Negotiation is a situation where two parties resolve their conflicts and reach a mutual decision. Sounds kinda boring, right? But you have been negotiating all your life without realizing it. Negotiating with your mom about bedtime, pocket money. You might have argued with your dad about coming late after a party when you were a teen. Your dad and you would fix it at different times but end up on a time in between. This is called integrative negotiation. Now, if you would keep negotiating to fix the time of your choice, it is called distributive negotiation. Negotiation is a huge part of our lives, both daily and professional. So, let's study how these are different.
Distributive Negotiation vs Integrative Negotiation
A competitive negotiation, also known as distributive negotiation, is employed when parties are attempting to divide a fixed resource, such as money, assets, etc. among themselves. A distributive negotiation occurs when two parties attempt to maximize their profit from a deal. The seller tries to give his best price. The buyer tries to give the lowest, most affordable price. It's old-fashioned bargaining.
In an integrative negotiation situation, both sides present their interests to reach an agreement on a course of action that benefits both equally. It aims to achieve a win-win solution while taking into account the preferences of all parties involved. In this negotiation, each team achieves what it wants, and no harm is done. This form of negotiation usually requires trust between each other and a cooperative approach toward achieving goals.
Difference Between Distributive And Integrative Negotiation In Tabular Form
| Basis of Comparison | Distributive negotiation | Integrative negotiation |
| About | Me and my goal | Our goal |
| Demand | Fixed demand | Flexible demand |
| Table | Opposite sides | On the same side |
| Trust | Trust is not important | Trust is important |
| Power | Shown by one party | Shared power |
| Idea | Only my idea should work | More ideas are accepted. |
| Efficiency | High | Low |
| Effective | No | Yes |
| Result | Winner and a loser | 2 winner inrs |
| Strategy | Competitive strategy | Collaborative strategy |
| Resources | Fixed assets | Not fixed |
| Issues | Ononeissue addressed | Several issues are addressed |
| Criticism | Heavy criticism | Constructive criticism |
| Relationship | Do not care for establishing a relationship | Parties care for a healthy relationship |
| Environment | Hostile | Constructive |
| Approach | Counter block the opponent | Meet the opponent mid way |
What is Distributive Negotiation?
Distributive bargaining results in one side winning only when the other party loses. Distributive bargaining is referred to as the negotiation dance as it involves the exchange of offers alternately. Due to the fixed nature of the resources or assets that must be divided, it is also termed zero-sum negotiations.
Distributive negotiations can take place between two parties, or they might involve multiple parties.
When we shop, we find ourselves using the distributive bargaining strategy in everyday situations as well. The distributive negotiating strategy typically succeeds when dealing with non-fixed-price goods. Evaluating one's reserve point or walkaway point is equally important for negotiators.
Tips To Win A Negotiation
- Focus on win-win agreements rather than win-lose agreements. Amateurs commit mistakes by using zero-sum tactics. These ultimately result in agreements where one party wins and the other loses everything. According to social psychology, zero-sum games can ruin long-term relationships and new businesses.
- Pay attention to what the other negotiators have to say. Understanding their needs and demands is one of the best negotiation abilities you bring to the table.
- Successful negotiators think long-term. They do not consider the value of an asset in the short term. They focus on how the assets will help them in the long run and improve their business.
- Knowing your BATNA before entering a negotiation will help you craft a better strategy because you'll be clear on how much is at stake if the negotiations fail. Knowing the other party's BATNA is also a tip because you will know what others have to serve if the negotiations take a turn.
- Find your reservation point. The reservation point is where you need to stick to your BATNA and reject the deal. For example, if a buyer has offered a flat for Rs.50 lacs and you are negotiating for Rs. 45 lacs. If the buyer won't settle for less than Rs. 50 lacs, it is time for you to withdraw the negotiations and cancel the talks.
- A ZOPA is a zone of possible agreement where you and the other party are close to committing to the deal. You will find ZOPA only if you have realistic goals and you understand others'.
In distributive bargaining, the winning party pushes the limits of the losing party. A distributive negotiator aims to pay low in the case of buying and get the highest price in the case of selling. The losing party is left over with the bare minimum. Strong distributors come to the table with demand rather than the idea to budge. The goal is to reduce the buying value as much as possible. Typically, a business deal does not include negotiators concerned about the opposite side's concerns and issues. Additionally, there is no interest in hearing any potential solutions from the opposing side. In a Distributive Bargaining scenario, one party typically comes to the table with a single solution and shoots down any counterproposals.
The discussion might be of no conclusion if both parties use aggressive negotiation strategies. If getting things done your way is more important than any other considerations, a distributive bargaining strategy might be acceptable. For instance, your goal can be to show dominance over the opposition. When you have no other opportunity to share the pie and lose the largest piece, using distributive negotiation would be helpful. This is for you if you are not here for building a relationship.
Merits
- It is a quicker process because no effort is made to establish a relationship, delve into needs and interests, or generate potential solutions. It may be as brief as a demand, resulting in either acceptance or rejection of the deal.
- You are either a winner or a loser. The winner takes all and the loser takes nothing. But the losing party isn't totally a loser because he would be out of such a non-profiting deal.
- Negotiating doesn't call for a lot of original thinking or creative solutions. The main goal is to make the most money off the table as the resources are fixed.
