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Typical hardball tactics

VIEWS: 23 PAGES: 47

									     CHAPTER 2

Strategy and Tactics of
Distributive Bargaining
        分配型
                  Learning Objective


1. Grasp the basic structure of distributive
   bargaining and some related strategies and tactics.
2. Understand how to effectively manage distributive
   bargaining process, focusing on careful planning,
   strong execution, and constant monitoring of the
   other party’s reactions.
3. Apply distributive bargaining skills properly to
   value claiming stage of any negotiation, e.g.
   integrative negotiation.
             Warming up Exercises



1. Any differences btwn Strategy and Tactic?
2. What does the term Distributive Bargaining (DB)
   mean to you?
             An illustrative case



• Is this scenario familiar-sounding?
Customer                         Storekeeper

How much do you want for        This is a beautiful antique,
this brass dish?                isn’t it? I guess I could let it
                                go for $500.
Oh come on, it’s dented. I’ll   Really! I might consider a
give you $175.                  serious offer, but $175
                                certainly isn’t serious.
Well, I could go to $200, but I You drive a hard bargain,
would never pay anything like young lady. $425 cash, right
$500. Quote me a realistic      now.
price.
                                It cost me a great deal more
$200.                           than that. Make me a serious
                                offer.
1. Distributive Bargaining (DB): Distinctive
                  Features
   DB: A summary of Distinctive Features

 win-lose battles,
 aimed at maximizing personal gain
 competitive environments that encourage
 forcing, as disputants attempt to wrestle
 concessions from each other toward an
 agreement most favorable to oneself.
Q: Other terms and labels to describe DB?
               1.1 Basic Structure

Key steps
• Positions Taken during Negotiation.
• Commitment.
• Closing the Deal.
   The entire process of making an opening offer and
   then ending up with a mutually agreeable settlement
   is known as the negotiation dance (Raiffa 1982)
    1.1 Basic Structure: Terms and Concepts
• Position: e.g. target/preferred/reservation points
• Offer: e.g. initial/opening/renewed/revised
• Concession
• Commitment
• Bargaining Zone (ZOPA)/Settlement Zone: Negotiated
  Agreement
  vs ZONA; Compromise
Alternatives to a Negotiated Agreement: BATNA
Settlement Point (p.37)
Bargaining Mix (p.37): e.g. Multiple Equal Offers (MEOs)
Pie= ZOPA?
           1.2 Fundamental Strategies


• “Tell me the bare            • “Why don’t you tell us
  minimum you would              the very maximum
  accept from us, and            that you are willing to
  I’ll see if I can throw in     pay, and we’ll see if
  something extra.”              we can shave off a bit”
 1.2 Fundamental Strategies: Bottom line

The above humorous story illustrates the essence of
 negotiation:
 How do people make sure they reach agreement if the
 bargaining zone is positive but claim as much of the
 pie as possible?
Q: Any rules of thumb?
 NEVER reveal your reservation point
 1.2 Fundamental Strategies: the condo example
e.g. The buyer’s 4 strategies available:
   (1) To push for a settlement close to the seller’s
  resistance point.
   (2) To convince the seller to change her resistance
  point.
   (3) If a negative settlement range exists, to
  convince the seller to reduce her resistance point.
   (4) To convince the seller to believe that this
  settlement is the best that is possible.
     1.2 Fundamental Strategies: Basics!


1. Discovering TOS’s Resistance Point
2. Influencing the Other Party’s Resistance
   Point(p.38)
         )
  1.2 Fundamental Strategies: Discover…(how?)


• The more you can learn about the other
  party’s target, resistance point, motives,
  feelings of confidence, and so on, the more
  able you will be to strike a favorable
  agreement.
• To influence the other party’s perception,
  however, they must establish some points
  effectively and convincingly.
   1.2 Fundamental Strategies: Influence… (how?)

• Factors are important in attempting to influence the other
  party’s resistance point:
     (1) the value the other attaches to a particular outcome;
    (2) the cost the other attaches to delay or difficulty in
  negotiations;
    (3) the cost the other attaches to having the negotiation
  aborted.
• A significant factor in shaping the other person’s
  understanding of what is possible is the other’s
  understanding of your own situation.
            1.3 Tactical Tasks (p.40)


• Assess the other party’s target, resistance point, and
  cost of terminating negotiations
• Manage the Other Party’s Impressions
• Modify the Other Party’s Perceptions
• Manipulate the Actual Cost of Delay or Termination
   2. Effective DB process management


• What do effective bargainers do?
 2. Positions Taken during Negotiation
          (Positional bargaining)

2.1 Opening Offers
2.2 Opening Stance
2.3 Initial Concessions
2.4 Role of Concessions
2.5 Pattern of Concession Making
2.6 Final Offers
opening offer
         2.1 Opening Offers (pp.47-8)

