Negotiation is a form of two-way communication that is supposed to help the involved parties get something they want. It involves two parties seeking to resolve their conflicts and modify their demands in order to reach a mutually acceptable solution. There are two ways this can be achieved: distributive and integrative bargaining. Simply put, distributive bargaining results with one party winning and the other party losing, whereas integrative bargaining can be described as a negotiation in which the two parties work together to find a solution that benefits them both. While both are common forms of negotiation, it is important to note the difference between these approaches so you can decide which strategy works best for you.
When both parties seek to maximize their own benefit from a transaction, it is considered distributive bargaining. For example, when you go to buy a car and you try to negotiate the lowest price while the seller tries to get as much as possible, you are both trying to protect your own interest in order to maximize your outcome. Here, what one party loses the other party will gain. Also known as a win-lose negotiation, distributive bargaining is a competitive strategy in which one party comes out ahead and the other one loses.
Integrative bargaining happens when both parties put forth their interests and seek a solution that will be mutually beneficial. Here, both parties gain something. For example, when you go to buy a house the seller might be asking $390K whereas your maximum offer is $360. You both compromise and settle on $375k, creating a mutual gain for both parties. This is a collaborative negotiation strategy in which the involved parties seek a win-win solution.
Key Differences Between Distributive and Integrative Bargaining
- Distributive bargaining is a competitive strategy whereas integrative bargaining is collaborative.
- Distributive bargaining ends with a winner and a loser while integrative bargaining ends with mutual winners.
- Distributive bargaining is motivated by self-interest and personal gain whereas integrative bargaining is motivated by mutual interests and gain.
- Distributive bargaining does not put much emphasis on the relationship between the two parties while integrative bargaining makes the relationship a high priority.