INTEGRATIVE AND DISTRIBUTIVE NEGOTIATION

There are several strategies for dealing with a negotiation. The way the negotiation itself is viewed also becomes important. Is it a war to divide a single scarce resource or is it a matter of agreeing to maximize the benefits for all?

In this article we will look at two very different approaches. One of ‘arm wrestling’ which provides winners and losers. One in which the perspective is changed to reason between parties who want to agree for mutual benefits.

The integrative negotiation  is now considered the best choice.

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Distributive and supplementary negotiation

An example of integrative negotiation

DISTRIBUTIVE AND SUPPLEMENTARY NEGOTIATION

Many people tend to view a negotiation as if it were a war. It is understandable that an important economic agreement warms the spirits. Unfortunately, however, negotiating with a mentality that there must be a winner and a loser often leads to agreements that are not optimal.

Even if you manage to get the best deal, or to ‘win’, you can ruin a relationship. This is not just a problem in terms of relationships or friendships. It means provoking resentment in others, a resentment that over time can take the form of revenge.

In trading strategies distinguishes between a distribution APPROACH (or ripartitivo ) and integrative approach.

According to the distribution approach, negotiating is like competing in a sports competition. There is a winner and a loser. There is talk of ‘ zero-sum games’ because what you take you take away from someone else. The result is always to go hand in hand and skill and take more than the others.

An example of a zero-sum game is the division of a sum of money or even trivially of a pizza. If we have eight slices of pizza we can divide them in different ways, but we will always end up with eight slices of pizza in total.

Tug of war is a zero-sum game

We are used to approaching a negotiation like sharing a pizza. We often think it is a zero-sum game and therefore we use a distributive approach.

The truth is that in many cases an integrative approach can be used . The integrative approach is a collaborative style. You may think that the two negotiating parties are people trying to solve a common problem together. Seeking to find the best solution by sharing information and resources.

The distribution approach represents a ‘ win-lose ‘ negotiation , while the integrative approach is of the ‘ win-win ‘ type.

This way of negotiating takes into account the relationship with the other. Who would want to continue making deals with people who always try to subdue him? Who take advantage of all his weaknesses?

Have you ever had someone extort an improper agreement from you by taking advantage of their strong position towards you? This person will have won a battle but has not put themselves in a good position to continue dealing with you.

There has long been debate about which approach is best. After long debates it is now believed that the integrative style is the most suitable for managing the business and commercial situations of our times.

 

If you have to negotiate for an agreement you can ask yourself if you are in front of a zero-sum game or not.

  • How could it become a non-zero-sum game?
  • How can you ‘enlarge the cake’ to share?
  • How do your interests differ from those of the other party?
  • Is it a single negotiation or will you have to deal with these people again – that is – is the relationship important?

AN EXAMPLE OF INTEGRATIVE NEGOTIATION

Dr. Rossi is a manager of a beverage company whose flagship product is orange juice. He must go to Morocco where he has an appointment with Mr. Faouzi who directs the largest cultivation of quality oranges on the market. He has to buy 35 tons of oranges for the new juice production.

On the plane he sits next to Dr. Bianchi with whom he begins to exchange two words. Bianchi says he works for a multinational company and that he was sent to solve a problem. In fact, as a result of climatic problems in Spain, their orange suppliers were unable to supply him with the quantity they requested.

Bianchi says he has a meeting to discuss the purchase of 50 tons of oranges for his company.

Rossi, trying not to show agitation, realizes that Bianchi probably must meet Mr. Faouzi too. That quantity represents practically all the annual production of Fauzi oranges. If Bianchi buys them, Rossi will have only a few remains and will be forced to make agreements for poor-quality oranges or to supply himself in other countries at prices he cannot sustain.

What would you do instead of Mr. Bianchi?

There are two options:

  • I keep this information for myself and try to use it to my advantage
  • I share what I know and start negotiating with Mr. Rossi

Mr. Bianchi explains that he needs 35 tons of oranges for his company. He says: “We could agree before we speak to Mr. Faouzi. If we are a united front we are in a position of strength while if we are two buyers it is he who is in a position of strength “.

Rossi replies: “I agree. I doubt though that Mr. Faouzi has 85 tons of oranges. I need the best quality and we have to decide how to divide what he has to sell. “

Bianchi adds: “it’s a nice problem. We could buy lower quality ones and divide them equally, if they represent a small percentage it shouldn’t be a problem on the finished product ”.

Rossi, unconvinced, comments:  “I don’t know. Does not convince me. Our orange peel anti-skin cream with real orange peels has always been produced with the best oranges on the market “.

Bianchi surprised and curious asks: “but do you need only the skins?” . “Yes, exactly,” Rossi replies. To which Bianchi concludes: “then we could make a single purchase and organize ourselves to divide the costs. I only use the pulp and she can have all the skins. ” 

Of course, it is not always possible to use an integrative approach successfully. In cases where it is possible, however, it is possible that each party in the game enjoys all the available resources. In fact in many cases different people may be interested in the same things for different purposes.

All this must be balanced against the dangers of exposing yourself too much with information that can put you in a position of weakness.

 

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