There are two opposite types or schools of negotiation: integrative and distributive.
Distributive Bargaining Basics
It’s a one-time-only occurrence. Except for the deal itself, there is no real benefit in investing in the relationship. So, we are generally less concerned with how the other person perceives us or how the other person might view our reputation.
In Distributive negotiation, participants give little or no information to the other side. The less the other negotiator knows about our interests, the better our position. The opposite is equally true – Try to obtain as much information from the other side as you can. Any further information uncovered is potential leverage to negotiate a better deal.
Reminding the seller of their competition shows our willingness to walk if necessary. It also lets the seller know there will be no negative consequences for us.
Make the first offer – Whatever the first offer is will generally act as a negotiation anchor. The anchor becomes the point on which the rest of the negotiation will likely revolve. Try to make the first offer to ensure discussions set off in your favor.
Integrative Negotiations – Everyone Wins Something (Usually)
Both teams want to walk away feeling they’ve achieved something that has value. Skillful mutual problem-solving generally involves some form of making value-for-value concessions. This is usually in conjunction with creative problem-solving.
Generally, integrative negotiations are future-focused, with long-term relationships in mind. This mutually beneficial type of negotiation outcome is often described as the win-win scenario.
Integrative Negotiation Basics
- Multiple Issues – Integrative negotiations usually involve many issues that are up for discussion. Each side wants to get something of value while trading something of lesser value. In contrast, distributive negotiations generally revolve around the price or a single issue.
- Sharing – To understand each other’s situation, both sides should share as much information as possible. This helps each side 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. For example, offer something valuable to the other side that is of lesser value to you. If you can make this trade while realizing your goal, 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 and the promise of future success.