The distributive negotiation is a zero sum game in which parties are in a state of competition, whereby each party seeks dominance over the other and tries to maximize its own self-interests. Since the self-interest is to get the most out of the available resources and since the pool of the available resources is fixed, whatever one party wins, the other party must lose.
Characteristics of Distributive Negotiations
A case of distributive negotiation can either be a hard one or a soft one. The hard distributive negotiation takes place when each party holds out for what it wants without any compromise. Many times such attitude leads to on impasse. This happened in the case of Eastern Airlines, where the union's demands were considered very high and the management refused to give in. The result was a strike by the workers and the end result was that the airline went into bankruptcy and ceased to exist.
In a soft distributive negotiation, both parties follow the give and take policy, make concessions, compromise on some issues and reach an agreement that is realistic and acceptable. In general, one party asks for much higher benefits than it is willing to accept and the other party offers much less than it is willing to give.
Then by negotiation and compromise, they meet somewhere in the middle and both parties are happy. This meeting point is somewhere in the bargaining zone. This bargaining zone is defined by the following example:
'A graduate with MBA degree is negotiating a job offer with a company manager. He believes that he should get $70,000 per year in salary but would be willing to settle for $60,000 per year. That is the lowest salary he will accept for the job. The manager would like to offer $55,000 per year but would be willing to go up to $65,000 per year.
Thus the minimum value of $60,000 for the graduate and maximum offer of the manager of$65,000 create a bargaining zone between $60,000 and $65,000. Negotiation takes place within this zone.' Similarly, purchasing a car or a house represents distribute negotiation with a bargaining zone to maneuver the price.
Distributive negotiation is a necessary way of resolving differences between parties with mutually exclusive goals. Parties to the negotiation will withhold as much information as possible to gain an advantage and at the same time, they will try to get as much information from the opposing party as possible.
Negotiators will generally have a very good idea as to what they are trying to accomplish and this is perhaps the most critical point of skillful negotiation. Negotiation should focus on realistic issues and not on egos about winning and not losing.