Negotiations, based on how they are conducted—competitively or cooperatively—can be divided into two different types: distributive negotiation and integrative negotiation.
■Distributive Negotiation
Distributive negotiation or distributive bargaining, also called positional bargaining, claiming value bargaining, zero-sum bargaining, or win-lose bargaining, is a competitive approach that is used when there is a fixed “pie”—a finite limit to a resource—and negotiators have to decide who gets how much of that pie. The negotiators assume that there is not enough to go around, and they can not “expand the pie”, so the more one side gets, the less the other side gets.
◆ Preparation
◇Prepare yourself to walk away to get your needs met elsewhere.
◇Develop a strong Best Alternative to a Negotiated Agreement (BATNA) and keep it to yourself.
◇Research their BATNA and their intangible needs (such as getting the deal done, making the customer happy, being fair, beating the competition, saving face, preserving reputation and setting a precedent). What matters to them?
◆ Opening Offers
◇Listen carefully and ask many questions before making any proposal.
◇Make the first offer if you have done your homework and have a good idea what the transaction is worth.
◇Wait for a response after making an offer.
◇Be quick to counter-offer.
◆ Exchanging Information and Arguments
◇Base your discussion on “objective” standards, principles, rationals, norms of fairness.
◇Beware of giving information that lowers your leverage—the ability to help or harm the other party—just to seem “nice” or signal that you trust them. They may not notice your signal or interpret it as you intended. Leverage given away is tough to regain.
◆ Concessions and Decisions
◇Make sure you receive something of similar value for each concession you offer.
◇Start with small concessions; give larger, more generous concessions towards the end.