Page 257 - DMGT521_PROJECT_MANAGEMENT

Project Management

Notes It doesn’t stop there either because we also use negotiation in our personal lives. We all have
some combination of family, friends, significant other, or kids. At some level, we negotiate with
them all the time without even knowing it.
Many people don’t like to negotiate because they view it as a hassle. Even though we might
consciously think we’re avoiding the blatant negotiation process, we end up doing it without
realising that’s exactly what’s happening. So we may as well learn how to do it well, and decide
which of the two negotiation types to use.

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

14.8.1 Distributive Negotiations – The Fixed Pie

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.
14.8.2 Distributive Bargaining Basics

1. 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.
2. 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.
3. 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.

4. 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.

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