Distributive bargaining

Definition

Distributive bargaining is a negotiation strategy where parties compete to divide a fixed resource, often referred to as a 'zero-sum' game. In this approach, each party seeks to maximize their own share of the resources at the expense of the other party, leading to a competitive atmosphere. This type of bargaining often involves haggling over price or terms and can create tension as negotiators try to assert dominance over one another.

5 Must Know Facts For Your Next Test

1. Distributive bargaining is often characterized by a fixed pie, meaning the resources available are limited and must be divided between parties.
2. This type of negotiation can lead to adversarial relationships since parties focus on winning rather than collaborating.
3. Effective tactics in distributive bargaining include anchoring, where one party sets an initial offer to influence the negotiation process.
4. The strategy is commonly used in situations like salary negotiations, real estate deals, and purchasing contracts where resources are strictly limited.
5. Successful distributive bargaining requires understanding one's own needs and limits while also predicting the other party's behavior and potential responses.

Review Questions

• How does distributive bargaining differ from integrative bargaining in terms of negotiation dynamics?
  • Distributive bargaining focuses on dividing a fixed resource and typically fosters a competitive atmosphere where each party aims to maximize their share at the other's expense. In contrast, integrative bargaining promotes collaboration, encouraging both parties to work together towards a mutually beneficial outcome. The key difference lies in the mindset: distributive bargaining views negotiation as a zero-sum game, while integrative bargaining seeks win-win solutions.
• Discuss the importance of understanding BATNA in the context of distributive bargaining and how it affects negotiation outcomes.
  • Understanding BATNA is crucial in distributive bargaining because it provides negotiators with a fallback option if an agreement cannot be reached. Knowing your best alternative enhances your leverage during negotiations, allowing you to make informed decisions about when to walk away from a deal. A strong BATNA can improve your negotiating position, making you less reliant on reaching an agreement and thus impacting the overall outcome significantly.
• Evaluate the implications of using distributive bargaining in organizational settings and how it can affect long-term relationships between parties.
  • Using distributive bargaining in organizational settings can lead to short-term gains but may negatively impact long-term relationships between negotiating parties. Since this strategy emphasizes competition over collaboration, it can foster mistrust and create adversarial dynamics that hinder future negotiations. Organizations that frequently engage in distributive bargaining may find it challenging to establish lasting partnerships or cooperative alliances, which are essential for sustainable success in complex environments.

Related terms

Integrative bargaining: A negotiation strategy focused on collaboration, where parties work together to find win-win solutions that satisfy both sides' interests.

BATNA: Best Alternative to a Negotiated Agreement; the best option available if negotiations fail, which helps negotiators understand their leverage.

ZOPA: Zone of Possible Agreement; the range in which an agreement is satisfactory to both parties involved in the negotiation.