Negotiations are an essential part of any business transaction, and the levels of bargaining and agreements involved can vary widely depending on the situation. Understanding the different levels can help businesses negotiate more effectively and reach agreements that are truly beneficial for all parties involved.
Here are the four levels of bargaining and agreements that can be categorized:
1. Distributive Bargaining:
Distributive bargaining is a negotiation strategy that involves dividing a fixed amount of resources between two parties. This type of bargaining is often known as a “zero-sum game” because one party`s gain is the other party`s loss. Distributive bargaining is often used in situations where there is a limited amount of resources. For example, if two companies are bidding on a contract, they may engage in distributive bargaining to determine who will win the contract and at what price.
2. Integrative Bargaining:
Integrative bargaining is a negotiation strategy where both parties work together to create value. Unlike distributive bargaining, where the goal is to divide resources, integrative bargaining aims to create more value for both parties. For example, if two companies are negotiating a partnership, they may engage in integrative bargaining to determine how they can work together to create a stronger product or service.
3. Attitudinal Bargaining:
Attitudinal bargaining is a negotiation strategy that involves changing the attitudes or beliefs of the other party. This type of bargaining is often used when there is a lack of trust between the parties or when one party has a negative attitude towards the other. For example, if a company is negotiating with a supplier who has a bad reputation for not delivering goods on time, they may engage in attitudinal bargaining to convince the supplier to improve their performance.
4. Intra-Organizational Bargaining:
Intra-organizational bargaining is a negotiation strategy that involves negotiating within an organization. This type of bargaining is often used when different departments or individuals within an organization have conflicting objectives. For example, if the marketing department wants to launch a new product, but the finance department is concerned about the cost, they may engage in intra-organizational bargaining to determine the best course of action.
In conclusion, understanding the different levels of bargaining and agreements is crucial for effective negotiation in business. Distributive bargaining is useful when resources are limited, integrative bargaining is ideal when both parties can benefit from creating value, attitudinal bargaining is helpful when building trust, and intra-organizational bargaining is necessary when different departments or individuals have conflicting objectives. By employing the right negotiation strategy, businesses can reach agreements that are mutually beneficial and lead to long-term success.