Integrative and Distributive Bargaining Whether a negotiation involves working together toward a goal or working against one another to win, each party must use a strategy to reach a solution. The differences of distributive bargaining and integrative bargaining are parallel. The ways in which one method is competitive and the other is cooperative is described and related to a well-known case involving basketball player Juwan Howard. Distributive Bargaining
In a competitive bargaining situation, referred to as distributive bargaining, resources are fixed and limited. Both parties want to maximize their share of the resources with each party’s goal conflicting (Lewicki, Saunders, & Barry, 2006). During a distributive bargaining, each party will have a plan and tactics to maximize their own benefits in the outcome. There is a limited resource to divide out between the two parties and the way in which they are divided depends on the negotiation.
Distributive bargaining is useful if “the negotiator wants to maximize the value obtained in a single deal, when the relationship with the other party is not important, and when they are at the claiming value stage of negotiations” (Lewicki, Saunders, & Barry, 2006). This describes a con of using this type of negotiating; the relationship with the other party may be negatively affected. In the case of Juwan Howard, Howard likely severed his relationship with Pat Riley of the Miami Heat by walking away from the Heat’s contract.
To enter a distributive bargaining situation, each party should have established their starting, target, and resistance points. The starting point is each party’s opening statement. The target point is learned throughout the negotiation as the party makes concessions between their starting point and target point. The resistance point is where the party would rather stop negotiations than go past that point. In a successful negotiation, neither party will have reached or revealed the resistance point.
The bargaining range is the point between each party’s resistance points, where the bargaining takes place. A third option in the outcome of a distributive bargaining situation is to have an alternative deal versus reaching a settlement or not reaching a settlement. If there are many alternatives to the deal, the negotiators will not have to make as many concessions. When dealing with less alternatives, the party will have less bargaining power in the negotiation.
Each party should have alternatives when going into the negotiation so each has a good idea how firm to be. BATNA is the term for “best alternative to a negotiated agreement” to be used to ensure the party has accepted the alternative that best fits their needs (Lewicki, Saunders, & Barry, 2006). Having the BATNA will help the party achieve their goals in the negotiation. Juwan Howard knew he had alternative deals when he was considering offers from teams besides the Bullets.
Being knowledgeable in the negotiation helped Howard achieve his goal of a much higher salary. Integrative Bargaining Much different from distributive bargaining in which the forum is competitive, integrative bargaining involves parties cooperating with each other to meet the needs of each party. Integrative bargaining involves understanding the other party’s needs, creating an open exchange of information, and reach options for both parties to benefit.
Important factors in this negotiating are “creating a free flow of information, attempting to understand the other negotiator’s real needs and objectives, emphasizing commonalities between parties, and searching for solutions that meet the goals and objectives of both parties”( Lewicki, Saunders, & Barry, 2006). To create a free flow of information, negotiators need to share their goals and alternatives with each other. Each party must listen and understand in an open forum for discussing the topic.
If each party understands the other’s alternatives, each will have a less extreme resistance point and benefit more. Understanding the other party’s needs will allow for each side to work to find the best solution for both. During the integrative negotiation, negotiators must be firm about their wants and needs but flexible as to how they are met to reach a solution to fit both sides. This cooperative type of negotiation was used at times during NBA free agent negotiations involving Howard.
Howard’s team worked with the Heat to negotiate the terms of his contract and both sides met their needs, until the NBA stepped in. Juwan Howard’s resistance point was not beyond what the Heat was willing to give to add him to the roster. Although this scenario was very competitive at times, each side defined and pursued their own goals while keeping in mind the goals of the other party. Integrative bargaining will not work if either side is competitive or non-cooperative. Each side must work together toward the resolution.
When there is something to be divided up, this is not the best method to use for negotiation. Another con to this method is that if one side fails to understand the other side, there will be conflict without reaching an agreement. The four steps to the integrative negotiation process are to indentify and define the problem, understand the problem and bring interests and needs to the surface, generate alternative solutions to the problem, and evaluate those alternatives and select among them. The process is designed to first create value, then to claim the value associated.
Defining the problem is a difficult part of the process because it must be done so in a detailed but not too complicated way. Indentifying the interests of the other party helps understand the motivating factors for the other party to take a position on the topic. The third step to generative alternatives to the problem requires each party to a list of option to discuss and choose from. Conclusion The goals of negotiators in a distributive bargaining are exclusive, opposite of the goals of an integrative negotiator.
The differences and processes in each method were described above. Depending on the situation, either method could be the better way to reach goals. In the Juwan Howard case, each type was used in a series of negotiations during the NBA free agent draft. References Lewicki, R. J. , Saunders, D. M. , & Barry, B. (2006). Negotiation (5th ed. ). Boston, MA: McGraw Hill. Lewicki, R. J. , Saunders, D. M. , & Barry, B. (2007). Negotiation: Readings, exercises, and cases (5th ed. ). Boston, MA: McGraw Hill.