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CS Professional · Arbitration, Mediation and Conciliation · Negotiation Skills and Communication

Two firms, Kiran Foods and Sahyadri Packaging, dispute a packaging price. Kiran's representative says, 'We do not want a lower price as such; we need stable costs because our retail prices are fixed for a year.' Sahyadri's representative then proposes a one-year fixed-price contract with a volume discount. Which negotiation approach does this exchange illustrate?

It illustrates interest-based or integrative negotiation. The parties look past stated demands to the underlying need, here cost stability, and then craft an option that serves both sides, rather than simply defending fixed positions on price.

  1. APositional bargaining based on fixed demands
  2. BInterest-based (integrative) negotiationCorrect
  3. CCompetitive negotiation using pressure tactics
  4. DAvoidance of the issue

Explanation

Kiran revealed its underlying interest (cost stability), and Sahyadri designed an option meeting that interest and creating value for both. This is interest-based or integrative negotiation. Positional bargaining would involve each side just defending a stated price figure.

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