Demerits
- Due to the nature of distributive bargaining, these interactions frequently turn into rivalry or hostility.
- Due to the competitive nature of this strategy, some negotiators in distributive bargaining go against business ethics, teamwork, and mutual respect between the parties. Often, aggressive negotiation results in the parties ending their business or relationship.
Example
John had a car to sell. He set its price to $4500. He found a buyer, Stark, who had a budget of $4000. When both parties met and exchanged thoughts. John had no intention to sell it for less than $4500. But Stark had a tight budget. Stark had two choices, give up the deal or give into it. He gave in and paid an extra $500 more than he had set aside. Here, John won and Stark lost. John didn't care about Stark's financial issues and expenditures and he got what he demanded.
What is Interrogative Negotiation?
In an integrative negotiation situation, both parties present their interests to reach an agreement on a solution that benefits both parties equally. People try to not go overboard when negotiating because they want to maintain the relationship. In contrast to distributive negotiation, it involves learning other interests and needs. Multiple issues can be discussed during integrative negotiation. Creativity can result in value creation for both parties in integrative negotiation. Start by carefully considering the BATNA and the interests of the opposing party. You must consider outside possibilities, needs, and wants or you might not be able to provide a package that he'll accept.
In most cases, the results are favourable for all parties. Innovative, integrative approaches would satisfy everyone's needs.
The genuine needs and concerns of both sides will be addressed, making integrative solutions generally more satisfying for everyone participating in the discussion. Due to the collaborative nature of the process, all stakeholders ultimately benefit from one another. Consequently, there won't be any resentment left after the negotiation. Integrative negotiation encourages the development of positive, constructive connections.
Steps
- In integrative negotiation, determining each side's interests is the first step. The negotiating parties will need to put some effort into this.
- You have to ask them why people feel the way they do and why they are making the demands they are making. You are asking them questions to learn their interests but not to use them in your favour. Next, you have to ask yourself these. What prevents them from concurring with you? Do they understand your deeper motivations?
- You must also consider how the opposing party might see the potential effects of the deal you are promoting. This technique simply involves analyzing the pros and cons, but you try to do it from the viewpoint of the other party.
- Once interests have been established, the parties must cooperate to try to determine the best ways to meet those interests. Parties might generate innovative new ideas for addressing interests that no one has previously considered by enumerating every possibility without initially criticizing or dumping anything.
Stages of Negotiation
- Understand perspectives.
- Questionnaire to learn interests.
- Answering the other party's questions.
- Solve the issues.
- Multiple deals are to be made.
- Pre settlement.
- Post settlement.
How Does It Work?
The integrative strategy is to create a solution that is acceptable to both parties. Planning for the negotiation entails figuring out your positions and interests as well as speculating on the positions and interests of the other party even before you meet. Negotiators discuss their priorities and reasons with one another.
Following the development and exploration of options, both parties settle on the option that best serves their primary interests.
Integrative negotiations may be appropriate in complicated circumstances where there are several problems to be considered and possibly several ways to resolve the situation.
Advantages
- Integrative negotiations are cooperative efforts to solve problems; neither party attempts to push their will on the other. Additionally, a solution that has been reached by both parties is more reliable. Any issues that arise during execution are typically easier to deal with.
- Relationships are strengthened as parties get to know one another and their problems.
Disadvantages
- This method requires a lot of skill. Success requires effective critical thinking, empathy, and innovative ideas.
- Participants in this process must leave their egos at the door. Initial assumptions about a potential solution could be completely incorrect. Instead of fighting over a solution, both sides work together to develop a variety of solutions that best serve their primary priorities.
- It is a long process.
Example
If your mom wants to buy a couch for $1500, she goes to a furniture store. The dealer shows her a couch that was $1600. She loved the couch, and she wouldn't miss it. She starts negotiating with the dealer. She asks for the couch for $1400 and the dealer sets the price at $1500. So, they came midway, and the final price was set at $1450. Here, both parties' needs were considered, and they agreed upon both parties' welfare.
Difference Between Distributive And Integrative Negotiation In Points
- Distributive negotiation focuses on maximizing individual gains, while integrative negotiation seeks to benefit both parties.
- In contrast to Integrative Negotiation, the outcome of Distributive Negotiation is almost always a win-win situation.
- Distributive is more of a confrontational negotiating tactic, while Integrative is a cooperative tactic.
- Distributive negotiation is the best option when the available resources are fixed or constrained. It is advisable to employ an integrative bargaining strategy when there are plenty of resources available.
- Open and productive communication is a hallmark of integrative negotiation. In the case of the distributive strategy, however, it is regulated and selective.
- Distributive negotiation is done when maintaining good connections between the parties is not of utmost importance. Integrative negotiation, on the other hand, is employed when the parties place great importance on establishing a long-term relationship with one another.
- A distributive negotiation only addresses one topic at a time, but an integrative negotiation takes into account several issues.
- An integrated negotiation has an open and productive communication environment.
Conclusion
Negotiation has always been a great part of our life whether it be buying a shirt to a house. Distributive bargaining is more suitable for an environment that is cut-throat and competitive. If winning is your only goal, opt for the distributive negotiation strategy. If you are empathetic and like to think about everyone's needs, you opt for a cooperative strategy of negotiation. In the end, it is not always about winning but getting the maximum profit out of the table.
