STRATEGIC NEGOTIATIONS: International Business Satyajeet Singh [email_address]

THE GLOBAL ECONOMY No country has a monopoly More interdependence More dependence on Overseas Markets More dependence on overseas products & services

No country has a monopoly

More interdependence

More dependence on Overseas Markets

More dependence on overseas products & services

PREPARATION Negotiations are all about satisfaction Stress your value or change the terms of the deal Raise aspiration levels Don’t be easy to get A little extra air in the balloon Don’t dwell on your pressures

Negotiations are all about satisfaction

Stress your value or change the terms of the deal

Raise aspiration levels

Don’t be easy to get

A little extra air in the balloon

Don’t dwell on your pressures

International Business Is More difficult and culturally dependant Business practices and laws vary and we as foreigners must learn their ways Demming has said that Variation can and must be managed Trust is the currency of International Trade Relationship-oriented

More difficult and culturally dependant

Business practices and laws vary and we as foreigners must learn their ways

Demming has said that Variation can and must be managed

Trust is the currency of International Trade

Relationship-oriented

International Business Travel Requires More Time and advance planning Jet lag and stomach infection can sink deals More investment in relationships Through internal negotiation with your Accounting Dept. and your boss While selling in different countries you have to understand how much work and how much play is acceptable

More Time and advance planning

Jet lag and stomach infection can sink deals

More investment in relationships

Through internal negotiation with your Accounting Dept. and your boss

While selling in different countries you have to understand how much work and how much play is acceptable

COMPANY BIRDS At the low end are companies which are Ostriches ( heads buried in sand ) Majority companies are Mocking Birds ( which speak from both sides of the mouth ) At the high end are the Golden Eagles which soar to greatest heights

At the low end are companies which are Ostriches ( heads buried in sand )

Majority companies are Mocking Birds ( which speak from both sides of the mouth )

At the high end are the Golden Eagles which soar to greatest heights

TACTICS Time Tactics – patience the superstar countertactic patience Tit-for Tat – influence others and build pressure Make smart remarks and use funny money Breaking Deadlocks – Call their bluff and change the deal slightly What If … ? Hypothetical situations and demands can be countered by Tying a string to the proposal Decoy Tactics – Good Guy / Bad Guy and change of pace

Time Tactics – patience the superstar countertactic patience

Tit-for Tat – influence others and build pressure

Make smart remarks and use funny money

Breaking Deadlocks – Call their bluff and change the deal slightly

What If … ? Hypothetical situations and demands can be countered by Tying a string to the proposal

Decoy Tactics – Good Guy / Bad Guy and change of pace

COUNTERTACTICS For Decoy Tactics you should recognise it, and let them play their games. Get your bad guy. Pull an end run and walkout if needed. For Authority Tactics hide yours, or seek highest authority, if limited authority you can postpone or review later. If no authority then you can only convey message and gather information Blow up the balloon by anticipation

For Decoy Tactics you should recognise it, and let them play their games. Get your bad guy. Pull an end run and walkout if needed.

For Authority Tactics hide yours, or seek highest authority, if limited authority you can postpone or review later. If no authority then you can only convey message and gather information

Blow up the balloon by anticipation

CONCESSIONS & LIMITS Get their shopping list and hold concessions for the end.The First concession affects credibility of your position and could be like an icebreaker Concession Size should be planned Never respond to an unreasonable demand with a concession When you give – Hollywood it up ! Get more than you give

Get their shopping list and hold concessions for the end.The First concession affects credibility of your position and could be like an icebreaker

Concession Size should be planned

Never respond to an unreasonable demand with a concession

When you give – Hollywood it up !

Get more than you give

PRESSURE TACTICS Escalation Clause Vs Contract Penalties Volume Discounts and Credit Terms Delivery of all containers in one vessel or all together Produce against Purchase Order do not wait for L/C Avoid pressure, say no to unreasonable demands, and ensure No penalties on delayed deliveries are imposed

Escalation Clause Vs Contract Penalties

Volume Discounts and Credit Terms

Delivery of all containers in one vessel or all together

Produce against Purchase Order do not wait for L/C

Avoid pressure, say no to unreasonable demands, and ensure No penalties on delayed deliveries are imposed

UPPER LIMITS & BOTTOM LINES Leave yourself room. Position and explain. Expand the ball park of reasonability Tough negotiators have more power, win more, create satisfaction, and gain respect Team Planning improves creativity, points of view, internal negotiation, moral support Leader, Listener, Watcher, Note-Taker Have Rules and Silent Signals for Concession-Making

