Negotiation and Global Partnerships

1. Negotiation and Global Partnerships Chapter 10

2. When negotiating in Russia, the slower you go, the further you’ll get. Don’t hurry to reply, but hurry to listen. -- Traditional Russian proverbs (p. 318)

3. When Arabs give a “yes” answer to a request, they are not necessarily certain that the action will or can be carried out. Etiquette demands that your request have a positive response. A positive response to a request is a declaration of intention and an expression of goodwill—not more than that. . . . If an action does not follow, the other person cannot be held responsible for failure. -- Margaret Omar Nydell University of Alexandria, Egypt (p. 318)

4. Opening question: If listening is more important than speaking, and saying “yes” is often a meaningless gesture, how can managers negotiate or build global partnerships with any degree of confidence?

5. Consider: GE and Mitsubishi How could a formal meeting (aisatsu) between two highly experienced CEOs go so wrong so quickly? How common are such failures? (p. 319)

6. Topic for today: Negotiation and global partnerships • Seeking common cause • Culture and negotiation: A model • The negotiation process • Negotiation patterns across cultures • Building global partnerships • Managing global partnerships

7. Potential benefits of global partnerships • Promote growth and development. • Acquire new technologies for market applications. • Respond to government policies or restrictions. • Take advantage of exchange rates between countries. • Respond to changes in the economic environment. • Reduce operating costs and/or increase productivity. • Get closer to clients. • Diversify operations and markets. • Open opportunities for increased vertical integration. (p. 324)

8. Consider: Hyundai and Samsung What did Hyundai Motors seek in their global strategic partnerships? Were their endeavors successful? How did Samsung Electronics build its own network of strategic partners to achieve its growth targets? Today, do you consider either of both or these companies to be world-class brands? Why or why not? (p. 324)

9. Potential drawbacks of global partnerships • Long-term objectives and aspiration can sometimes remain ill-defined, leading to an incompatibility of goals as the partnership gets down to managing details. • Potential for lack of long-term commitment by one or both partners. • Partners may be reluctant to share key information. • Disagreements over distribution of profits. • One partner may fear losing control to other partner. • Changing business conditions may lead to better opportunities elsewhere outside the partnership. (p. 328)

10. Consider: Secoinsa and Pharmacia Was the Secoinsa partnership between Spain and Japan doomed from the beginning, or could managers from both sides have done things differently at the beginning to build a stronger alliance? What was the nature of the conflicts that eventually sank the Swedish-American partnership Pharmacia? Could these conflicts have been anticipated early enough to resolve them before things got out of hand? (p. 325)

11. Culture and negotiation: A model Exhibit 10.1. Cultural influences on the negotiation process Culture 1: Manager 1’s normative beliefs about uncertainty and social control (e.g., risk oriented; rule oriented) Culturally compatible negotiation style (e.g., win-lose approach to bargaining; buffer risk through legal contracts; contracts before relationships) Manager 1’s negotiation style (e.g., competitive negotiation; sequential bargaining; seek written contract; doctrine of fixed circumstances) Other influences on the negotiation process (e.g., previous experiences with prospective partners; preparedness for negotiation and bargaining; degree mutual trust and mutual benefit; degree of competition; control over valued resources; personal and situational differences; realities on the ground) Manager 2’s negotiation style (e.g., problem-solving negotiation; holistic bargaining; seek verbal contract; doctrine of changed circumstances) Culturally compatible negotiation style (e.g., win-win approach to bargaining; buffer risk through personal networks; relationships before contracts) Culture 2: Manager 2’s normative beliefs about uncertainty and social control (e.g., risk averse; relationship oriented (p. 330)

12. Competitive bargaining strategy/1

13. Problem-solving bargaining strategy/2

14. Sequential and holistic bargaining strategies (p. 335)

15. Contracts and the doctrine of changed circumstances (p. 337)

16. Negotiating in Japan and Brazil (p. 339)

17. Criteria for selecting global partners • Solid compatibility of strategic goals and tactics. • Complementary value-creating resources. • Complementary corporate cultures. • Strong commitment to partnership. • Strong philosophical and operational compatibility. (p. 343)

18. Preparing for global negotiations • Start with the end result in mind. • Help the other side to prepare. • Treat alignment as a shared responsibility. • Send one clear signal. • Manage negotiations like a business process. (p. 345)

19. Managing the negotiation process • Concentrate on building long-term relationships with partner. • Focus on understanding the organizational and personal interests and goals behind stated bargaining positions. • Avoid overreliance on cultural generalizations. • Be sensitive to timing. • Remain flexible throughout negotiation process. • Plan carefully. • Learn to listen. (p. 347)

20. Management arrangements for global partnerships • Shared arrangements • Assigned arrangements • Delegated arrangements (p. 348)

21. MANAGER’S NOTEBOOK:Can people be trusted? (p. 353)

22. MANAGER’S NOTEBOOK:Building mutual trust (p. 354)

23. MANAGER’S NOTEBOOK:Aligning corporate cultures (p. 357)

24. MANAGER’S NOTEBOOK:Conflict resolution strategies (p. 359)

25. MANAGER’S NOTEBOOK:Dealing with conflicts • Prepare people • Prepare processes • Explore past and present • Envision the future • Create solutions • Rejuvenate and reflect • Don’t forget relationships (p. 360)

26. Application:Jeff Depew Assume you are Jeff Depew and you could start over in preparing for the meeting between the two CEOs of GE and Mitsubishi. Mid-level negotiations are well underway, and it is your job to prepare your boss (GE’s CEO) for the upcoming formal meeting in Tokyo. • Outline a specific plan of action to lay the groundwork for this meeting, doing everything in your power to make it successful. What would you do? • What are the biggest hurdles that might lead to failure? • What would you do to try and overcome, of at least minimize, these hurdles?

27. Think about it: Negotiating skills Think about times when you had to bargain with other people (colleagues, supervisors, friends, parents, etc.). With these experiences in mind: • Do you believe you won most of the negotiations? Why or why not? • What are your strengths and weaknesses as a negotiator? • What specific skills do you wish to develop to enhance your ability to negotiate successfully with others?