The Types of Negotiation and How to Prepare Negotiation

Negotiation is a dialogue between two or more people or parties intended to reach a beneficial outcome over one or more issues where a conflict exists with respect to at least one of these issues. This beneficial outcome can be for all of the parties involved, or just for one or some of them.

People negotiate daily, often without considering it a negotiation. Negotiation occurs in organizations, including businesses, non-profits, and within and between governments as well as in sales and legal proceedings, and in personal situations such as marriage, divorce, parenting, etc. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiator, or hostage negotiators. They may also work under other titles, such as diplomats, legislators, or brokers.

Removing the veil, we find there are two relatively distinct types of negotiation. The 2 types are known as distributive negotiations, and integrative negotiations. The Negotiation Experts' Sales course and Purchasing Negotiation course teach both methods, as both are essential to negotiate successfully in business. 

1.   Distributive Negotiations

The term distributive means; there is a giving out; or the scattering of things. By its mere nature, there is a limit or finite amount in the thing being distributed or divided amongst the people involved. Hence, this type of negotiation is often referred to as 'The Fixed Pie'. There is only so much to go around, but the proportion to be distributed is limited but also variable. How many times has somebody shouted out, 'Who wants the last piece of pizza?' Everyone looks at each other, then the pizza slice, and two or more hands rush to grab it.

In the real world of negotiations, two parties face off with the goal of getting as much as possible. The seller wants to go after the best price they can obtain, while the buyer wants to pay the lowest price to achieve the best bargain. It's really just good old plain haggling, which is not all that much different from playing a tug of war.

A distributive negotiation usually involves 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 one time 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. 

  1.  Integrative Negotiations

  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. 

 

Depending on the level of concern the negotiator has for one’s own outcomes and for the outcomes of others, the negotiator may adopt one of the following five strategies:

1. Compromising: This strategy aims at finding a middle ground. Often the person gives away something in exchange for something, else. A person using this strategy has a moderate degree of concern for one’s own interests and the interests of others. There is no clear outcome when this strategy is used.

2. Forcing: This is an aggressive and dominating strategy aimed at achieving one’s personal goals at the expense of others. This style of conflict resolution reflects a high concern with one’s own interests but low concern with the interests of others.

3. Avoiding: In this strategy the negotiator has little concern for one’s outcomes as well as those of others. The individual physically and mentally withdraws from the conflict. This often results in a lose-lose outcome.

4. Smoothing: In this strategy the negotiator is more concerned with others outcomes than one’s own outcomes. The participant does not mind giving the other side whatever they want. The negotiator deliberately seeks a solution that is beneficial to the other side even though it may not be in his best interests.

5. Confronting: In this strategy the negotiator participant faces the conflict head-on and aims at a solution that is mutually satisfactory. The negotiator strives to find a solution that is acceptable to both the parties. This strategy seeks to maximize the outcomes for both the sides. This strategy is also known as problem solving or integrating.

     How to Prepare Negotiation

1. Check Whether You're In A Negotiating Situation. A negotiating situation exists when you are in any communication or problem-solving situation with others that can work out to your advantage. If there is no advantage to you, then don't negotiate; you'll only lose. As Sun Tzu, the author of "The Art of War", said hundreds of years ago, "Engage only when it is in the interests of the state; cease when it is to its detriment. Do not move unless there are advantages to be won."

2. Clarify Your Aims. Your overriding aim in any negotiation is to achieve the objectives you and your constituents have set. There are other aims, such as getting a good deal and improving your relationship with the other side. But getting what you want is tops. Always keep this aim firmly in your sights and don't stop until you get it.

3. Gather Information. Once you know you're in a negotiating situation, you need to gather information about the other side's offer and use it to refine your own. Many negotiations come unstuck simply because one side or the other doesn't listen, or check, or take the time to clarify exactly what the other side are offering, or indeed what they themselves are offering. This means that throughout a negotiation you should do tons of listening, clarifying and checking. And when it comes your turn to put over your case, you should use every skill you can muster to make sure they understand.

4. Negotiate With Your Own Side. It is rare to go into a negotiation only representing yourself. Usually you negotiate as a representative of others, your constituents. Part of your preparation for negotiations has to be spent getting the best mandate from your constituents. Aim to get the support you need; the trust you need; the resources you need; the understanding you need; and the freedom you need.

5. Get A BATNA. A BATNA is your Best Alternative To a Negotiated Agreement and is the only certain way to be successful in negotiations. By preparing for negotiations with one party by sounding out an alternative deal with another party, you get walkaway power. It means that, even if the alternative isn't quite what you want, you are still prepared to go there, if need be.

6. Prepare The Setting. There are five questions to ask yourself when preparing the setting for a negotiation. They are: Who? (i.e. who is to take part and do what?); Where? (i.e. our place or theirs?); When? (i.e. what is the time scale?); Why? (i.e. what are we negotiating about?); and How? (i.e. how are we to present our case?).

7. Prepare Yourself Mentally. The right attitude towards negotiations is the principal difference between successful and unsuccessful negotiators. Getting into the right frame of mind before you begin should be part of your preparation plan.