OKBIT22 Managing International Relations
4. International business negotiations: Planning the
negotiations
Lesson 3 in a Nutshell
Defining negotiations Different negotiations situations Business negotiations characteristics Stages of a negotiation process Principled negotiations Framework for international business
negotiations Successful negotiator Preparing for negotiations
Developing a Structure for Effective Negotiation
1. Preparing2. Setting the Scene3. Opening up a Negotiation4. Exploring Positions5. Finding a Common Ground6. Building a Movement7. Reaching Agreement8. Following Up
1. Preparing for Negotiations
To fail to prepare, is to prepare to failPreparing includes:
Doing background research “homework” Planning objectives – a Vision Planning a Strategy Planning your Tactics
1. In This Stage You Should…
1. Prepare yourself and your team
2. Know the other party
3. Know the big picture
4. Identify objectives
5. Prioritize objectives
6. Create options
7. Select fair standards
8. Examine alternatives
9. Select your strategy, tactics, andcountertactics
10. Develop a solid and approvedteam negotiation plan
1. A Little Bit of Research is Needed
The other person - Knowing your opponent and the power the other party has
The history - Avoiding troubleThe context - Understanding a bigger
pictureThe 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.
1. Preparing to Negotiate
Recognize your preferred negotiating styleDiagnose distributive, integrative, and
mixed-motive negotiationsFrame, plan, and strategize for the
negotiation
1. Preferred Negotiating Styles
Style
Diagnose
Plan
Concern for other
Concern for self
Cooperative
Uncooperative
Assertive Unassertive
Collaboration (Problem solving)
Competition (Contending)
Accommodation (Yielding)
Avoid(Inaction)
Compromise
1. Preferred Negotiating Styles
There is no “right” negotiating styleEach style is appropriate and
inappropriate at different times and situations
1. The Dual-Concerns Model
Is the substantive outcome important to you?
Yes No
Yes
No
Is the relational outcome
important to you?
Collaboration (Problem solving)
Competition (Contending)
Accommodation (Yielding)
Avoid(Inaction)
Compromise
1. Competitive Style
Appropriate when: Unpopular course of action
is needed Speedy decision is needed Unfavorable decision by the
other party very costly to you
You are in a power position and your relationship with the other party is not important
Inappropriate when: Both parties are equally
powerful Relationship is
important to you Speedy decision isn’t
necessary Issue is complex
1. Accommodative Style
Appropriate when: Preserving relationship
is important You anticipate
reciprocation later Issue is more important
to other party You have less power You believe you might
be wrong
Inappropriate when: Issue is important to
you You believe that you are
right The other party is
wrong or unethical
1. Collaborative Style
Appropriate when: Issues are complex One party alone cannot
solve the problem Time is available for
problem solving Other parties’
commitment is necessary for implementation
Issues are complex
Inappropriate when: Task or problem is
simple Speedy decision is
required Other parties are
unconcerned about outcome
Other parties do not have problem-solving skills
1. Compromising Style
Appropriate when: Goals of parties are
mutually exclusive; consensus cannot be reached
Parties are equally powerful
Temporary solution to a complex problem needed
Integrating or dominating styles failed
Inappropriate when: One party is more
powerful Problem is complex, but
an integrative solution can be found through problem solving
1. Avoiding Style
Appropriate when: Issue is trivial Potential dysfunctional
effect of confronting the other party outweighs benefits of resolution
Cooling off period is needed
Inappropriate when: Issue is important to
you It is your responsibility
to make the decision Prompt attention to the
problem is needed and the parties are unwilling to defer
1. Distributive and Integrative Negotiations
Style
Diagnose
Plan
Distributive Negotiations Win-lose Fixed pie to be divided
Integrative Negotiations (Principled negotiations)
Win-win Pie can be expanded
1. Frame, Plan & Strategize for the Negotiation
Style
Diagnose
Plan
Frame the problem
Define your goals
Develop a strategy to achieve those goals
Develop a plan to execute that strategy
1. Planning a Strategy
Planning the strategy will help you to develop your objectives and produce an overall plan for negotiation
Set objectives Ideal position Realistic position Fallback position (bottom line)
1. Planning a Strategy - Preparing your Case
Key areas to cover: Identify the main argumentsWork out their strengths and weaknessIdentify potential sticking pointsAnticipate the other party's positionWork out what concessions you can offer
(to achieve movement)
1. Planning Tactics
Key areas to plan:TimingMethodLocation Sequence of issuesControlling the release of informationGetting movementReaching Agreement
1. Strategies and Tactics in International Business Negotiations
Developing a Structure for Effective Negotiation
1. Preparing2. Setting the Scene3. Opening up a Negotiation4. Exploring Positions5. Finding a Common Ground6. Building a Movement7. Reaching Agreement8. Following Up
2. Setting the Scene
Personal IntroductionsPurpose of the meetingTime allowed for the meetingRelevant background informationMeeting agenda Decision making process and authority
levelsConstraints and boundaries - areas that
are not up for discussion
3. Opening up the Negotiation
Decide who will state the position first How much information are you going
to disclose when you present your position?
