Hello World!
It's exciting to be on the Net!!
Today I was thinking to write something useful, both for me as well as for others. Ultimately I decided to write on mostly used types of negotiations, you will wonder why I am writing on negotiations? The answer is that tomorrow on 3rd May I have another assignment on negotiations (besides this assignment i.e. writing any article on Wikipedia), so I thought 'why not kill two birds with one stone'. Didn't it sound smart!!
Here is what I learnt about negotiations.
There exist two opposite types or schools of negotiation:
(a) Distributive Negotiation The Fixed Pie
(b) Integrative Negotiation Everybody Wins Something (usually)
In this article I will try to emphasis on important difference between each negotiation type and which type of negotiation may be right for you. Please remember that I am not a negotiation expert but sharing my understanding about negotiation theories with you.
(a) Distributive Negotiation: A distributive negotiation type or process that normally involves a single issue to be negotiated. The single issue often involves price and frequently relates to the bargaining process. It is also referred to as 'Win-Lose', or 'Fixed-Pie' negotiation because one party generally gains at the expense of the other party. You will wonder Why Distributive negotiation is referred to as The Fixed Pie? The term distributive means; there is a giving out; or scattering of things! So by its mere nature there is a limit or finite amount in the thing being distributed or divided among the people involved. Hence it is referred to as The Fixed Pie. There is only so much to go around, but the proportion to be distributed is not only limited but variable too. In the real world of negotiations, the two parties face off with the goal of getting as much as possible, the seller wants the best price while the buyer wants the lowest to achieve the best bargain, which is not all much different from playing a tug of war or haggling (a form of distributive negotiation which means negotiate, argue or barter about the terms of business transaction, usually focusing on the purchase or selling price of a product or service).
Usually distributive negotiation involves those people who have never had a previous interactive relationship nor are they likely to do so again in the near future. Simple everyday examples, would be when we're buying a car or a house. Purchasing products or services are simple business examples where distributive bargaining is often employed. Remember, even friends or business acquaintances can drive a hard bargain just as well as any stranger.
Secondly, when we are dealing with someone unknown to us, and it's a onetime only occurrence, we really have no particular interest in forming a relationship with them, except for the purpose of the deal itself. We are generally less concerned with how they perceive us, or how they might regard our reputation. Ours and their interests are usually self serving.
Distributive Bargaining Basics:
Play your cards close to your chest - Give little or no information to the other side. The less they know about our interests as to why we want to make the purchase, our preferences, or the point at which we'd decline to deal, the better our position. Expressing eagerness or need, reveals a weakness which could be exploited to our disadvantage.
The opposite is equally true - Try to pry as much information from the other side. Any additional information that we uncover can be used as leverage to negotiate a better deal.
The only thing you should ever tell - The only information we should ever reveal are those alternative options, such as other sellers, which shows we are prepared to walk from the negotiation whenever it suits us.
Let them make the first offer - Whatever is used as the first offer will generally act as an anchor upon which the rest of the negotiation will revolve. Try to get the other side to set the stage from which to start.
Be realistic - Being too greedy or too stingy will likely result in no agreement, so keep it real.
(b) Integrative Negotiation: Where everybody wins something mostly! In this type of negotiation, all parties contribute to increase the net result’s value. For example, in a joint-venture situation wherein the parties are pooling resources to create more value than their individual operations. This is also called as “creating” the value. The word integrative means to join several parts into a whole. Conceptually, this implies some cooperation, or a joining of forces to achieve something together. Usually involves a higher degree of trust and a forming of a relationship. Both parties want to walk away feeling they've achieved something which has value by getting what each wants. Ideally, it is a twofold process.
In the real world of business, the results often tilt in favour of one party over the other because, it's unlikely that both parties will come to the table at even strength, when they begin the talks.
Nonetheless, there are many advantages to be gained by both parties, when they take a cooperative approach to mutual problem solving. The process generally involves some form or combination of making value for value concessions, in conjunction with creative problem solving. Generally, this form of negotiation is looking down the road, to them forming a long term relationship to create mutual gain. It is often described as the win-win scenario.
Integrative Negotiation Basics:
Multiple Issues - Integrative negotiations usually entails a multitude of issues to be negotiated, unlike distributive negotiations which generally revolve around the price, or a single issue. In integrative negotiations, each side wants to get something of value while trading something which has a lesser value.
Sharing - To fully understand each other's situation, both parties must realistically share as much information as they can to understand the other's interests. You can't solve a problem without knowing the parameters. Cooperation is essential.
Problem Solving - Find solutions to each other's problems. If you can offer something of lesser value which gives your counterpart something which they need, and this results in you realising your objective, then you have integrated your problems into a positive solution.
Bridge Building - More and more businesses are engaging in long term relationships. Relationships offer greater security.
NOTE: The contents of the above article have been adapted from http://www.negotiations.com
FOLLOWING IS THE LIST OF MY OTHER PAGES ON WIKIPEDIA EDITED BY ME:
1.Assam
2. Best Alternative to Negotiated Agreement
4. Malta