Strategic Negotiations

Slide 1: STRATEGIC NEGOTIATIONS: International Business Satyajeet Singh satyajeet.singh@yahoo.com

Slide 2: THE GLOBAL ECONOMY  No country has a monopoly  More interdependence  More dependence on Overseas Markets  More dependence on overseas products & services

Slide 3: 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

Slide 4: 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

Slide 5: 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

Slide 6: 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

Slide 7: 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

Slide 8: 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

Slide 9: 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

Slide 10: 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

Slide 11: 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

Slide 12: 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,Ter ms & conditions,Governing Board,Investors  Keep record and dont shoot from the hip

Slide 13: 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

Slide 14: 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

Slide 15: 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

Slide 16: 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

Slide 17: 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

Slide 18: HOW PERSONALITIES INTERACT RED ON YELLOW RED ON RED RED ON GREEN Yellow avoids Win-lose Tit for Tat Red wins Deadlock Show your toughness Show how both can win

Slide 19: INTERACTION OF PERSONALITIES YELLOW ON GREEN ON GREEN YELLOW ON GREEN YELLOW Yellow avoids must The ideal Avoidance pursue Show your empathy Generate value Lose-Lose and convince “no loss”

Slide 20: 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

Slide 21: 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

Slide 22: 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

Slide 23: 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.

Slide 24: 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.

Slide 25: 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 )

Slide 26: 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

Slide 27: 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

Slide 28: 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

Slide 29: 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

Slide 30: Thank You !