Page 195 - DMGT519_Conflict Management and Negotiation Skills

Unit 9: Distributive Bargaining

Board Chairman Paul Volker represented the American side. In a creative solution, the Americans Notes
asked Mexico to contribute huge amounts of petroleum to their strategic petroleum reserve,
which Herzog agreed to do. That didn’t settle it all, however. The Americans proposed to the
Mexicans that they pay them a $100 million negotiating fee, which was a politically acceptable
way to pay accrued interest. When President Lopez Portillo heard what the Americans were
asking for, he went ballistic. He said the equivalent of: “You tell Ronald Reagan to drop dead.
We’re not paying the United States a negotiating fee. Not one peso.” So now the Americans had
the negotiating range established. They asked for $100 million. The Mexicans were offering
zero. Guess what they ended up paying? That’s right – $50 million.
So often, in little things and in big things, we end up splitting the difference. With Bracketing,
Power Negotiators are assured that if that happens, they still get what they want.

To Bracket, you must get the other side to state its position first. If the other side can get you to
state your position first, then it can Bracket you so that, if you end up splitting the difference as
so often happens, it ends up getting what it wanted. That’s an underlying principle of negotiating:
Get the other person to state his or her position first. It may not be as bad as you fear, and it’s the
only way you can Bracket his or her proposal.
Conversely, don’t let the other side trick you into committing first.
If the status quo is fine with you and there is no pressure on you to make a move, be bold enough
to say to the other side, “You approached me. The way things are satisfies me. If you want to do
this, you’ll have to make a proposal to me.”
Another benefit of Bracketing is that it tells you how big your concessions can be as the negotiation
progresses. Let’s take a look at how this would work with the three situations I described earlier:
1. You hope that your boss will give you a 10 percent increase in pay, so you ask him for
20 percent. He offers you 5 percent, so you can now lower your demand to 15 percent.
If you want to be a better bargainer, take a tip from the Power Negotiators: Get the other side
committed to a position first and then Bracket your objective. You’re far more likely to end up
with what you want.

Did u know? How to Respond to an Extreme opening offer
How should you respond to an extreme opening offer—which might set an anchor in
favor of the other party? Keep in mind that an unrealistic opening offer is often simply a
tactic employed by the other side, not an insult. The other party simply is trying to lower
your expectation, and in the process establish its extreme offer as an anchor point. Negotiators
are especially likely to use this tactic if they believe you may end up agreeing to split the
difference between your reasonable offer and their extreme offer. Thus you should first
recognize their extreme offer for what is it—and quickly dismiss it with a response such as
“Outrageous!” or “Ridiculous—$11,000 is not in the ballpark!” The goal is to get them to
abandon the possibility that their offer will be considered at all in the ensuing negotiations.
Then quickly follow up with your own opening offer based on facts or a defensible
position. For example: “The Blue Book on this vehicle is $18,500, and that is for a car in
average condition. This one has low mileage and is in excellent condition, so I believe
$20,500 is a fair price. Now what is your offer?” With this response, you accomplished two
important objectives—first, you dismissed their extreme offer, effectively removing it as
a potential anchor, and then you focused the discussion on your price by basing your offer
on facts. Source: Roger Fisher, William Ury, and Bruce Patton, Getting to Yes, 2nd ed. (New
York: Penguin Books, 1991), 138–140.

LOVELY PROFESSIONAL UNIVERSITY 189