INTERNATIONAL NEGOTIATIONS

CONTENTS
Definition of Negotiations Process of international business negotiations Factors that influence negotiation process Negotiating styles of different countries

Definition
A voluntary process of give and take where both parties modify their offers and expectations in order to come closer to each other. Every negotiation presents opportunities and dangers for both parties. The parties can, at any given moment, quit the process.

Contd..
Negotiation is working side by side to achieve mutually beneficial solutions Efficiency is doing things right Effectiveness is doing the right things

The process of International Business Negotiations

Background Factors Objectives Environment Third parties Negotiators Atmosphere Factors Conflict/Cooperati on Power/Dependenc e Expectations

Strategic Dimension
(Strategic Factors) Presentations Strategy Decision Making Need for an agent

Process Pre-Negotiation Negotiation Post-Negotiation

Cultural Dimension Time Individualism vs. collectivism Pattern of communication Emphasis on personal relation Source: Ghauri and Usunier, 1996

Background Factors
Influence
Process Atmosphere

Objectives
Common Conflicting Complementary

 Environment Factors
Political Social Structural issues

Third parties
Consultants Agents Governments

 Negotiators
Skills Experience

Atmosphere variables
Characterize the relationship that has evolved during the process as a whole.

Strategic Dimensions
Presentation of business proposal
Formal or informal setting Handled individually or by a team Several view points, faster decision making, strength in numbers. Expensive, management of egos, roles and expectation of individual members. Complete plan regarding problems, the solutions available and preferred choices, relative to the other partys choices and preferences.

Strategy

 Types of strategies
Tough Soft Intermediate

Decision making
Pattern of the parties Ability to handle negotiation

Need for an Agent

Pre negotiation stage

Both the parties attempting to understand each others needs and demands. Preparation and planning
Research Selecting negotiators Negotiating strategy Anticipate events which may occur in the process of negotiation

Operating environment Involvement of third parties Influences Competitors Infrastructure

Atmosphere factors play a very important role

Whether the process will continue to next stage depends on the perceived level of conflict or co-operation

 Power or dependence and the expected benefits of the relationship at this stage.

Key points
Identify the contents of the deal Implications of the deal Create alternatives Put yourself in their shoes Gauge the appropriateness of the message Build up relative power

Negotiation process
Factors that influence the process
Basic conception of the negotiation process
Competitive process or problem solving approach

Negotiator selection criteria

Experience, status, expertise, personal attributes, political connections

Significance of types of issues

Price consideration, relationships, control and uses of resources

 Concern with protocol

Procedures, practices of social behaviours

Complexity of language
Verbal and non-verbal communication

Nature of persuasive arguments

Emotional or logical approach

Bases of trust
Laws, friendship, mutual respect

Value of time
Each partys attitude towards time

Examples
Problem solving approach Americans Interpersonal relationships Brazilians Formal approach Germans Emotional and family oriented Arabs Negotiators are normally the top management (CEO) and individual decision making - Pakistan

 Longer decisions making process Asians Seek relationships with permanence, faithfulness, great hospitality Chinese Non-business, social group gatherings are standard practice before any deal making - Japanese

Negotiation styles of different countries

Japanese
Dependency on groups Fearful of losing face Approach negotiation with suspicion Keep repeating their position No strict legalistic approach Try to renegotiate the agreement if circumstances change

Pakistan
Generally conducted by CEO Centralized decision making (high power distance culture) Quick decision making since it is individualistic

US
Forceful Blunt and Legalistic Urgent Results oriented Uncomfortable with silence and body language Create pressure for early agreements Use track two contacts to accelerate negotiations

India
Simultaneous individualism and collectivism Indian cultural values Nationalistic sentiment is high Willing to listen to other party Not a good team player Hierarchical culture (top down approach) Subjective view of time Negotiators are highly complex and imaginative Inconsistent behavior patterns

Contd
Extensive analysis of information Relationships are important at the operational stage of the venture Contractual obligations do not have the same sanctity Highly sensitive Flexibility in contracts

British
Between the lines communication style (hinting) Politeness classic form of indirectness Aggressive and rude Link between concessions and conditions are not made explicit Make other party feel socially incompetent Use of phrases likeexcellent, oh dear, amazing, isnt it the British prefer Slaves to tradition Fierce individualists Accountant mentality Initially very formal over a period very informal vice versa for French

Key Points to remember when dealing with British

1. Prepare in detail for meetings

2. Technical data should solidly researched 3.Prepare thorough costings and spread sheets

4.Avoid taking abrupt authoritative positions in the meeting

5.Good command of English language adds, since it helps decode their messages as they are very contextual and hinting 6.Last minute changes are very common

Arabs

Russians

Family oriented
Very emotional Very loud in approach Timelines are least important Expect concessions and discounts

Deal Oriented
Logical approach Straight forward approach Time is absolute They feel asking for concessions is a sign of weakness

Summary
Know what you want Know what concessions you are willing to give Know your alternatives Know your counterpart and the subject matter Rehearse practice what you will say

L-A-E-R
Listen Acknowledge Explore Respond

Problems in negotiations
Culture Language Environment