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Integrative bargaining among parties with unequal bargaining power

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Integrative bargaining among parties with unequal bargaining power

            Over many years, bargaining has been practised in various communities. This is the act of negotiating so as to come to an agreement on an issue. It is also referred to as haggling. Alvin Roth (1995) suggests that bargaining, which involves at least two individuals, aims at making sure that the agreement reached should leave both parties in a better position than if they had not reached the agreement. The most important factor in bargaining is communication.

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Ideas need to be exchanged and decisions made. Angelmar and Stern (1978) categorize communication employed in bargaining into two, namely; expressive and manipulative. The aim of expressive model of communication is to pass across ideas or facts. Manipulative model on the contrast targets the effect of communication (Kemp and Smith  2004). It should however be noted that bargaining is not universally accepted. It is determined by regional customs and religious beliefs. For example, there are almost no supermarkets or chain stores that accept bargaining, just like the Quakers’ religion.

On the contrary, market places and supply sources are very common with bargains.

            Bargaining can be classified into two major categories; integrative and distributive. Integrative bargaining refers to the coming together or uniting of the involved parties to increase value and satisfy the interests of both parties, even if partially (Brad Spangler, June 2003). The negotiators would employ information sharing, clear communication and co-operation and put their focus in fulfilment of their interests. It is a gradual process that would involve identifying, formulating and eventually implementing ideas. It is also referred to as ‘win-win, or ‘interest-based’ bargaining (The Conflict Resolution Information Source). Expressive communication is employed in this type. On the contrary is distributive bargaining where only one party benefits. In Business Dictionary, it is defined as negotiations where as one party gains while the other loses. It is also referred to as ‘win-lose’ or positional bargaining. Lax and Sebenius (1992) differentiate these two types of bargaining by taking the former as creating whereas the latter type of bargaining is claiming.

            Integrative bargaining has proved very beneficiary in business over years. With this type of bargaining the desires and interests of both parties are satisfied. A situation could arise where each party has different interests. A compromise in this case would ensure that both customers are satisfied. For instance, there are two buyers who want a sheep from a market. One needs the wool and the other the mutton. If it is to be sold to one of them, the other loses (win-lose situation). On the other hand, if both of them agree to compromise their demands, then each of them will benefit (win-win situation). Both interests would be satisfied even if not fully. No one loses in this bargain. If this was a distributive bargaining, only one of them benefits. The successful negotiator must be a hard bargainer, one who starts on a very high note, gradually conceding, exaggerating facts and concealing the information known so as to minimize the benefits of the other party (D. Lax and Sebenius 1992, p.50).

            This is a type of bargaining that builds constructive relationships amongst the concerned parties. As stated earlier, the bargainers compromise their interests. They come to an agreement without being pressurized. Their agreement is entirely based on facts and principles such that no one takes advantage of the other. This eliminates the idea that one party is trying to rob the other. With this kind of situation therefore, it becomes very hard for one to carry a negative attitude towards the other. This trust created makes it easier for the parties involved to foster cordial relationships that would enable them come up with positive business relationships. Mergers could even result and the economies of scale realized. Other bargaining styles like distributive leave one party feeling deprived of its needs and hence the difficulty of further association. Tricks are involved with the major goal being to win over the opponent. It faces a lot of criticism with many arguing that it is leads to destructive actions since it involves arguments. It can thus be concluded that integrative bargainers are problem solvers while distributive bargainers are enemies.

            Integrative bargaining involves a lot of calculations, principles and wise decisions (Fisher, Roger, William Ury, and Patton, 1991). Both parties need to make their desires known. This will then be followed by proper calculations to weigh out the viability of each. They also consider what happens when they decide to drop some demands and only work with a fraction of what was needed. They agree to terms that would not make either party lose but that which would benefit both of them (Honeyman C. 2007). This not only increases their intellectual capacities, but also exposes them to knowledge on working within confined limits. Contrary to this, positional bargaining would involve pressurizing the opponent so as to achieve the desired goals. No considerations are made on the opportunity to compromise and still remain a winner. This hard-line stands and pressure make these bargainers almost extremists. They are not flexible intellectually. They base their arguments on positions and not interest (Interest-Based Bargaining 1995).

