Distributive Negotiation Insights
Distributive Negotiation Insights
What is distributive negotiation?
Distributive negotiation is a bargaining strategy where all parties involved try to divide/distribute something of value, such as a price or resources. It’s also known as value claiming because the value is always fixed, meaning that if one party takes more, the other party will have to take less. This is often described as “slicing up the pie,” since it’s impossible for one side to claim more without the other losing some. Because of this, each side tries to get the maximum amount possible and make smaller compromises. Distributive negotiation usually leads to a win-lose outcome rather than a win-win outcome. This is because one party usually ends up having a better outcome at the expense of the other party. However, another strategy, integrative negotiation, aims for a win-win outcome every time. This is achieved by balancing trade-offs of multiple kinds instead of focusing on a single thing of value. Both of these are formal approaches to negotiation, but distributive negotiation is more focused on claiming the highest amount of value, while integrative negotiation focuses on relationships as well as value.
When is distributive negotiation used?
Distributive negotiation is most often used in situations where only one issue is being negotiated, such as a price or specific term in a contract, and the resource is fixed (can’t be increased/expanded). Since what’s being negotiated is of fixed value, parties and their negotiators focus on attaining the best outcome for themselves, regardless of how it may harm a long-term relationship with the other party involved. One common example of distributive negotiation is price haggling in marketplaces, since both parties seek the best deal for themselves and are unlikely to interact again after the negotiation is finished. Another example is negotiating the price of a used car at a dealership. The buyer in this situation wants to pay as little as possible, while the seller wants the highest price possible. Neither party expects a partnership in the future, so this negotiation is entirely focused on getting the best deal. In cases such as this, negotiators are focused on an object or objects of fixed value, which is why distributive negotiation is appropriate.
What are the advantages and disadvantages of using distributive negotiation? How can it affect relationships or long-term outcomes?
One advantage of distributive negotiation is that only one topic is being negotiated, which allows for simplicity in the negotiation process. Additionally, building a future relationship with the other party is unimportant, allowing for further simplicity and more focus on the issue alone. This simplicity also ends up leading to quicker outcomes most of the time. Because of this, distributive negotiation is ideal in one-time situations where reaching the best outcome quickly is the main priority. One disadvantage is that distributive negotiation seldom leads to long-term relationships and can even harm existing ones. Since both parties are seeking the best outcome for themselves, and one party can’t gain value without the other losing value, distributive negotiation can cause resentment and dissatisfaction, damaging any potential future partnership. If the parties do end up interacting again, they may distrust each other, which can lead to strained negotiations. Finally, focusing on a single value can cause the parties to ignore other possibilities that could create additional value, which wouldn’t be ignored during integrative negotiations.
I found the insight on distributive negotiation to be very interesting. Especially when considering the fact that it is unlikely that both parties will encounter each other again. This is different from other business negotiations where you are trying to build a relationship for long term collaborative success. I especially liked the analogy made in the first paragrah about slicing the pie up to describe a fixed amount of something that is exchanged. Leading to an objective winner and loser of the transaction.
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