DO
Listen wellUse open questionsCheck that you understand the other
person's positionSummarizeWithhold judgment
× DON´T
InterruptImmediately put down the other
person's positionReveal all your negotiating currencyAnswer questions too specifically
OKBIT22 Managing International Relations
5. International business negotiations: Conducting the
negotiations
Developing a Structure for Effective Negotiation
1. Preparing2. Setting the Scene3. Opening up a Negotiation4. Exploring Positions5. Finding a Common ground6. Building a Movement7. Reaching Agreement8. Following Up
Conduct
11. Determine who has authority
12. Prepare the facility
13. Use an agenda
14. Introduce the team
15. Set the right tone
16. Exchange information
17. Focus on objectives
18. Use strategy, tactics, andcountertactics
19. Make counteroffers
20. Document the agreement or know when to walk away
4. Exploring Positions
Spend some time exploring the position to identify common ground and sticking points i.e.
Have you got enough information? What information have you discovered?
DO
Focus on the topic or problem not the personConcentrate on issues, not positionsListen for common ground and possible
sticking pointsAsk probing and clarifying questionsObserve the other person's body languageSummarize and check understandingMake notes
×DON´T
InterruptTalk too much or allow the other person to
talk too muchBe tempted to present counter agreementsStart to become entrenched in your position Think in terms of “right” and “wrong” (it is
more helpful to think in terms of difference)
5. Finding Common Ground
Keep positive attitude and make positive statements
Don’t allow yourself to become negative if there seems to be little common ground
Do not put pressure on the other person to agree if there is no common ground
DO
Make a note of the common groundKeep a positive attitude and make
positive statements
×DON´T
Allow yourself to become negative if there seems to be little common ground
Put pressure on the other person to agree
5. Identify Sticking Points
Summarize where sticking points seem to be
Explore them in more detail and attempt to resolve or minimize them
DO
Make a note of the sticking pointsKeep a positive attitude and make
positive statementsDeal with any conflict in a constructive
way
×DON´T
Allow yourself to become negative if there seems to be a lot of sticking points
Don’t sweep the sticking points under the carpet
Blame the other person if they won't budge
5. Deploying Effective Negotiating Behavior
Behave effectively
USE
Effective listeningSummarizingEffective questioning skillsStress control
×AVOID
IrritatorsCounterproposalsDefend and attack spiralsArgument dilution
6. Moving towards Agreement
Movement Phase
6. Movement Phase
What concessions do you want to offer?Are you happy with the concessions the
other person is offering?Other opportunities for movement?
DO
Aim for a win/win outcomeSummarize as you proceedBe open about your motives and
intentionsGive reasons before making a proposal
or a decisionAnticipate counter argumentsAsk questions
DO (cont.)
Keep focused on the main themeGain questions: “If you…then we…” Build on common ground
×DON´T
Make threats or use sarcasmUse irritating phrases, such as: “I am
sure you will want to accept my extremely generous offer”
Become defensive or attack the other person
Insult the other personForce decisions prematurely
Developing a Structure for Effective Negotiation
1. Preparing2. Setting the Scene3. Opening up a Negotiation4. Exploring Positions5. Finding a Common Ground6. Building a Movement7. Reaching Agreement8. Following Up
7. Reaching Agreement
Reaching Agreement is often the most overlooked stage in the negotiating process
7. Reaching Agreement
Do all parties share the same understanding of the proposed agreement?
Do people need time to consider?
DO
Record all decisions in writing Give people time to consider
acceptanceCheck that all parties are committed to
the decision / agreement reachedMake sure that all parties agree with
the next steps to be taken
×DON´T
Rush decisions before everyone has stated that they agree
Leave any actions to be followed up open-ended
7. Recording Agreements
Make a record of the decisions that are reached
Make a note of who will take an action and by when next to each decision
Send a copy of the decisions reached to all parties within 24 hours of the conclusion of the negotiation
7. Recording Agreements (cont.)
Allow a fixed period of time for amendments
If there is a disagreement you may need to re-open the negotiation
Inform other people who need to know about the outcome of the negotiation as soon as the decisions have been ratified
7. Document the Negotiation and Form the Contract
21. Prepare the negotiation memorandum
22. Send the memorandum to the other party
23. Offer to write the contract
24. Prepare the contract
25. Prepare negotiation results summary
26. Obtain required reviews and approvals
27. Send the contracts to the other party for signature
28. Provide copies of the contract to affected organizations
29. Document lessons learned
30. Prepare the contract administration plan
Developing a Structure for Effective Negotiation
1. Preparing2. Setting the scene3. Opening up a negotiation4. Exploring Positions5. Finding a common ground6. Building a movement7. Reaching Agreement8. Following Up
8. Following Up the Negotiation
Follow up to check that all the agreed actions have been taken
DOSend a note to all parties, summarizing the
agreements reached and reminding of the next steps
Carry out all your agreed action by the agreed deadline
Inform all relevant parties about the conclusions reached
Send a letter of thanks to those involved in the negotiation
×DON´T
Forget
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