Negotiation Strategies for International Business Ro-Sung Kwak, Professor School of Economics and International Trade Dongguk University, Seoul , Korea Address:

Contents Negotiator’s Dilemma Ⅲ 3 Building Blocks for Integrative Negotiations Ⅱ Negotiations in the Global Business Ⅰ Principled Negotiation: Fisher and Ury (1981) Ⅳ Ex) Opera House Simulation) Las Flores

Negotiations in the Global Business Ⅰ Global business world is relationship-oriented where cooperation among interested parties is inevitable for competitive edge. -Agreement through cooperation in the business activities such as international M&A, strategic alliance and joint venture is very important for ensuring the competitiveness of firms Also, conflict management in the global organization is necessary for securing high performance. 3 Therefore, learning the effective skills of negotiation as well as skills for overcoming the barriers of communication is directly related to the competitiveness of the firms involved.

3 Building blocks for Integrative Negotiations Ⅱ 4 1.What is successful negotiation? : Definition of integrative negotiation Successful negotiation is defined as the one where maximum value is created through problem-solving process among parties. -Thus, the negotiator play a value creator role during the process. -And the expert negotiator can handle the process well enough to create value through negotiation Why problem-solving approach is necessary for successful negotiation? -Problem-solving approach settles the conflict of interests between parties through investigating real interests of each party, analyzing, and then exchanging and trading – off them -Thus, the approach has an advantage that the interests of parties involved are balanced and the relationship between them not harmed.

Ⅱ 5 Real Interests the thing which is at stake in the interaction that you care about. -they are either tangible and objective or intangible and subjective In this context, the task of negotiation is to forge an agreement which is better than BATNA (Best Alternative To a Negotiated Agreement) of each party. -First thing to induce agreement through negotiation is to find what differences of interests are the real sources of conflicts since there commonly exist illusory conflicts. -And then construct agreement utilizing these differences which are seemed to be the sources of conflicts, but paradoxically are the sources of joint gains. Therefore, negotiation with the agreement better than BATNA of each party utilizing these differences should be value creating process. 3 Building blocks for Integrative Negotiations

Ⅱ 6 2.Three Building Blocks for Integrative Negotiations: Sebenius (1993) 1)Focus on Real Interests: cf. Positional Bargaining 2)Negotiation is a Means of Advancing Interests: BATNA and ZOPA 3)Negotiation is a Joint Problem-Solving Process: Parties are Interdependent 3 Building blocks for Integrative Negotiations

Negotiator’s Dilemma Ⅲ 7 1.Why it happens? (Exhibit) Negative Advertizing War between Detergent Producers 2.CASES: Resolution of Negotiator’s Dilemma and Failure Failure: Frequent-Flier Program of the U. S Commercial Air Industry in the 80s Resolution: Manufacturer’s Rebate Competition among Big 3 Automobile Companies.

Principled Negotiation: Fisher and Ury(1981) Ⅳ 8 Principle 1 Separate Problems from people Principle 2 Focus on Real Interests rather than Position Principle 3 Have a Brainstorming Session for developing jointly beneficial options Principle 4 Insist on Using Objective Criteria