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International BusinessNegotiation Strategies
Dr. Corinne B. YoungJune 24, 2004Dominican Republic
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Workshop Purpose
Increase awareness of the different types of negotiation strategies and tacticsProvide a framework for thinkingCreate awareness of the complexity of international negotiationsAssess and improve your negotiation skillsGain knowledge
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Outline
IntroductionWhen to negotiate?Context of negotiationsNegotiation strategy and tacticsTurning negotiation into a corporate capabilitySteps to coordinating successful negotiationsHow to negotiate that everyone wins…but especially you?The context of international negotiations
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Introduction
The basis of negotiations is some form of conflict Negotiation is complex, dynamic process Many people are afraid of conflict and negotiationIt requires behavioral and analytical skillsEverybody can learn how to become an effective negotiator
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When to Negotiate??Common Characteristics for Negotiation Situations
Two or more parties must make a decision Parties are committed to peaceful means for resolving their disputeThere is no clear or established method for making the decision
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Context of Negotiations
NegotiationProcess &Outcomes
Relationship betweenNegotiators before/during
Negotiations
Levels of ConflictUnderlying Potential
Negotiations
Relative Bargaining Power and Nature of
Dependence ImmediateStakeholders
DesiredOutcome of Negotiations
Negotiations tend to be
highly complicated
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Negotiation Strategy & Tactics
Distributive Bargaining versus Distributive Bargaining versus Integrative NegotiationIntegrative Negotiation
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Characteristics of Distributive Bargaining
Deal Focused
Reach final settlement close to other party’s resistanceGather information about the oppositionConvince the other party Promote your own goals
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Characteristics of Integrative Negotiation
Relationship Focused
How to create Win-Win deals?• Focus on communalities• Address needs and interests• Commit to meet the needs of all parties • Exchange information and ideas• Invent options for mutual gain• Use objective criteria for standards of performance
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The Deal versus Relationship
Confirm suspicions & perceptions
Reduce risk taking & creativity
Create low-valuedeal
Under invest inrelationship
Restrict Information
flow
Improvemutual
understanding
Expand scopeof discussions
Create valuableoptions
Improve trust &communication
Share informationAbout interests
Deal Relationship
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Turning Negotiation into a
Corporate Capability
Every company negotiatesFew companies have a systematic approach Partnerships, alliances and other agreementsManage negotiations at the corporate level
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Steps to Coordinating Successful Negotiations
Create a company-wide negotiation infrastructureBroaden measures of successDistinguish between a single deal and relationshipLearn to walk away from a deal
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Factors that Facilitate Successful Negotiations
Common objective or goalFaith in your problem-solving abilityBelief in the validity of your own position and the other’s perspectiveMotivation and commitment to work togetherTrustClear and accurate communicationUnderstanding of dynamics in negotiations
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How to Negotiate so Everyone Wins….
But especially you?
1. Determine your negotiation strategy and goals2. Do your homework3. Build trust 4. Develop external listening skills5. Use trade outs and concessions6. The golden rule: SILENCE 7. Be a Winner
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The Don'ts in Negotiation
Go in negotiation unpreparedStrictly rely on creativity, improvisation and intuitionNot know when to walk away Ignore legitimacyMake a commitment before listening
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7 Elements of a Good Negotiation
1. Clarify interests not positions2. Options for mutual gains3. Know your alternatives (BATNA)4. Use standards of legitimacy5. Communication6. Relationship building7. Make commitments with care
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7 Elements of a Good Negotiation
InterestsOptions
Legitimacy
Communication Relationship
CommitmentBATNA
If YESIf NO
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The Context of International Negotiations
NegotiationProcess &Outcomes
Relationship betweennegotiators before/during
negotiations
Levels of conflictunderlying potential
Negotiations
Relative Bargaining Power and Nature of
Dependence ImmediateStakeholders
Desired Outcome of Negotiations
Political &Legal
Pluralism
Currency fluctuationsForeign Exchange
ForeignGovt. ControlBureaucracy
InstabilityChange
IdeologicalDifferences
Cultural &Language
Differences
ExternalStakeholders
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Global Negotiations
Different cultures and countries Cultural noisesNegotiation style, processes, strategies and communication patterns Not everyone negotiates like Americans
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Exercise
Salary Negotiations
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Negotiation Strategies: Tools for Survival
Questions
Discussion
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The American Way: Strengths
PreparationClear and plain speaking, good communicatorsFocus on pragmatism over doctrineRecognition of other party’s perspective, friendlinessFocus on win-win: fairness and honesty, flexibilityConcession making, co-operation
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The American Way: Weaknesses
Impatience: putting too much emphasis on speed and quick actionArrogance: Jumping right into business without a period of socializingPoor listening skillsFailing to have the authority to make decisions on the spotCultural insensitivity:
– “Yes” not always means “I agree” but could very likely mean “Yes, I hear you”
– Assuming, that as in America, all cultures view a final agreement as carved in stone
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Questions ?