Negotiation Analysis at HBS

1. Negotiation Analysis at HBS 1. Parties: Who will participate or could participate? 2. Rules: What are the rules of the game? 3. Issues: What agenda of issues will be, or could be, negotiated? 4. Interests: What goals are you and others pursuing? 5. Alternatives: What will you do if you don’t reach agreement? 6. Agreements: Are there potential agreements acceptable to both sides? 7. Linkages: Are your current negotiations linked to other negotiations? - Watkins, 2002.

2. The idea of an “interest” Interest: what a negotiator really cares about a basic concern, an underlying need Examples: for a buyer, preserving cash for other needs for a consultant, satisfying the client Types of interests: - tangible Examples: improving profitability, _________ - intangible (e.g., process, relationship, principles) Examples: efficiency, trust, fair play, ___________

3. A Negotiator’s “BATNA” BATNA: BestAlternative To a Negotiated Agreement an alternative way to satisfy a set of interests Qualities of a BATNA . . . - outside the current negotiation arena/counterpart [it is not the resistance level on a current issue] - only one - global [for a set of issues or interests] - concrete, probable, reliable - not always good Example: ______________________________ -W. Ury, H. Teegen

4. Types of Linkages • Sequential • Concurrent • Competitive – one party negotiates with two or more others, but only one negotiation can reach an agreement • Reciprocal – multiple negotiations occur, but each agreement is conditional upon an other negotiation reaching agreement Watkins. Breakthrough Business Negotiation.

5. Resources and Capabilities Negotiation is not just a matter of what you want, but of what you have to offer. Resource = means of satisfying interests, of creating value Capabilities = skills, resources and traits of a primary party that enable it to influence or be influenced by a counterpart Example: the broad, socio-economic packages LDC gov’ts seek and obtain from MNEs the buyer who pursues barter over cash purchase

6. The RBC Perspective Relationships Behaviors Conditions - Weiss, 1993

7. Reichmann and The Banks, 1995 As an analyst, how would you fill in these blanks? [Subject matter] Parties: Reichmann The Banks (13) _________ __________ _________ __________ Issues: ______________________________ Interests: ________ __________ ________ __________ Resources/Capabilities: ___ ___ Options: _________ __________ Other Conditions: ________, ________, Process(R, B): ________________________ Outcome: ____________________________ - Weiss, 1987

8. Party Map of Canary Wharf Repurchase Negotiation Cargill Inc. Investor Group Bank Consortium Price CIBC Reichmann Safra Citibank Tisch family BMO Royal Bank Alwaleed Speyer

9. Reichmann and The Banks, 1995 As an analyst, how would you fill in these blanks? [Subject matter] Parties: Reichmann The Banks (13) _________ __________ _________ __________ Issues: ______________________________ Interests: ________ __________ ________ __________ Resources/Capabilities: ___ ___ Options: _________ __________ Other Conditions: ________, ________, Process(R, B): ________________________ Outcome: ____________________________ - Weiss, 1987

10. International vs. Intranational Business Negotiations • differences between (national) contexts - each country = unique environ’l and institut’l context - greater degree of variation possible (magnitude) - new variables (e.g., currency) • operating simultaneously in multiple contexts • no umbrella framework (cf. WTO, regional blocs) • actors unique to IB arena: MNEs incl. C. Hill

11. Distinctive Barriers in International Negotiation • negotiating environment (place, time, surroundings) • culture • ideology • foreign bureaucracies and organizations • foreign laws and governments • multiple money • instability and sudden change -J. Salacuse. Making Global Deals.

12. Subjects of International Negotiation [By Type of Primary Parties Involved] COMPANY-COMPANY GOVERNMENT-GOV’T bilateral multilateral sales contractual joint ventures mergers & acquisitions consular affairs educational, scientific, and cultural exchange security trade "commons" issues economic and trade integrative (regional military political 1 2 COMPANY-GOVERNMENT 3 market entry asset ownership strategic control operations and management transfer of technology Notes 1 e.g., lobbying (''negotiations") that companies pursue to influence intergovernmental trade negotiations 2 e.g., negotiations involving government-owned firms 3 Home as well as host governments may be involved

13. My Teaching Philosophy • Negotiating well involves analysis, strategy, and skill. • Learn by practicing and by low-cost experimenting. • Process and outcomes are both important. • General skills deserve more work than tactics do. • Try to develop not one style (“one size fits all”), but a repertoire of negotiating styles and ways (“tailor-made”). The best negotiators are “reflective practitioners.”

14. Why develop your negotiating skills? • Your own dissatisfaction with previous: experiences (process) outcomes (no agreement or bad terms) implementation • Your counterpart’s dissatisfaction with the above three (including counterparts that are or have been partners, suppliers, customers, superiors, colleagues, subordinates) • Improved job performance/career success • Lack of confidence, or discomfort toward upcoming negotiation • Enjoying the activity, wanting to pursue it further

15. Session Take-aways • __________________________________ • __________________________________ • __________________________________

16. Characteristics of Negotiation • two or more parties • mixed motives (conflicting and common, complementary) • communication between the parties • mutual movement from initial positions • a goal of reaching agreement, but no guarantee • more than one set of terms is possible ?

17. Why negotiate? • to advance your “interests” • to obtain from someone else what you cannot • provide for yourself as well or at all • deal-making, relationship-building, dispute resolution, or conflict management (Watkins, 2002) • in international relations, to extend relations, normalize them, redistribute, innovate, or pursue side-effects (Ikle, 1967)

18. It’s better not to negotiate when … • you’re ill-prepared • you have to nothing to offer (or negotiate with) • the counterpart is not committed to negotiation • the counterpart does not have authority at least to make a preliminary decision - J. Thorn. How to Negotiate Better Deals.

19. Four Negotiating Skills: Benefits • Preparing clarifies your needs and goals • offers bases for controlling process • increases confidence and success • Communicating drives the negotiation process • defines and shapes relationships • provides information • allows you to influence others • Managing Process improves the process and results alleviates some of your uncertainty • Problem-solving unblocks impasses to facilitate agreement leads to superior outcomes

20. Elements/Issues of Any IB Agreement • governing laws (which country) • dispute resolution procedures • the parties to the agreement • governing language (if 2 or more lang. versions made) • entire agreement clause • assigning agreement to third party (optional?) • notice clause • force majeure • signing and dating the agreement -Klotz, Going Global?