Meaning
Approach to bargaining that treats the process as a zero-sum game where one side’s gain is the other side’s loss defines the standard competitive model of exchange. In positional bargaining, the participants start with an extreme demand and gradually move toward a middle ground through a series of small compromises. The strategy focuses on the positions themselves rather than the problems that need to be solved.
The approach is common in one-time transactions where the relationship between the parties is not a priority.
Competitive Interaction
Parties view the other side as an opponent to be defeated or a counterparty to be squeezed for the best possible terms. When founders engage in positional bargaining with a vendor or a landlord, they often hide their true requirements to maintain an advantage. Such behavior can lead to a stalemate if neither side is willing to move from their opening offer.
The tension created by this style often makes the negotiation take longer than necessary.
Tactical Concession
Incremental moves toward the center are used as a way to test the resolve of the other party and to signal a limit to what one is willing to give. In positional bargaining, a concession is often met with a demand for an equal move from the opponent. The participants use the distance between their current offers as a measure of progress.
Because the focus is on the numbers or the specific terms, creative solutions that could benefit both parties are rarely discovered. The process can become a battle of wills where the ego of the negotiators plays a larger role than the economic facts.
Outcome Limit
Settlements reached through this method often leave both parties dissatisfied or result in a sub-optimal agreement that ignores long-term value. Positional bargaining frequently ends at a point that is exactly in the middle of the two opening offers. While this may seem fair, it does not account for the actual needs of the business.
The strategy often leaves a residue of resentment that can affect future dealings.
