Week 3 - Managerial Negotiation Flashcards
Distributive Bargaining
(aka Competitive or Win-Lose bargaining)
What is distributive bargaining?
Give an example
Essay Question and True/False
Low / Outcome High
Goal of one party are usually in fundamental and direct conflict with the goals of the other party.
Resources are fixed and limited, and both parties want to maximize their share of the resources.
One important strategy is to guard information carefully - one party tries to give information to the other party only when it provides a strategic advantage.
Distributive bargaining is basically a competition over who is going to get the most of a limited resource.
The Distributive Bargaining Process
Useful when a negotiator wants to maximize the value obtained in a single deal.
When the relationship with the other party is not important.
When they are at the claiming value stage of negotiations.
The Distributive Bargaining Process
Multiple Choice
Target point is a negotiator’s optimal goal, or the point at which she/he would like to conclude negotiations.
The resistance point is a negotiator’s bottom line - the point beyond which a person will not go. This is not known to the other party and should be kept secret. The resistance point is a high prices for the buyer and a low price for the seller.
The asking price is initial price set by the seller, or the first number quoted by the seller.
Both parties to a negotiation should establish their starting, target, and resistance points before beginning a negotiation.
BATNA
Always have an alternative negotiation plan.
1) Having an alternative plan in case the negotiation doesn’t go according to plan.
2) Preparing in advance and having your BATNA will make you a stronger negotiator.
