Negotiation Strategies for International Business

1. Negotiation Strategies for International Business Ro-Sung Kwak, Professor School of Economics and International Trade Dongguk University, Seoul 100-715, Korea E-mail Address: rskwak@dgu.ac.kr

2. Negotiations in the Global Business Ⅰ 3 Building Blocks for Integrative Negotiations Ⅱ Ⅲ Ⅳ Principled Negotiation: Fisher and Ury (1981) Negotiator’s Dilemma Ex) Opera House Simulation) Las Flores Contents

3. Global business world is relationship-oriented where cooperation among interested parties is inevitable for competitive edge. • Agreement through cooperation in the business activities such as international M&A, • strategic alliance and joint venture is very important for ensuring the competitiveness of firms • Also, conflict management in the global organization is necessary for securing high performance. • Therefore, learning the effective skills of negotiation as well as skills for overcoming the barriers of communication is directly related to the competitiveness of the firms involved. Ⅰ Negotiations in the Global Business

4. What is successful negotiation? : Definition of integrative negotiation • Successful negotiation is defined as the one where maximum value is created through problem-solving process among parties. • Thus, the negotiator play a value creator role during the process. • And the expert negotiator can handle the process well enough to create value through negotiation • Why problem-solving approach is necessary for successful negotiation? • Problem-solving approach settles the conflict of interests between parties through investigating real interests of each party, analyzing, and then exchanging and trading –off them • Thus, the approach has an advantage that the interests of parties involved are balanced and the relationship between them not harmed. Ⅱ 3 Building blocks for Integrative Negotiations

5. Real Interests • the thing which is at stake in the interaction that you care about. • -they are either tangible and objective or intangible and subjective • In this context, the task of negotiation is to forge an agreement which is better than BATNA (Best Alternative To a Negotiated Agreement) of each party. • First thing to induce agreement through negotiation is to find what differences of interests are the real sources of conflicts since there commonly exist illusory conflicts. • And then construct agreement utilizing these differences which are seemed to be the sources of conflicts, but paradoxically are the sources of joint gains. • Therefore, negotiation with the agreement better than BATNA of each party utilizing these differences should be value creating process. Ⅱ 3 Building blocks for Integrative Negotiations

6. Ⅱ 3 Building blocks for Integrative Negotiations • Three Building Blocks for Integrative Negotiations: Sebenius (1993) • Focus on Real Interests: cf. Positional Bargaining • Negotiation is a Means of Advancing Interests: BATNA and ZOPA • Negotiation is a Joint Problem-Solving Process: Parties are Interdependent

7. Negotiator’s Dilemma Ⅲ • Why it happens? • (Exhibit) Negative Advertizing War between Detergent Producers • CASES: Resolution of Negotiator’s Dilemma and Failure • Failure: Frequent-Flier Program of the U. S Commercial Air Industry in the 80s • Resolution: Manufacturer’s Rebate Competition among Big 3 Automobile Companies.

8. Ⅳ Principled Negotiation: Fisher and Ury(1981) Principle 1 Separate Problems from people Principle 2 Focus on Real Interests rather than Position Principle 3 Have a Brainstorming Session for developing jointly beneficial options Principle 4 Insist on Using Objective Criteria