International BusinessNegotiation Strategies

Dr. Corinne B. YoungJune 24, 2004Dominican Republic

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

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

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

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

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

Negotiation Strategy & Tactics

Distributive Bargaining versus Distributive Bargaining versus Integrative NegotiationIntegrative Negotiation

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

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

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

Turning Negotiation into a

Corporate Capability

Every company negotiatesFew companies have a systematic approach Partnerships, alliances and other agreementsManage negotiations at the corporate level

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

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

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

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

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

7 Elements of a Good Negotiation

InterestsOptions

Legitimacy

Communication Relationship

CommitmentBATNA

If YESIf NO

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

Global Negotiations

Different cultures and countries Cultural noisesNegotiation style, processes, strategies and communication patterns Not everyone negotiates like Americans

Exercise

Salary Negotiations

Negotiation Strategies: Tools for Survival

Questions

Discussion

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

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

Questions ?