Types of Negotiation for Business Professionals

What is negotiation? In The Mind and Heart of the Negotiator, Northwestern University professor Leigh Thompson defines negotiation as “an interpersonal decision-making process necessary whenever we cannot achieve our objectives single-handedly.”

Her definition highlights the central role of interdependence, reminding us that negotiation arises precisely because our outcomes depend on the choices and cooperation of others.

When preparing to negotiate, business professionals often wonder what types of negotiation they might encounter and which strategies apply best. In this article, we outline the main types of negotiation used in business settings, along with situations where each commonly appears.

Quick Overview: What Are the Main Types of Negotiation?

Most business negotiations fall into one or more of these categories:

• Distributive negotiation (dividing fixed value)
• Integrative negotiation (creating and sharing value)
• Team negotiation
• Multiparty negotiation
• One-shot vs. repeated negotiations

Understanding which type you’re facing helps determine whether you should compete, collaborate, or combine both approaches.

Distributive Negotiation: Dividing a Fixed Pie

A distributive negotiation occurs when parties bargain over a single issue—usually price—and assume that value is fixed. In this scenario, negotiators are essentially slicing up a pie of limited size.

Common examples include:

• Negotiating the price of a used car
• Bargaining in a marketplace or bazaar
• Negotiating fees for a one-time service

In distributive negotiation:

• One side’s gain is typically the other side’s loss.
• Negotiators aim to claim as much value as possible.
• Anchoring, concessions, and reservation prices matter greatly.

However, negotiators sometimes mistakenly assume a negotiation is purely distributive when additional issues could be added to create value.

Integrative Negotiation: Expanding the Pie

An integrative negotiation involves multiple issues and allows negotiators to create value through tradeoffs.

Consider a job negotiation involving:

• Salary
• Benefits
• Remote work flexibility
• Bonus structure
• Start date
• Professional development support

If one side values flexible scheduling more than salary, and the other side feels the opposite, both parties can make concessions on lower-priority issues while gaining on what matters most.

Team Negotiation: When Groups Sit at the Table

A team negotiation occurs when one or both sides include multiple negotiators. Often, negotiations involve teams on both sides.

Examples include:

• Union and management contract negotiations
• Merger or acquisition discussions
• Large vendor or supplier negotiations

Teams are used because negotiators bring different strengths:

• Legal expertise
• Financial analysis
• Relationship management
• Technical knowledge

Research shows negotiations involving at least one team often create more value, provided teams coordinate effectively.

Best practices for negotiation teams include:

• Agreeing in advance on roles and responsibilities
• Aligning strategy before talks begin
• Taking breaks to reassess progress privately
• Presenting a unified message to the other side

Multiparty Negotiations: When Many Voices Are Involved

A multiparty negotiation involves three or more parties negotiating together, whether as individuals or teams.

Examples range from everyday situations—such as friends deciding where to eat—to complex global negotiations like international climate agreements.

Multiparty negotiations are often seen as complicated, but they also create opportunities:

• More parties mean more interests and potential tradeoffs.
• Creative coalitions can help agreements emerge.
• Value creation opportunities multiply.

However, risks include:

• Coalition formation that excludes others
• Communication breakdowns
• Process confusion

Effective multiparty negotiations require careful structure, agenda-setting, and facilitation.

One-Shot vs. Repeated Negotiations: Why Future Relationships Matter

Negotiations also differ depending on whether parties expect future interactions.

One-Shot Negotiations
In one-shot negotiations, parties expect no future dealings once the agreement is reached.

Examples include:

• Buying a used car from a private seller
• Negotiating a one-time freelance contract

Because relationships are temporary, negotiators may:

• Bargain more aggressively
• Share less information
• Feel less pressure to preserve goodwill

Repeated Negotiations
In ongoing business relationships, parties expect to negotiate again.

Examples include:

• Supplier relationships
• Client contracts
• Internal organizational negotiations

Repeated interactions encourage:

• Greater cooperation
• Trust-building
• Long-term value creation

Reputation becomes important, shaping future opportunities.

Negotiations rarely fall neatly into a single category. A negotiation may be integrative, involve teams, include multiple parties, and occur within an ongoing relationship—all at once.

The key is recognizing the type of negotiation you face and adjusting your strategy accordingly.

What other types of negotiations have you encountered in your professional or personal life?