OKBIT22 Managing International Relations

1. OKBIT22 Managing International Relations 3. International Business Negotiations: Introduction

2. Let’s make a mind map • Whatever comes into your head concerning international business negotiations

3. International business negotiations • Introduction • What is a business negotiation? • Where do you need business negotiation skills? • What kinds of things influence international business negotiations? • What kind of stages do business negotiations have? • How do you prepare for business negotiations? (continues next week)

4. Characteristics of a negotiation situation • There are two or more parties with a perceived conflict of interest • The parties think they can influence the other parties to get a better deal • The parties prefer to search for agreement rather than fight openly, have one side capitulate, permanently break off contact or take the dispute to a higher authority to resolve • Negotiating tangible and intangibles

5. Defining Negotiation • Negotiation is a process trough which two or more parties move from their initially divergent positions to a point where agreement is reached

6. Where do you need negotiations skills? • Different negotiations situations: • Informal Negotiations • e.g. Negotiating a salary increase with your boss • Formal Negotiations • e.g. Negotiating a sale for your company

7. Business negotiations • In business negotiations stakes are high • We have to plan our performance and prepare for the other party’s performance • In problem-solving business negotiations there is: • Open information flow • A search for a solution which benefits both • Understanding of conflicting objectives • Will to try to understand the other party

8. Negotiation is a process • Negotiation is a process - a method ofreaching agreement on an issue that is under discussion or debate • Skilled negotiators focus as much on there attention on process, as the actual content • There are certain stages in a negotiation process

9. Initial planning and fact finding Orientation at the site prior to the negotiations Non-task Task-related exchange of information Resistance Reformulation of strategies Hard bargaining and decision making Persuasion Concessions Agreement Follow-up Stages of negotiations (Hendon et al. 1996)

10. Principled negotiation • Principled Negotiation assumes that the outcome of the negotiation will always satisfy, at least to some extent, the needs of both parties in the negotiation • Principled Negotiation is Win/Win Negotiation. • Win/lose • Lose/lose

11. Rules of Principle Negotiation • Separate the people from the problem • Focus on interest, not on positions • Generate a number of options before making a final decision • Make sure the result is based on objective criteria

12. A framework for international business negotiations

13. What makes a Successful Negotiator • Sufficient time to prepare. • Clear objectives. • Knowledge of the subject matter. • Information about the other parties involved and their organization.

14. What makes a Successful Negotiator • A clear negotiating strategy or plan. • Appropriate use of negotiating tactics e.g. when to release information • All parties treating each other with respect throughout. • Effective communicating skill, such as listening.

15. What makes a Successful Negotiator • A willingness to be open by all parties involved. • Conflicts raised and handled in a constructive manner. • Movement of both sides from their initial starting position to a win/win outcome • Agreements being implemented.

16. What is the best outcome to a negotiation? • IT DEPENDS! • Sometimes, it’s extracting as much as you possibly can out of the other party • Sometimes, it’s coming to a wise, efficient agreement that values the underlying relationship • Sometimes, it’s walking away without an agreement

17. When Should You Walk Away From a Negotiation • If time pressure is high • When you’re not prepared • A situation where you could lose everything • When you’re running at capacity • If the demands are illegal, unethical or immoral • When you have no stake in the outcome • When the other party acts in bad faith • If waiting would improve your position

18. Developing a Structure for Effective Negotiation • Preparing • Setting the scene • Opening up a negotiation • Exploring Positions • Finding a common Ground • Building a movement • Reaching Agreement • Following Up

19. Preparing for negotiations • To fail to prepare, is to prepare to fail • Preparing includes: • Doing background research i.e. “homework” • Planning a Strategy • Planning the Tactics

20. Plan the negotiations • Prepare yourself and your team • Know the other party • Know the big picture • Identify objectives • Prioritize objectives • Create options • Select fair standards • Examine alternatives • Select your strategy, tactics, andcountertactics • Develop a solid and approvedteam negotiation plan

21. Research • The other person - Knowing your opponent and the power the other party has • The history - avoiding trouble • The context - understanding a bigger picture • The environment/culture - How do they do things over there?

22. Things to Know About the Other Party Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005), pg. 63.