Positional bargaining

Definition

Positional bargaining is a negotiation strategy where each party starts with a position, or demand, and negotiates by making concessions to reach an agreement. This approach often leads to a competitive atmosphere where each side aims to maximize their own gains, sometimes at the expense of the other party's needs. It can result in a win-lose scenario and may create resentment or distrust if parties feel that their interests are not being considered.

5 Must Know Facts For Your Next Test

1. Positional bargaining can lead to a hardening of positions, making it difficult for parties to shift from their original demands.
2. This approach may create an adversarial atmosphere, leading to emotional reactions that can hinder effective communication.
3. While it can be effective for straightforward negotiations, positional bargaining often fails in more complex situations where collaboration is needed.
4. Successful negotiators need to be aware of the limitations of positional bargaining and consider integrating interest-based strategies when appropriate.
5. Positional bargaining often requires a strong understanding of one's own bottom line to avoid giving away too much in concessions.

Review Questions

• How does positional bargaining affect the relationship between negotiating parties?
  • Positional bargaining can strain relationships between negotiating parties as it creates a competitive environment where each side focuses on maximizing their own gains. This often leads to a win-lose dynamic that may result in resentment or distrust if one party feels that their interests are not being addressed. The adversarial nature of this approach can make future negotiations more difficult as parties may become entrenched in their positions.
• Evaluate the effectiveness of positional bargaining in complex negotiations compared to interest-based negotiation strategies.
  • In complex negotiations, positional bargaining is generally less effective than interest-based negotiation strategies because it tends to overlook the underlying interests and needs of both parties. While positional bargaining can simplify straightforward discussions, it may lead to missed opportunities for collaboration and mutual gain. Interest-based approaches focus on finding solutions that satisfy both sides, which can foster better relationships and more sustainable agreements.
• Propose a scenario where positional bargaining could be detrimental and suggest how interest-based negotiation could improve outcomes.
  • In a scenario where two companies negotiate a merger, positional bargaining could lead each side to cling tightly to initial valuations and terms, potentially resulting in a breakdown of talks. If both parties approach the negotiation with an interest-based mindset instead, they could explore each other's underlying concerns about valuation, future growth prospects, and operational synergies. This collaborative approach could lead to a more favorable outcome for both companies by identifying creative solutions that address their interests rather than sticking rigidly to initial positions.

Related terms

interest-based negotiation: A negotiation method that focuses on the underlying interests of both parties instead of their initial positions, aiming for mutual gain.

concessions:

Compromises made by one party during negotiations to help reach an agreement, often involving giving up part of their initial demands.

negotiation tactics: Strategies used during negotiations to influence the outcome, including approaches like positional bargaining, interest-based negotiation, and more.