Transcript OKBIT22 Managing International Relations

OKBIT22 Managing
International Relations
3. International Business
Negotiations: Introduction
Let’s make a mind map
Whatever comes into your head
concerning international business
negotiations
International business negotiations
Introduction
What is a business negotiation?
Where do you need business negotiation skills?
What kinds of things influence international
business negotiations?
What kind of stages do business negotiations
have?
How do you prepare for business negotiations?
(continues next week)
Characteristics of a negotiation situation
 There are two or more parties with a perceived
conflict of interest
 The parties think they can influence the other
parties to get a better deal
 The parties prefer to search for agreement
rather than fight openly, have one side
capitulate, permanently break off contact or take
the dispute to a higher authority to resolve
 Negotiating tangible and intangibles
Defining Negotiation
 Negotiation is a process trough which two or
more parties move from their initially divergent
positions to a point where agreement is
reached
Where do you need negotiations skills?
Different negotiations situations:
Informal Negotiations
e.g. Negotiating a salary increase with your boss
Formal Negotiations
e.g. Negotiating a sale for your company
Business negotiations
In business negotiations stakes are high
We have to plan our performance and
prepare for the other party’s performance
In problem-solving business negotiations
there is:
Open information flow
A search for a solution which benefits both
Understanding of conflicting objectives
Will to try to understand the other party
Negotiation is a process
Negotiation is a process - a method of
reaching agreement on an issue that is
under discussion or debate
Skilled negotiators focus as much on
there attention on process, as the actual
content
There are certain stages in a negotiation
process
Stages of negotiations (Hendon et al.
1996)
 Initial planning and
fact finding
 Orientation at the site
prior to the
negotiations
 Non-task
 Task-related
exchange of
information
 Resistance
 Reformulation of
strategies
 Hard bargaining and
decision making
 Persuasion
 Concessions
 Agreement
 Follow-up
Principled negotiation
Principled Negotiation assumes that the
outcome of the negotiation will always
satisfy, at least to some extent, the
needs of both parties in the negotiation
Principled Negotiation is Win/Win
Negotiation.
Win/lose
Lose/lose
Rules of Principle Negotiation
Separate the people from the problem
Focus on interest, not on positions
Generate a number of options before
making a final decision
Make sure the result is based on objective
criteria
A framework for international business
negotiations
What makes a Successful Negotiator
Sufficient time to prepare.
Clear objectives.
Knowledge of the subject matter.
Information about the other parties
involved and their organization.
What makes a Successful Negotiator
A clear negotiating strategy or plan.
Appropriate use of negotiating tactics
e.g. when to release information
All parties treating each other with respect
throughout.
Effective communicating skill, such as
listening.
What makes a Successful Negotiator
A willingness to be open by all parties
involved.
Conflicts raised and handled in a
constructive manner.
Movement of both sides from their initial
starting position to a win/win outcome
Agreements being implemented.
What is the best outcome to a
negotiation?
 IT DEPENDS!
Sometimes, it’s extracting as much as you
possibly can out of the other party
Sometimes, it’s coming to a wise, efficient
agreement that values the underlying
relationship
Sometimes, it’s walking away without an
agreement
When Should You Walk Away From a
Negotiation
 If time pressure is high
 When you’re not prepared
 A situation where you could lose everything
 When you’re running at capacity
 If the demands are illegal, unethical or immoral
 When you have no stake in the outcome
 When the other party acts in bad faith
 If waiting would improve your position
Developing a Structure for Effective
Negotiation
Preparing
Setting the scene
Opening up a negotiation
Exploring Positions
Finding a common Ground
Building a movement
Reaching Agreement
Following Up
Preparing for negotiations
To fail to prepare, is to prepare to fail
Preparing includes:
Doing background research i.e. “homework”
Planning a Strategy
Planning the Tactics
Plan the negotiations
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Prepare yourself and your team
Know the other party
Know the big picture
Identify objectives
Prioritize objectives
Create options
Select fair standards
Examine alternatives
Select your strategy, tactics, and
countertactics
Develop a solid and approved
team negotiation plan
Research
The other person - Knowing your
opponent and the power the other party
has
The history - avoiding trouble
The context - understanding a bigger
picture
The environment/culture - How do they do
things over there?
Things to Know About the Other Party
Buyer and Seller
 What is the organization’s overall business strategy?
 What is its reputation?
 What is its current company business environment?
 Who is the lead negotiator?
 Who are the primary decision makers?
 What are their key objectives?
 What are their overall contract objectives?
 What are their personal objectives?
 Who or what influences the decision makers?
 What internal organization barrier do they face?
Seller Only
 When does the buyer need our products or services?
 How much money does the buyer have to spend?
 Where does the buyer want our products and services delivered?
 What benefits will our products and services provide?
 What is our company’s past experiences with this buyer?
Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 63.