            In industrial situations, integrative bargaining is a vital practice. Recommendations put forward by workers or their unions to the management have to be resolved in an appropriate manner so that neither side of the divide ends up frustrated. If the employer loses, the workers too lose. This calls for proper balancing on the demands raised and what is to be implemented. If the workers feel cheated, then they would end up sabotaging the firm. However, if the employer makes decisions that would allow workers have their demands, even partially, and the firm compromises to some degree, then a solution that would ensure both parties benefit would be reached. This results to communication enhancement since an agreement must be reached. Positional bargaining compromises communication since the ultimate goal is to silence one party to be assured of winning.

            Integrative bargaining has its disadvantages. Situations arise when one has to maximize on a single deal. Resources and time could not allow one to compromise the deal. Integrative bargaining would not work out in such situations. This is because, in integrative bargaining, there must exist some allowance for compromise. One does not have to benefit wholly or say, take the whole share. Calculations are made on what to forsake and what to take so that the goals of this kind of bargaining is achieved. From this, decisions are made on what one party forsakes for the benefit of the other and what is taken as benefits. To make both parties satisfied, degrees of the interests ought to be compromised. This will disadvantage a person who aims at making the optimum use of an opportunity without compromise. It thus does not allow one to fully benefit. It would only work for bargaining styles like distributive. This allows for arguments and trickery to ensure that one side fully benefits while the other loses on the same grounds. The beneficiary is thus saved from minimal benefits and time wastage.

            Integrative bargaining, as earlier indicated is a stepwise process. It begins with identification of the interests of the involved parties. Ideas are identified and shared so that each side of the bargain accesses the information. They then negotiate on what each divide would forsake and what they wouldn’t. They then make calculations on this basis so as to come up with agreements that would not cost one party. The implementation stage may then take time. All these processes may take quite a long time. It thus becomes a time consuming venture. On the other hand, the length of time distributive bargaining would take to conclusion would depend on how strong the negotiator is. The ability to trick and put off the opponent entirely determines the length of the deal. If the bargainer is good in these skills, mostly gained through experience, then this can take a short time. It can thus save a lot of time that would otherwise be spent in calculations and decision making if it were the integrative form of bargaining.

            Integrative bargaining is not universal. It can only be applied in certain areas for specific purposes only. Distributive bargaining is the oldest and common type of bargaining. In other texts, it is referred to as traditional bargaining. Most people are used to it and at the mention of bargaining, this is what most people would refer to. It has thus been a commonly practised form of bargaining and would exist in many regions, especially in markets and small retail shops. It is common to negotiate in public transport for some waiver in fare charges even with the increase in the cost of living at the expense of the vehicle owner. It is also limited to other regions where any form of bargaining is not allowed due to religious beliefs or ethnic principles. As earlier indicated, religious groups like Quakers and most chain stores would not allow bargaining. Some extremist groups too wouldn’t allow negotiations where both opponents win. It is thus clear that integrative bargaining is not universally applicable but rather limited to certain regions or situations.

            A lot of resources is input in integrative bargaining. To complete all the procedures involved, a lot of input has to be sacrificed. Consider that this type of bargaining has to gradually go through several procedure earlier highlighted. Each procedure would require special skills and probably outsourcing some of these skills would be necessary. Initially, there would be no total trust since the involved parties are just the normal human beings. The fear of loss is therefore almost definite. To make sure that this does not translate to reality, employment of uncompromisable skills becomes necessary. Even if it means paying for professional services, then the necessary has to be done. Even to these professionals, and to whoever else would be delegated the duty of entering into this bargain, the whole procedure is very demanding. The three major steps involved need a lot of brain work and informed decisions. One mistake made in the calculations could cost the bargainer a lot. Take for instance a bargainer who ignores one vital interest and goes ahead with the implementation of the final agreement. It will eventually cost the bargainer and at the end of the day end up losing, which is not the absolute goal of this bargaining type. To avoid this, informed decision should be made. This ends up being a very costly venture.

            Despite integrative being a preferred choice of bargaining, it comes with its cost when it is the choice taken. The interests of both parties are met but not fully as it would have otherwise been. Each side comes up with their expectations. They then discuss these expectations and each side decides on what to sacrifice. The options are the weighed on the implications of doing away with some interests and taking on others. When an agreement is reached, the initial demands are partially fulfilled. No one’s interest is fully met but at least they are satisfied with what they achieve other than both of them losing completely. It can thus can be said that despite both parties winning, none of them has their interests fully met.

