1. Strategy and tactics in international contract negotiations
Inspired by a lecture by Pervez Ghauri,
Tehran, November 2009
© 2018 Taylor & Francis

2. We won the negotiations!
© 2018 Taylor & Francis

3. Two types of negotiations
Distributive
Maximise own benefit at the expense of the other party
Integrative
Both parties gain
Future behavior towards each other (the shadow of the future)
© 2018 Taylor & Francis

4. Concern for meeting customer needs Concern for achieving the sale
Selling styles
Customer’s
friend
Problem
solver
Soft
sell
Concern for meeting customer needs
Hard
sell
Order
taker
Concern for achieving the sale
© 2018 Taylor & Francis

5. Three stages in negotiations
Pre-negotiation
Face to face
Post-negotiation
© 2018 Taylor & Francis

6. Pre-negotiation Do your homework Seek advice
Define your objectives according to your strategic plan
Identify the content of the deal accordingly
Create alternatives (competition/flexibility)
Put yourselves in their shoes
Build relative power (information, alternatives, resources)
Understand culture
Identify third parties and their roles (banks, consultants, etc.)
Do your homework
Seek advice
© 2018 Taylor & Francis

7. Face to face Who should participate in your team?
Individual vs team (Europe/Asia)
Create a positive atmosphere
start with the easy parts
Set your limits and priorities
“I have to call HQ!”
Develop a strategy and tactics
 overall and on specific issues
© 2018 Taylor & Francis

8. Negotiation strategy
Your approach to the negotiations will determine the outcome
Tough limits the number of alternative outcomes Soft = empathy?  gives the counterpart too much leverage
Intermediary  your approach depends on the issue
Perspective  opens up for “new solutions”
Develop trust (importance of small talk, get to know each other, and wining & dining)
don’t tell them “white lies”
© 2018 Taylor & Francis

9. Possible outcomes Unfair deal Party 2 loses Maximise mutual gains
Integrative
Party2’s negotiation strategy
Unfair deal
Party 1 loses
No deal
Distributive
Distributive
Integrative
Party 1’s negotiation strategy
Possible outcomes
© 2018 Taylor & Francis

10. Identify potentials for alignment of interests
Buyer’s maximum outcome
Buyer’s minimum outcome
Seller’s minimum outcome
Seller’s maximum outcome
Identify potentials for alignment of interests
© 2018 Taylor & Francis

11. (e.g. the Telenor experience in Russia)
Buyer’s maximum outcome
Buyer’s minimum outcome
Seller’s minimum outcome
Seller’s maximum outcome
Make sure that you don’t make concesssions without similar moves from your counterpart!
(e.g. the Telenor experience in Russia)
© 2018 Taylor & Francis

12. Negotiation tactics Location – home team vs “away team”
Variation in style and strategy
Control your concessions – time them efficiently
Give and take: check the limits of your counterpart
if … then …, or rather: if … then perhaps
Find the decision maker in the other team
Body language
© 2018 Taylor & Francis

13. Post-negotiation Asymmetry in agreement
Check possible legal implications
Avoid ambiguous language and sentences
Check with your own organisation
What is a good outcome?
Can no agreement be a good outcome?
Are contracts used after signing?
© 2018 Taylor & Francis