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. Preparing 2. Setting the Scene 3. Opening up a Negotiation 4. Exploring Positions 5. Finding a Common Ground 6. Building a Movement 7. Reaching Agreement 8. Following Up

1. Preparing for Negotiations To fail to prepare, is to prepare to fail Preparing includes: Doing background research “homework” Planning objectives – a Vision Planning a Strategy Planning your Tactics

1. In This Stage You Should… 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

1. A Little Bit of Research is Needed 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.

1. Preparing to Negotiate Recognize your preferred negotiating style Diagnose distributive, integrative, and mixed-motive negotiations Frame, plan, and strategize for the negotiation

1. Preferred Negotiating Styles Cooperative Collaboration (Problem solving) Accommodation (Yielding) Concern for other Compromise Competition (Contending) Avoid (Inaction) Uncooperative Style Assertive Unassertive Diagnose Concern for self Plan

1. Preferred Negotiating Styles There is no “right” negotiating style Each style is appropriate and inappropriate at different times and situations

1. The Dual-Concerns Model Is the substantive outcome important to you? Yes No Collaboration (Problem solving) Accommodation (Yielding) Yes Is the relational outcome important to you? Compromise No Competition (Contending) Avoid (Inaction)

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: Inappropriate when: Issues are complex One party alone cannot solve the problem Time is available for problem solving Other parties’ commitment is necessary for implementation 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 Distributive Negotiations Win-lose Fixed pie to be divided Integrative Negotiations (Principled negotiations) Win-win Pie can be expanded Style Diagnose Plan

1. Frame, Plan & Strategize for the Negotiation Frame the problem Define your goals Develop a strategy to achieve those goals Style Diagnose Develop a plan to execute that strategy Plan

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 arguments Work out their strengths and weakness Identify potential sticking points Anticipate the other party's position Work out what concessions you can offer (to achieve movement)

1. Planning Tactics Key areas to plan: Timing Method Location Sequence of issues Controlling the release of information Getting movement Reaching Agreement

1. Strategies and Tactics in International Business Negotiations

Developing a Structure for Effective Negotiation 1. Preparing 2. Setting the Scene 3. Opening up a Negotiation 4. Exploring Positions 5. Finding a Common Ground 6. Building a Movement 7. Reaching Agreement 8. Following Up

2. Setting the Scene Personal Introductions Purpose of the meeting Time allowed for the meeting Relevant background information Meeting agenda Decision making process and authority levels Constraints 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 well Use open questions Check that you understand the other person's position Summarize Withhold judgment

DON´T Interrupt Immediately put down the other person's position Reveal all your negotiating currency Answer questions too specifically

OKBIT22 Managing International Relations 5. International business negotiations: Conducting the negotiations

Developing a Structure for Effective Negotiation 1. Preparing 2. Setting the Scene 3. Opening up a Negotiation 4. Exploring Positions 5. Finding a Common ground 6. Building a Movement 7. Reaching Agreement 8. Following Up

Conduct Determine who has authority Prepare the facility Use an agenda Introduce the team Set the right tone Exchange information Focus on objectives Use strategy, tactics, and countertactics Make counteroffers 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 person Concentrate on issues, not positions Listen for common ground and possible sticking points Ask probing and clarifying questions Observe the other person's body language Summarize and check understanding Make notes Probing=εντιμότητα

DON´T Interrupt Talk too much or allow the other person to talk too much Be tempted to present counter agreements Start 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 ground Keep 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 points Keep a positive attitude and make positive statements Deal 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 listening Summarizing Effective questioning skills Stress control

AVOID Irritators Counterproposals Defend and attack spirals Argument 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 outcome Summarize as you proceed Be open about your motives and intentions Give reasons before making a proposal or a decision Anticipate counter arguments Ask questions

DO (cont.) Keep focused on the main theme Gain questions: “If you…then we…” Build on common ground

DON´T Make threats or use sarcasm Use 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 person Force decisions prematurely

Developing a Structure for Effective Negotiation 1. Preparing 2. Setting the Scene 3. Opening up a Negotiation 4. Exploring Positions 5. Finding a Common Ground 6. Building a Movement 7. Reaching Agreement 8. 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 acceptance Check that all parties are committed to the decision / agreement reached Make 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 Gloat=xairekaka

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 Prepare the negotiation memorandum Send the memorandum to the other party Offer to write the contract Prepare the contract Prepare negotiation results summary Obtain required reviews and approvals Send the contracts to the other party for signature Provide copies of the contract to affected organizations Document lessons learned Prepare the contract administration plan

Developing a Structure for Effective Negotiation 1. Preparing 2. Setting the scene 3. Opening up a negotiation 4. Exploring Positions 5. Finding a common ground 6. Building a movement 7. Reaching Agreement 8. Following Up

8. Following Up the Negotiation Follow up to check that all the agreed actions have been taken

DO Send 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 