• The fundamental question is whether the opening
  offer should be exaggerated or modest.
• There are at least two reasons that an
  exaggerated opening offer is advantageous.
• Two disadvantages of exaggerated opening offer
  are: (1) it may be summarily rejected by the other
  party; (2) it communicates an attitude of toughness
  that may be harmful to long-term relationships.
       2.2 Opening Stance (pp.48-9)

• Will you be competitive or moderate?
• It is important for negotiators to think carefully
  about the messages that they wish to signal
  with their opening stance and subsequent
  concessions.
• To communicate effectively, a negotiator
  should try to send a consistent messages
  through both opening offer and stance.
 Box 2.3 The power of the first move (p.50)
         2.3 Initial Concessions (p.49)

• First concession conveys a message, frequently a
  symbolic one to the other party that how you will
  proceed.
• Firmness may actually shorten negotiations, there is
  also the very real possibility, however, it will be
  reciprocated by the other.
• There are good reasons for adopting a flexible
  position.
             2.4 Role of Concessions

Concessions are central to negotiation.
 take-it-or-leave-it VS progression of concession
 Reciprocity: “Since you have reduced your demand on
  X, I am willing to concede on Y.”

Box 2.4 four guidelines on how to make concessions
  (p.51)
 2.5 Pattern of Concession Making (p.51)

• Figure 2.4 Pattern of Concession Making for
  Two Negotiators (p. 52)
                                        5
     Size of Concessions (in dollars)



                                                                            =George’s concessions
                                        4                                   =Mario’s concessions

                                        3

                                        2

                                        1


                                            0   1     2     3    4      5
                                                    Concession Number
       让步的方式 (刘宏, 2010年第134页)

让步方式         第一次   第二次 第三次      第四次
冒险式让步方式      0     0     0      6
均衡式让步方式      1.5   1.5   1.5    1.5
递增式让步方式      0.8   0.3   1.7    3.2
小幅递减式让步方式    2.2   1.7   1.3    0.8
有限式让步方式      2.6   2     1.2    0.2
快速式让步方式      4.9   1     0      0.1
反弹式让步方式      5     1     -1     1
一次性让步方式      6     0     0      0
           2.6 Final Offers (p.53)


 “This is all I can do.”
 “This is as far as I can go”
                         VS
 “I went to my boss and got a special deal just for
you.”
            2.7 Commitment (pp.53-4)

• Commitment is the taking of a bargaining
  position with some explicit or implicit pledge
  regarding the future course of action.
• The purpose of commitment is to remove
  ambiguity about the actor’s intended course of
  action.
• A commitment is often interpreted by the other
  party as a threat.
               2.7 Commitment

1. Tactical Considerations in Using Commitments
2. Establishing a Commitment
3. Preventing the Other Party from Committing
   Prematurely
4. Finding Ways to Abandon a Committed Position
2.7.1 Tactical Considerations in Using Commitments
                       (p.54)

• Commitments exchange the flexibility for
  certainty of action, but they create difficulties if
  one wants to move to a new position.
• When one makes commitments one should also
  make contingency plans for a graceful exit
  should it be needed.
    2.7.2 Establishing a Commitment (pp.54-6)

• A commitment statement has three properties: a high
   degree of finality, a high degree of specificity, and a
   clear statement of consequences.
e.g. “We must have a 10% volume discount in the next
   contract, or we will sign with an alternative supplier
   next month.”
• Several ways to create a commitment:
      public pronouncement
     linking with an outside base
     increase the prominence of demands
     reinforce the threat or promise
2.7.3 Preventing the Other Party from Committing
              Prematurely (pp.56-7)


 Approaches:
 • To deny his or her the necessary time.
 • To ignore or downplay a threat by not
   acknowledging the other party’s commitment, or
   even by making a joke about it. (e.g. “You don’t
   really mean that,” OR “I know you cannot be
   serious about really going through with that,” ….)
2.7.4 Finding Ways to Abandon a Committed Position
                     (pp.57-8)



     • Four avenues for escaping commitment:
         Play a way out
         Let it die silently
         Restate the commitment
         Minimize the damage
             2.8 Closing the Deal (pp.58-9)

• Several tactics are available to negotiators for closing a
  deal:
•    Provide alternatives 提供备选方案
     Assume the close 假装成交
     Split the differences 妥协,折中,互相让步
     Exploding the offers 逼签
     Sweeteners:成交刺激,成交诱饵(以优惠的条
  件促使成交) “I’ll give you X if you agree to the
  deal.”
   2.9 Hardball Tactics (pp.60-8) 高飞球

  Such tactics are designed to pressure negotiators to
  do things they would not otherwise do, and their
  presence usually disguises the user’s adherence to
  a decidedly distributive bargaining approach.
• 1 Dealing with typical hardball tactics (TBCed)
• 2 Typical hardball tactics (TBCed)
  2.9.1 Dealing With Typical Hardball Tactics

