1) The difference between distributive and integrative bargaining
Negotiation approaches are generally described as either distributive or integrative. At the heart of each strategy is a measurement of conflict between each party’s desired outcomes. Consider the following situation. Chris, an entrepreneur, is starting a new business that will occupy most of his free time for the near future. Living in a fancy new development, Chris is concerned that his new business will prevent him from taking care of his lawn, which has strict requirements under neighborhood rules. Not wanted to upset his neighbors, Chris decides to hire Matt to cut his grass.
In a distributive bargaining approach, each negotiator’s objective is in direct conflict with the other. Looking at our situation, each party is concerned about the final price and has a limited number of resources. In starting a new business, Matt’s cash flow is low and there is limit on what he will spend for the service. On the other hand, Chris wants to ensure a high fee but also guarantee he will not lose money after buying gas for his lawnmower. The goal in distributive bargaining is not to find a mutually accepted outcome, but rather that one side gains preferential treatment. In other words, the final result is a win-lose scenario. In distributive bargaining, each party must decide before the negotiation where certain breakpoints lie. For Chris, maybe he can not afford more than $20 for the service, but is willing to pay $15. Conversely, Matt cannot accept less than $12, but would prefer $18. The spread between the resistance points, $12-$20, defines the bargaining range and where a settlement is likely to occur. If the resistance points did not overlap, a negotiation would not be possible. As the negotiation occurs, the challenge will be in discovering and influencing each other’s resistance point.
Conversely, consider that while meeting to discuss a price, both parties realize there are different interests at stake. Chris’ priority is a low price while Matt prefers a longer contract. In this case, negotiators may then use an integrative bargaining strategy where each side can achieve their objective. In other words, the final result is a win-win scenario. This approach requires a fundamentally different process. First, negotiators who take an integrative approach view a negotiation as problem solving rather than adversarial. The measurement of success is not whether one party is doing better, rather is the overall objectives met. The challenge to integrative bargaining is ensuring a free flow of information, so each party understands the overall objectives, and maintaining a high level of trust.
2) Common perception errors and how they affect negotiation
Negotiations are a very social experience and participates enter into discussions guided by their perceptions. These can be derived from pervious experiences, relationships or the physical or mental environment and can impact the...