Leave yourself room. Position and explain. Expand the ball park of reasonability

Tough negotiators have more power, win more, create satisfaction, and gain respect

Team Planning improves creativity, points of view, internal negotiation, moral support

Leader, Listener, Watcher, Note-Taker

Have Rules and Silent Signals for Concession-Making

Conditional Concessions Stall for time and avoid giving away value Try and get something in return Make the other work hard Agreed Authority limits – Budget,Policy,Legal,Insurance,Terms & conditions,Governing Board,Investors Keep record and dont shoot from the hip

Stall for time and avoid giving away value

Try and get something in return

Make the other work hard

Agreed Authority limits – Budget,Policy,Legal,Insurance,Terms & conditions,Governing Board,Investors

Keep record and dont shoot from the hip

THE WIN WIN MENTALITY All negotiations are for satisfaction for yourself , but Win-Win negotiation seeks to satisfy buyer and seller +1 +1 = +3 “ You can negotiate anything” by Herb Cohen is worth reading Positional Bargaining has Seller high and Buyer low Win-Lose and The Zero Sum Mentality are the other end results of negotiation

All negotiations are for satisfaction for yourself , but Win-Win negotiation seeks to satisfy buyer and seller +1 +1 = +3

“ You can negotiate anything” by Herb Cohen is worth reading

Positional Bargaining has Seller high and Buyer low

Win-Lose and The Zero Sum Mentality are the other end results of negotiation

PERSONALITY IN NEGOTIATION RED - to better the other party YELLOW – to maximize own value GREEN – to maximize joint value Need to recognize the personality traits to understand and predict outcomes

RED - to better the other party

YELLOW – to maximize own value

GREEN – to maximize joint value

Need to recognize the personality traits to understand and predict outcomes

YELLOW TRAITS Folds arms and leans away Little eye contact and no demands Indirectly critical and gives up easily Assumes fixed value ( like RED ) Does not want to negotiate, lose value Hides information Dead stop is best

Folds arms and leans away

Little eye contact and no demands

Indirectly critical and gives up easily

Assumes fixed value ( like RED )

Does not want to negotiate, lose value

Hides information

Dead stop is best

RED TRAITS Assumes fixed value and wants lion’s share In a hurry wants to negotiate Leans forward and goes for high ground Hides information makes direct eye contact Many concessions demand and is critical Uses pressure tactics and does not give in easily

Assumes fixed value and wants lion’s share

In a hurry wants to negotiate

Leans forward and goes for high ground

Hides information makes direct eye contact

Many concessions demand and is critical

Uses pressure tactics and does not give in easily

GREEN TRAITS Assumes value can be created and wants to negotiate Not in a hurry and shows interest by leaning forward Avoids demands and makes offers Unconditionally constructive Does not give up easily

Assumes value can be created and wants to negotiate

Not in a hurry and shows interest by leaning forward

Avoids demands and makes offers

Unconditionally constructive

Does not give up easily

HOW PERSONALITIES INTERACT Show how both can win Show your toughness Deadlock Red wins Tit for Tat Win-lose Yellow avoids RED ON GREEN RED ON RED RED ON YELLOW

INTERACTION OF PERSONALITIES Lose-Lose Generate value Show your empathy and convince “no loss” Avoidance The ideal Yellow avoids must pursue YELLOW ON YELLOW GREEN ON GREEN YELLOW ON GREEN

HOW TO HANDLE AGGRESSION Avoid direct counterattacks and sarcasm Probe into their position and stress your commitment to their needs Change channels and go on to another issue Brainstorm and do not retaliate in kind Humor and active listening helps Make eye contact and have a visible symbol of your common concerns

Avoid direct counterattacks and sarcasm

Probe into their position and stress your commitment to their needs

Change channels and go on to another issue

Brainstorm and do not retaliate in kind

Humor and active listening helps

Make eye contact and have a visible symbol of your common concerns

DOING BUSINESS WITH JAPANESE Kaisha Ningen – company man for lifetime employment Feudal “Master Follower” Relation – Oyabun-kobun. Hierarchy is important. Group Values – Japanese Baseball GAKUBATSU – school cliques NENBATSU – year clubs

Kaisha Ningen – company man for lifetime employment

Feudal “Master Follower” Relation – Oyabun-kobun. Hierarchy is important.

