts that enhance one’s position

14. Modify the Other Party’s Perceptions
Make outcomes appear less attractive
Make the cost of obtaining goals appear higher
Make demands and positions appear more or less attractive to the other party –whichever suits your needs

15. Manipulate the Actual Costs of Delay or Termination
Plan disruptive action
Raise the costs of delay to the other party
Form an alliance with outsiders
Involve (or threaten to involve) other parties who can influence the outcome in your favor
Schedule manipulations
One party is usually more vulnerable to delaying than the other

16. Positions Taken During Negotiations
Opening offer
Where will you start?
Opening stance
What is your attitude?
Competitive? Moderate?
Initial concessions
Should any be made? If so, how large?

17. Positions Taken During Negotiations
The role of concessions
Without them, there is either capitulation or deadlock
Patterns of concession making
The pattern contains valuable information
Final offer (making a commitment)
“This is all I can do”

18. Thompson’s Pie-Slicing Strategies (I)
Strategy 1: Assess your BATNA and improve it
Strategy 2: Determine your reservation point, but do not reveal it
Strategy 3: Research the other party’s BATNA and estimate their reservation point
Strategy 4: Set high aspirations (be realistic, but optimistic)
Strategy 5: Make the first offer (if you are prepared)
Strategy 6: Immediately reanchor if the other party opens first

19. Thompson’s Pie-Slicing Strategies (II)
Strategy 7: Plan your concessions
Pattern of concessions
Magnitude of concessions (GRIT model)
Timing of concessions
Strategy 8: Use an objective-appearing rationale to support your offers
Strategy 9: Appeal to norms of fairness
Strategy 10: Do not fall for the “even split” ploy

20. Closing the Deal Provide alternatives (2 or 3 packages)
Assume the close
Split the difference
Exploding offers
Deal sweeteners

21. Dealing with Typical Hardball Tactics
Four main options:
Ignore them
Discuss them
Respond in kind
Co-opt the other party (befriend them)

22. Typical Hardball Tactics
Good Cop/Bad Cop
Lowball/Highball
Bogey (playing up an issue of little importance)
The Nibble (asking for a number of small concessions to)

23. Typical Hardball Tactics
Chicken
Intimidation
Aggressive Behavior
Snow Job (overwhelm the other party with information)

24. Summary Negotiators need to: Set a clear target and resistance points
Understand and work to improve their BATNA
Start with good opening offer
Make appropriate concessions
Manage the commitment process