Describe the process of negotiations. Be sure to include the difference between distributive and integrative bargaining along with the psychological factors often associated with the negotiation process?
Instructor Notes: Students should make some reference to the following:
- On its most simple level, negotiations occur when two or more parties seek to agree on conditions or terms in the exchange of goods or services.
- For negotiations to happen, there are three conditions that must be met.
- First the parties must agree that compromise is possible. If one of the parties must choose between total victory and complete loss, no bargaining occurs. Bargaining situations require intermediate solutions for the parties involved.
- Secondly, the possibility must exist for provisional offers to be made by those involved in the situation. This is a fancy way of saying that there needs to be the exchange of offers.
o Finally, offers are just that: an offer to purchase or exchange. All terms must be accepted by all parties before an offer can become a meaningful exchange.
- Distributive bargaining has parties pitted against each other. Any gain to one party comes at direct cost to the other party.
- Integrative bargaining allows for mutual gain throughout the negotiations. In many cases, this referred to as win-win negotiations.