Group Values – Japanese Baseball

GAKUBATSU – school cliques

NENBATSU – year clubs

JAPANESE WAYS SHINYO – Gut level trust Overtime can account for 30% of salary SHINBEIHA is a pro-Western person GISEISHA – Victim syndrome. Don’t get blacklisted as networking is very big ENRYO – Distance and distrust HONNE – is the real truth

SHINYO – Gut level trust

Overtime can account for 30% of salary

SHINBEIHA is a pro-Western person

GISEISHA – Victim syndrome. Don’t get blacklisted as networking is very big

ENRYO – Distance and distrust

HONNE – is the real truth

THE RIGHT METHODS Court before them and ceremony is important First Meeting have GIRI gifts ( nice gifts please ) . Don’t open gifts and let them give first as it creates satisfaction Two is lucky number ( Cuff Links, Pen Sets) Four and 9 symbolize death , and flowers only for lovers Stress on cooperation, sharing, your company and its values Don’t be direct it’s better to be vague. Speak slowly and clearly. They expect competition.

Court before them and ceremony is important

First Meeting have GIRI gifts ( nice gifts please ) . Don’t open gifts and let them give first as it creates satisfaction

Two is lucky number ( Cuff Links, Pen Sets)

Four and 9 symbolize death , and flowers only for lovers

Stress on cooperation, sharing, your company and its values

Don’t be direct it’s better to be vague. Speak slowly and clearly. They expect competition.

SAUDI ARABIAN BUSINESS WAYS Relationships count more than business deal or legal wording of contracts It is not acceptable to bring a gift for your hostess if you are invited for a meal Do not show the soles of your feet or shoes to the person you are talking to and do not use left hand to pass on anything to them Presents are valued and a knowledge of their culture, history and the Koran is helpful Friends and others can also join into meetings and the negotiations would take a long time by Western standards.

Relationships count more than business deal or legal wording of contracts

It is not acceptable to bring a gift for your hostess if you are invited for a meal

Do not show the soles of your feet or shoes to the person you are talking to and do not use left hand to pass on anything to them

Presents are valued and a knowledge of their culture, history and the Koran is helpful

Friends and others can also join into meetings and the negotiations would take a long time by Western standards.

FAUX PAS & LANGUAGE Avoid making gaffes that can hurt sentiment of the partners Feelings are important so watch your jokes Speak slowly and clearly as English may only be their second language Cross-cultural communications involves using obvious symbol ( language ) and hidden symbols ( pace, space )

Avoid making gaffes that can hurt sentiment of the partners

Feelings are important so watch your jokes

Speak slowly and clearly as English may only be their second language

Cross-cultural communications involves using obvious symbol ( language ) and hidden symbols ( pace, space )

DOING BUSINES IN THE UNITED STATES Ethnocentricism – believing that their way is the best Impatience – efficiency and speed are equated Time Flies – Clock runs ? In Portuguese “ O tempo anda” Individualism – lacking in teamwork skills and not good socializers

Ethnocentricism – believing that their way is the best

Impatience – efficiency and speed are equated

Time Flies – Clock runs ? In Portuguese “ O tempo anda”

Individualism – lacking in teamwork skills and not good socializers

DOING BUSINESS IN USA – 2 Activity oriented – “Just do it” like NIKE advert.Innovative over tradition. Mobility – upward , and between companies Workaholism – Work first . Play later Don’t reveal soul easily and avoid being emotional More focussed on RIGHTS rather than DUTIES

Activity oriented – “Just do it” like NIKE advert.Innovative over tradition.

Mobility – upward , and between companies

Workaholism – Work first . Play later

Don’t reveal soul easily and avoid being emotional

More focussed on RIGHTS rather than DUTIES

PLANNING & FUTURE ORIENTATION Short-term, Reactive Vs. Proactive , Inductive with orderly agendas Youth is highly valued and New is better than old No small step-by-step changes motivated by the impossible THE BIG LEAP Motivation by money and bottomline

Short-term, Reactive Vs. Proactive , Inductive with orderly agendas

Youth is highly valued and New is better than old

No small step-by-step changes motivated by the impossible THE BIG LEAP

Motivation by money and bottomline

OTHER IMPORTANT CHARACTERISTICS Culturally naïve and PUSHY – direct communication mode Quick intimacy – first name, lack of follow up, too direct Opionionated – avoid politics,religion,ideology Gifts – Not part of US business but can give personalised items after work is over

Culturally naïve and PUSHY – direct communication mode

Quick intimacy – first name, lack of follow up, too direct

Opionionated – avoid politics,religion,ideology

Gifts – Not part of US business but can give personalised items after work is over

Thank You !