            When it comes to integrative bargaining, a lot of procedural requirements cannot be avoided. But it is worth. There are three major procedures involved which are vital, namely; identification, formulation and implementation. These procedures may involve a lot of input. It may involve a long period of time spent looking for expertise and negotiation on the tabled interests. It calls for so much input. But the end results are very rewarding. There are no losses and one is assured of a win. Hence, it can be said that despite the demanding procedures, a win is assured at the end of the deal.

            This bargaining assures one of a win but in real sense there is a touch of loss. When the two parties engage in discussion on their respective interests, some of these interests have to be forsaken for the sake of reaching an agreement. In the process, it is found out that some important interests had to be fore

gone. Some interests could be overlooked for the sole reason of reaching the ultimate goal of agreement. At times, these negotiations could take long to reach the final stage. It becomes clear here that other than the sacrificed interests, time, a very important factor, is also overspent. This means that in spite of the assurance of winning, a certain degree of loss too is inevitable.

            Lastly, integrative bargaining has been the most advisable form of bargaining amongst researchers. However, most people still emphasize on the directive form of bargaining. The major reason as to why integrative bargaining has been the most preferred mode of bargaining amongst researchers is that the involved parties are all winners at the end of the deal. In the other form of bargaining (directive bargaining), It is only one side of the divide that wins while the other loses. This does not go well with the researchers. Contrary to this idea, directive bargaining still remains the widespread form, also referred to as traditional bargaining. This could be because of people’s acquaintance to this form of bargaining. It could also be because of the widespread availability of this form of bargaining. It is thus said that in as much as integrative bargaining is advised, directive bargaining still takes prominence in many nations.

            Researchers worldwide encourage integrative bargaining. This form of bargaining has no losses involved. However, the benefits are partial. Directive bargaining on the other hand is a win-lose bargain where only one party benefits. Whatever the form of bargaining chosen, informed decision must be made the and expected results have to be pre-weighed.

REFERENCE LIST

Angelmar R. and Stern L., 1978, Development of a Content Analytic System for Analysis of Bargaining Communication in Marketing, Journal of Marketing Research, p. 94.Fisher, Roger,

Interest-Based Bargaining 1995, (retrieved on September 5, 2008, http://www.afscme.org/publications/9684.cfm)

Brown L. and Co.Spangler B., June 2003, Integrative or Interest-Based Bargaining, Beyond Intractability,University of Colorado, (Retrieved on September 5, 2008 http://www.beyondintractability.org/essay/interest-based_bargaining/.

Buidens W., 2001, Collective Gaining: A Bargaining Alternative, Issue 63, pp. 244-245.

Business Dictionary, (Retrieved September 6, 2008, from http://www.businessdictionary.com/definition/distributive-bargaining.html)

Distributive Bargaining, University of Colorado, USA, (retrieved September 6, 2008 from http://www.colorado.edu/conflict/peace/treatment/distbarg.htm).

Honeyman C., 2007, Integrative Bargaining, CRInfo Version VI,  University of Colorado Journal.

Gosling T., Nanlin J. and Tsang E., 2007,  Games, Supply Chains and Automatic Strategy Discovery Using Evolutionary Computation, Handbook of research on nature-inspired computing for economics and management, Vol II, Rennard Eds.

Kemp K. and Smith P., 2004, Information Exchange, Toughness and Integrative Bargaining: The Roles of Explicit Cues and Perspective Taking, MCB UP Ltd, International Journal of Conflict Management.

Lax D. and Sebenius J., 2002, The Manager as Negotiator: The Negotiator’s Dilemma: Creating and Claiming Value in Dispute Resolution, 6th Edition, Boston:

 Roth, Alvin E. 1995″Bargaining Experiments,” Handbook of Experimental Economics, Princeton University Press, 253-348.

The Conflict Resolution Information, 2007, (Retrieved on September 6, 2008 http://www.crinfo.com/action/browse.jsp?nid=2375)

Uchendu V., October 2007, Some Principles of Haggling in Peasant Markets in Economic Development and Cultural Change, Vol. 16, No. 1, pp. 37-50.

William Ury, and Patton, 1991, Getting to Yes: Negotiating Agreement Without Giving In, Second Edition. New York: Penguin Books, p. 13.

 

 

Cite this Integrative bargaining among parties with unequal bargaining power

Integrative bargaining among parties with unequal bargaining power. (2016, Oct 22). Retrieved from https://graduateway.com/integrative-bargaining-among-parties-with-unequal-bargaining-power/

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