322 ENTREPRENEURSHIP
The less the buyer pays, the lower the dealer’s profit. The goal of the negotiation is to
find the line between the dealer’s resistance point (the lowest price he will accept for the
car) and the buyer’s resistance point (the highest price she will pay).
In a distributive bargaining situation, each party’s goal is to arrive at a settlement
point as close as possible to the opponent’s resistance point. Splitting the difference is
often the quickest solution, so a seller must understand exactly what his or her own
resistance point is and make a realistic, but high, opening offer. Then the negotiator
must seek information to establish the opponent’s resistance point. When more than one
item is up for negotiations, there is a bargaining mix. If the negotiators have different
priorities for the tangibles and intangibles in the bargaining mix, they can concede
ground on the less important items and hold firm on the more important ones.
Integrative bargainingoccurs when the outcome is a variable sum. Each side can
obtain a better result by cooperating with the opponent than by trying to beat the oppo-
nent. It is a variable-sum game and can lead to a win-win situation.
In integrative bargaining, negotiators are concerned not only with their own out-
comes but also with the results for the other side. There are certain preconditions for
integrative bargaining:- Each side must understand the needs—both tangible and intangible—of the other
side. There must be a free flow of information between the two (or more) sides so
that each can continuously readjust its resistance points to achieve the optimum out-
come. - There must be true commonalities of purpose between the two sides. For example,
in a labor negotiation, both management and labor want to keep the company from
going bankrupt. In a venture capital negotiation, both sides want sufficient capital
to launch the business and sufficient operating cash flow to keep it going and grow-
ing. - There must be a willingness to search for solutions. Sometimes the first three con-
ditions are met but one party to the negotiation is more interested in establishing a
reputation or proving to be tough and is therefore unwilling to look for integrative
solutions.
Regardless of whether the negotiation situation is distributive or integrative, it is rec-
ommended that the negotiator evaluate the relevant factors and do some planning
before the face-to-face discussions begin. All negotiators should come to the bargaining
table prepared, which means understanding the nature of the relationship between
themselves and their opponents and knowing their goals for the negotiation. Thought
must be given to the issues and to the strengths and weaknesses of the opposition as well
as to their own strengths and weaknesses. Last, negotiators should prepare a strategy
that can enable the bargainers to focus on the central issues and also be sufficiently flex-
ible to deal with change. The central points for planning are presented in Table 8.8.
Negotiation Tactics
Negotiation is one of the most researched topics in social science. Researchers know
quite a bit about how conflict develops and about the techniques and methods used to
resolve it. A recent comprehensive review of the literature on negotiations divides this
knowledge into five categories: (1) negotiator characteristics, (2) negotiator-opponent