• How best to respond?
  Ignore them (p.60) 不予理睬
  Discuss them (p.60) 加以讨论
  Respond in kind (p.61)正面回应,以同样的方式
  回敬对方
   Co-opt the other party (p.61) 拉拢对手,化敌为
  友(联合次要敌人打击首要敌人)
Lowball/Highball (pp.62-3) 滚地球/高飞球
Risk: the other party will think negotiating is a
  waste of time and will stop negotiating.
The best way to respond: ask for a more
  reasonable opening offer from the other party,
  but not “anchored” by the other’s first
  outrageous offer.
 Good preparation is a critical defense against
  this tactic.
Bogey (pp.63-4) 哄骗
 Negotiators using the bogey tactic pretend that an issue
 of little or no importance to them is quite important.
  This tactic is fundamentally deceptive, and it can be a
 difficult tactic to enact. Bogeys occurs more often by
 omission该做而没有做 than commission做错事.
Once again, good preparation is a critical defense against
 this tactic. Probing with questions about why TOS wants
 a particular outcome. Be cautious about sudden reversals
 in positions taken by TOS, especially late in a
 negotiation.
• The Nibble (p. 64) 最后揩油,最后再咬一口
  Negotiators using the nibble tactic ask for a
  proportionally small concession on an item that
  hasn’t been discussed previously in order to close the
  deal.
• Risk: (TOS) potential to seek revenge in future
  negotiations.
• Two ways to combat the nibble (Landon, 1997).
   respond with the question “What else do you what?”;
    respond with your nibble on another issue/item.
     A nibble case in a business context

• After a considerable amount of time has been
  spent in negotiation, when an agreement is
  close, one party asks to include a clause that
  hasn’t been discussed previously and that will
  cost TOS a proportionally small amount. This
  amount is too small to lose the deal over, but
  large enough to upset TOS. (p. 64)
• Chicken (pp.64-5) (see Box 2.6 Playing Chicken
  in int’l relations, p.66)
 Negotiators using this tactic combine a large
 bluff with a threatened action to force the other
 party to “chicken out” and give them what they
 want.
 Weakness: It turns negotiation into a serious
 game in which one or both parties find it difficult
 to distinguish reality from postured negotiation
 positions.
Chicken (pp.64-5) 胆小鬼
Possible options:
 1 Preparation and a thorough understanding of
 the situations of both parties help identify the
 boundary line.
 2 Use of external experts to verify information or
 to help reframe the situation.
• Intimidation (p.65-7) 胁迫,威吓
 Many tactics under the label of intimidation all
 attempt to force TOS to agree by means of an
 emotional poly, usually anger or fear. Another form
 includes increasing the appearance of legitimacy.
 Guilt can also be used as a form of intimidation.
 How to deflate the effectiveness of intimidation?
 discuss the negotiation process with the other party;
 Ignore TOS’ attempts to intimidate you.
 use a team to negotiate with TOS.
• Aggressive Behavior (p.67) 激烈手段
  Negotiators using this tactic is signaling a hard-nosed
  intransigent position and trying to force TOS to make
  many concessions to reach an agreement.
 e.g. “You can do better than that”, “Let’s not waste any
  time. What is the most that you will pay?”, “What is
  your cost breakdown for each item?”
  countermoves: halt the negotiations in order to discuss
  the negotiation process itself. Have a team to counter
  the tactic. Good preparation and understanding needs
  and interests relative to each party make the job easier.
              6.2 Typical Hardball Tactics
• Snow Job (pp.67-8) 用欺骗手段来说服别人,花言巧
   语
   It occurs when negotiators overwhelm TOS with so
   much information that he or she has trouble determining
   which facts are real or important, and which are included
   merely as distractions.
to counter this tactic:
   Not be afraid to ask questions.
   Instead of negotiators, technical experts discuss
   technical issues.
   Listen carefully to spot out incorrect and inconsistent
   information in a complete snow job package so as to
   question the accuracy of the whole presentation.
   Strong preparation counts.
    3. Distributive Bargaining Skills Applicable to
            Integrative Negotiation (p.68)

• Many of the skills are also applicable to the latter
  stages of integrative negotiation when negotiators
  need to claim value, that is, to decide how to
  divide their joint gains.
• Care needs to be taken, however, not to seriously
  change the tone of those negotiations by adopting
  an overtly aggressive stance at this stage.
              4 Teacher’s note

Chinese Textbook Approach to IB Negotiation
Prevalence of Strategy and Tactics (DB)
1 My own observation
 2. Zhao(2000)

Zhao, Jensen J., The Chinese Approach to
International Business Negotiation, The Journal of
Business Communication,37(3), July 2000: 209-237.

								
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