Integrative versus distributive negotiation

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Information about Integrative versus distributive negotiation
Business & Mgmt

Published on March 7, 2014

Author: pmaglevy



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

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.  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. Who will claim the most value? - Sale of a carpet, house, car... - Wage negotiations between business owners and union employees Harvard Business Essentials

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  Acme negotiation 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 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 Harvard Business Essentials

Negotiation example  Integrative  Gomez negotiation 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  Creating  Gomez negotiation extra value 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? *

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

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