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International Business Negotiations :

1 International Business Negotiations

What is Negotiation?:

2 What is Negotiation? The term 'negotiation', as reviewed by Strauss (1978:1), refers to many synonymous processes as bargaining, wheeling and dealing, compromising, making deals, reaching agreements after disagreement, getting tacit understandings, mediating, power brokering, trading off, exchanging, and engaging in collusion.

Science and Art:

3 Science and Art SCIENCE: Analyze the relative bargaining strengths of each party The different strategic ploys available to each party Assess how the other party might respond to various bargaining ploys

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4 ART: Interpersonal skills Ability to convince Be convinced Ability to use a basketful of bargaining ploys The wisdom to know when and how to use them Influence of national norms, values and culture

Negotiation Basics:

5 Negotiation Basics What is negotiation? A group process for reaching agreement Has these characteristics Parties may have different end objectives Parties expect to reach an agreement No one party has all the information

Bargaining power:

6 Bargaining power Determinants of bargaining power Firms time horizon Comparable alternatives to firm Value placed by host government on investment Bargaining power of firm High Low Long Short Many Few High Low

Why Negotiation?:

7 Why Negotiation? Negotiation is an obvious principle of life, like it or not, you are negotiator! Negotiation is a resolution of conflict. In short, International Business Negotiation deals with processes, strategies, tactics and techniques for reaching an agreement.

The Importance of Negotiation:

8 The Importance of Negotiation Negotiating involves a dynamic equilibrium between fighting and cooperation

Characteristics of negotiation:

9 Characteristics of negotiation The negotiation is of characteristics on antagonism, cooperation and concession. Antagonism Cooperation Concession

Negotiators:

10 Negotiators To achieve satisfactory results in negotiation, a negotiator must pay heed to the following points: Resourcefulness Patience Perseverance Shrewdness Adaptability Endurance Gregariousness Concentration The ability to articulate Sense of humor

Translators (Interpreters):

11 Translators (Interpreters) Among the personnel to be engaged in negotiation, the translator is a must, since the ability to make oneself understood is essential if any agreement is to be reached. Generally speaking, a translator should satisfy the essential requirements and qualities: a good command of language and an intimate knowledge of translation regularity.

Tips of successful negotiations:

12 Tips of successful negotiations Successful negotiations The perfect negotiator Set up your goals and plan your negotiation time Genuinely communicate your own strengths Pick the right moment Be fair and objective

Tips of successful negotiations:

Tips of successful negotiations Listen attentively, ask questions, repeat, and summarize Repetition also has other advantages "Visualize" your arguments Use clever phrases "I" & "We" Dealing with Defeat Impromptu Meetings All is well that ends well

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14 Interrelated negotiations

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15 Acceptance zones in Negotiating

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16 Negotiating Strategies

Competitive or hard style of negotiation:

17 Competitive or hard style of negotiation Competitive negotiation stems largely from a "zero - sum" or "win -lose" orientation, e.g. one negotiator's gain is the other's loss. It can be referred to as hard style of negotiation (see, Fisher & Ury, 1981). It is one of the game theoretical models of negotiations;

Collaborative strategy::

18 Collaborative strategy: A collaborative strategy can be characterized as a passive component of a competitive strategy and is used primarily to avoid deadlock or breakdown in the negotiations. Collaborative behavior is facilitated when negotiators adopt a problem-solving orientation to negotiations and show relatively high degree of trust and cooperation. In short, each negotiator attempts to fully satisfy his/her own interests and the interests of the other party. This is an integrative "problem solving style" in which the negotiator's main objective is the maximization of the joint gain of both parties.

Sharing strategy:

19 Sharing strategy In sharing style of negotiation, the negotiator settles for partial satisfaction of both parties' interests. This is a "compromise" style in which the negotiator attempts to "split the difference" with the other party.

Accommodative or self-sacrificing strategy :

20 Accommodative or self-sacrificing strategy In this strategy the negotiator attempts to fully satisfy the interests of the other party at the expense of his/her own interests. This is a "self sacrificing" style in which the negotiator seeks a peaceful coexistence with the other party.

Controlling strategy:

21 Controlling strategy The controller’s approach to conflict is to take the necessary steps to ensure that his or her personal goals are met. whatever the cost to the relationship. Conflict is viewed as a win or lose proposition, with winning somehow equated with status and competence. This is a power-oriented approach in which you use whatever power seems appropriate to defend a position which you believe is correct or simply attempt to win.

Avoiding strategy:

22 Avoiding strategy The avoider views conflict as something to be shunned at all costs. A central theme of this style is evasiveness, which results in a high degree of frustration for all parties involved. Personal goals are usually not met, nor is the interpersonal relationship maintained. This style might take the form of diplomatically diverting an issue, postponing an issue until a better time, or simply withdrawing from a threatening situation. It is a leave or lose-win posture, in which the avoider’s stance is to leave-lose, allowing the other party to win.

PowerPoint Presentation:

23 Managing the Negotiation Process

PowerPoint Presentation:

24 The Six Step Approach 1. Preparing 2. Developing a strategy 3. Getting started 4. Building understanding 5. Bargaining 6. Closing

Step 1 Preparing for negotiation:

25 Step 1 Preparing for negotiation Setting objectives Assessing the other side’s case Assessing strengths and weaknesses Step 1: Preparing for negotiation

The Second Step of Negotiation:

26 The Second Step of Negotiation Step 2 Developing a strategy What style to adopt What tactics to use

Five Negotiating Styles:

27 Five Negotiating Styles Accommodating Collaborating Avoiding Controlling Compromising

How to Prepare for the First Meeting :

28 How to Prepare for the First Meeting Where to negotiate When to negotiate The first meeting Tactics

The Third Step of Negotiation:

29 The Third Step of Negotiation Step 3 Getting Started Opening the negotiation Setting the agenda

Opening the negotiation:

30 Opening the negotiation The progress of a negotiation is influenced significantly by the opening statement of the two parties, for a number of reasons: 1. It conveys information about a party’s attitudes, aspirations, intentions and perceptions of the other party and the issues in dispute. 2. It has the ability to shape the climate of the negotiation. 3. It may be used by the parties to explore the other side’s overall posture before deciding on their own. 4. It can be used by the parties to establish the negotiation range . Who should speak first? Where should you pitch your opening position? How do you respond to the other’s opening position?

