BARGAINING

            Bargaining occurs between all forms of human groupings including individuals, groups, organizations, and countries. The condition under which “bargaining” takes place is when two or more parties have divergent interests or goals and communication between the parties is possible.

WHAT IS BARGAINING?

            A bargaining situation can then be defined as an interaction where parties with certain disagreements confer and exchanges idea about a possible solution until a compromise is reached or the bargaining is terminated.

HOW IS AN AGREEMENT MADE?

The bargaining agents, which include representatives of staff members, meet to negotiate a draft agreement. Once the agreement content has been agreed in principle between the bargaining agents, the Agreement will then be put to staff members for their approval. If a valid majority of staff members vote in favor of the agreement.

TYPES OF BARGAINING

DISTRIBUTIVE BARGAINING

            A two –party, varying or zero-sum schedule is suitable depending upon the payoff schedule involved. In a varying-sum schedule bargaining situation, the profits (and/or losses) of the respective bargainers, when added together, need not always equal the same fixed amount, thus the term varying sum.

INTEGRATIVE BARGAINING

            Integrative bargaining exists where there are areas of mutual concern and complementary interest. The situation is a varying-sum schedule such that, by working together, both parties can increase the total profits available to be divided between them.

PSYCHOLOGICAL BARGAINING FRAMEWORK

            The findings by psychologists can be categorized under six areas, each representing a major factor assumed to affect bargaining. (1) General bargaining predispositions. (2) Payoff system. (3) Social relationship with the opponent. (4) Social relationship with significant others. (5) Situation factors. (6) Bargaining strategy.

QUANTITY DISCOUNTS

            The buying firm must consider its total cost of accepting a quantity discount. Specially, the holdings cost associated with carrying larger quantities must be compared to the expected benefit of the discounts. In others words, quantity discounts must be tied to the buying firm’s cost structure. The supplier must not discriminate with product pricing. The legal issues related to pricing will be discussed in the next section.