Question

why to choose integrative negotiation over distributive negotiation . please explain why and give an example

Answer 1

The reason for choosing integrative negotiation over distributive negotiation is that integrative negotiation implies cooperation and leads to an eventual outcome and understanding in which everyone wins something. In this case a cooperative approach is taken and several parts are joined together into a cohesive whole. In the end each team achieves want they want. On the other hand distributive negotiation involves negotiating by the involved teams in a manner in which each team want to claim as much value as possible. This leads to overall scattering of value as the proportion of value or utility that has to be distributed is limited and hence not all the parties in the negotiation will be able to maximize their value.

For example take the case of business takeovers or mergers and acquisitions (M&As). In such cases one company buys out another company or takes over another company. The striking point in such cases is usually valuation. When integrative negotiation is used then both the companies (i.e. the acquiring company and the company that is being acquired) will work on the deal with a fair degree of mutual trust and confidence as both the companies will feel that their interests are being looked into. Value will be created for both and shared by both in an optimal manner and the deal will sail through easily and successfully. On the other hand if the two companies go for distributive negotiation then the acquiring company will try to minimize the takeover price while the company being acquired will try to maximize the takeover price. This will not lead to any trust and confidence creation and then the deal either does not go through or goes through after a bitter negotiating process.