Setting the agenda:

31 Setting the agenda To be effective, the negotiators need a common understanding of what is to be discussed and why. The subject, scope and purpose, therefore, need to be agreed before negotiations commence. For formal negotiations, this definition of the agenda should be in writing, providing the other party with time to prepare arguments and responses. However, do not be bound by the assumed ‘legitimacy’ of a written agenda. The agenda always remains negotiable .

The Fourth Step of Negotiation:

32 The Fourth Step of Negotiation Getting Information Testing Arguments and Positions Using Timing and Adjournments Step 4: Building Understanding

Getting Information:

33 Getting Information Getting Information Open questions Probing questions Closed questions Hypothetical questions

Testing arguments and positions:

34 Testing arguments and positions Testing Arguments and positions Do not interrupt responses to your questions End each statement with a direct question Say only what is needed Summarize regularly what has been said Avoid being sidetracked

How to use adjournments?:

35 How to use adjournments? Adjournments can be used as powerful aids to negotiation. You should use them whenever you find yourself in a situation with the following conditions. You need a few moments to absorb and consider the impact of important new information that has an effect on your strategy or position. You recognize an important change in climate or style on the port of the other party. A strategy or a particular tactic being followed proves ineffective, and a new strategy or tactic needs to be developed. You need time to think through new claims or proposals being put forward by the other party. You would like the other party to give proper consideration to your new proposal or concession. You notice that the conflict is escalating and you need a ‘cooling off’ period. You need to get approval for a decision from your constituents; or you need to get their viewpoint. The discussion has been going on for too long and everybody is getting hungry and tired. You need a break. You feel it may be useful to provide an opportunity for informal, exploratory talks with the other party, away from the bargaining table.

The Fifth step of Negotiation:

36 The Fifth step of Negotiation Trading concessions Breaking deadlocks Moving towards an agreement Step 5: Bargaining

How to Trade Concessions:

37 How to Trade Concessions Should I make it now? How much ground should I give? What am I going to get in return? Getting and making concessions

How much Concessions ?:

38 How much Concessions ? Trading concessions effectively A good concession is usually a small one Promote the other’s willingness to make concessions Concessions offered should apply pressure Go into a negotiation with possible concessions in mind Know how to deal with package claims

Breaking deadlocks:

39 Breaking deadlocks As part of planning for negotiation, it is essential to think about the situation which would occur if the negotiations failed to achieve agreement. Why do deadlocks arise? Deadlock or stalemate can arise for a number of reasons, including the following: Both parties have widely divergent objectives. One party mistakes firmness for rigidity and will not make concessions even to keep the negotiation ‘alive’. As a deliberate tactic during a negotiation to force the other party to reconsider its position and make concessions.

How to break deadlocks:

40 How to break deadlocks Go back to information gathering Discover the barriers to effective negotiating Agree not to agree Highlight the consequences of failure Try a proposed solution Call in an outside party

The Sixth Step of Negotiation:

41 The Sixth Step of Negotiation Formulating an agreement Ensuring implementation Reviewing your negotiating experience Step 6: Closing

Formulating agreement:

42 Formulating agreement Formulating agreement Check all aspects for agreement Ensure full understanding Do not “fudge” with ambiguous words or phrases Sound closing is never done in a hurry

Securing implementation:

43 Securing implementation How to implement agreements? Securing implementation Clarify the terms of the agreement Ask yourself: WHO gets HOW MUCH of WHAT, WHEN? Try to get the agreement in writing If the agreement is oral, send a letter

Reviewing your negotiating experience:

44 Reviewing your negotiating experience How satisfied are you wit the outcomes? Who was the most effective negotiator? Who conceded most? What strategies and actions helped most? What actions hindered the discussion? Did you trust the other party? What affected feelings most? How well was time used? Could it have been used better? How well did people listen to each other? Who talked most? Were creative solutions suggested? What happened to them? Did you understand well the other’s underlying issues and concerns? How adequate was your preparation? How did this affect the negotiation? What were the strongest arguments put forth by the other party? How receptive was the other party to your arguments and ideas? What are your main learning points from this negotiation? What would you do differently next time?

Moving towards agreements:

45 Moving towards agreements What tactics can be used to facilitate progress towards agreement? A variety of tactics can be used. The most common techniques are: Promises, threats Explanations Adjournments Criticism Praise Apologies Reflecting Questions Advice Proposals Humor

BODY LANGUAGE IN NEGOTIATION:

46 BODY LANGUAGE IN NEGOTIATION Some of the attitudes and behaviors revealed by body language are: Active listening: -Eyes wide and alert - Leaning slightly forward - Hands open and arms extended Defensiveness: - Eyes open and alert - Erect body - Arms and legs tightly crossed - Fists clenched Frustration: - Tightly clenched hands - Rubbing the nape of the neck - looking at the exit or outside Boredom: - Leaning backwards - looking at one’s watch - doodling or drumming fingers Confidence: - Relaxed and expansive gestures - Sitting upright Deception: - Minimal eye contact - Sudden changes in voice pitch - Covering the mouth while talking

PowerPoint Presentation:

47 Culturally Responsive Strategies and Their Feasibility