IBnegotiationslideppt_major_international_commerce

UFM IB negotiations

1. INTERNATIONAL BUSINESS
NEGOTIATION

2. COURSE OBJECTIVE
1.GENERAL OBJECTIVES
Studentsmasterthetypesofnegotiationsininternational
business,thenegotiationprocess,thebusinessnegotiation
techniques.Besidesthat,thelearnerscanapplytheabove
knowledgetoplanandimplementaninternational
businessindependently,oringroups.

3. 2. SPECIFIC OBJECTIVES
-Knowledge:Studentshavebasicandcomprehensivetheoretical
knowledgeaboutnegotiationstylesininternationalbusiness,
negotiationprocesses,andnegotiationtechniquesinthebusiness.
-Skills:Studentshavetheabilitytoapplytheaboveknowledgetoplan
andexecutenegotiationsininternationalbusiness.
-Regardingthedegreeofautonomy,andself-responsibility:
Studentshavethenecessarycreativecapacitytoperform
independentlyoringroupstheworkofaninternationalbusiness
negotiator,andatthesametimetakingpersonalresponsibilityfor
themselves.Heisresponsibletothegroupfortheresultsofthatwork.
COURSE OBJECTIVE

4. LEARNING CONTENT
Chapter 1: A framework for international business
negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business
negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the world

5. •Class hours: 45
•Allocation of credit hours for activities:
–Theory: 50%
–Exercises, group activities, simulations,
discussion in class: 50%
Allocation of credit hours for activities

6. •Assessment:
–Class participation ,Chapter Exercises, Q&A and
attendance, Quizzes, simulations, presentation
and Mid-term paper 40%, in there:
+ Class participation, presentation30%
+ Chapter Exercises, Q&A, attendance30%
+ Mid-term 40%
–Final test 60%

7. How to study effectively ?
•By practicing in a variety of settings
•By feedback: sharing your experiences
•By analysis: descriptive

8. Our focus =>skill building and learning by doing
Doing negotiation in different substantive context
sharpen our ability to recognize untested assumption,
alternative explanations
Increase our sensitivity to what works, what doesn’t
work and why.

9. References
•Lecture provided by lecturer.
•Ghauri, P. N., Ott, F.U. & Rammal,. H.J.
(Eds.). (2020). International business
negotiations: Theory and Practice.
Edward ElgardPublishing
•Khan, A.M., & Ebner Noam (2019). The
Palgrave Handbook of Cross-Cultural
Business Negotiation. Springer
International Publisher, Palgrave
Macmillan.
•Danielle Costa Morais, LipingFang
(2022). Group Decision and Negotiation:
Methodological and Issues. Springer
International Publisher.

10. Chapter 1
A FRAMEWORK FOR INTERNATIONAL
BUSINESS NEGOTIATION
“The goal is not the deal, The goal is to
get a good deal”

11. Chapter 1: A framework for international
business negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business
negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the
world

12. •Understand the basics of negotiation in
International business
•Awarestrategiesand tacticsin International
businessnegotiation
•Understand a frameworkforInternational
businessnegotiation
Learning objectives

13. Content of Chapter 1
❖A Case Study of Successful Dispute Resolution
1.1. WhatisInternational businessnegotiation? Types
1.2. Negotiationprinciples
1.3. Strategiesand Tacticsin International business
negotiation
1.4. Negotiators
1.5. Dos and Don’tin Negotiation
1.6. A frameworkforInternational business
negotiation:

14. Apple and Samsung Offer a Case Study of
Successful Dispute Resolution
May 2012, Apple CEO Tim Cook and Samsung
CEO Gee-Sung Choi met with a judge in the U.S.
District Court of Northern California
April 2011, Apple had filed a lawsuit accusing
Samsung of copying the “look and feel” of the
iPhone when the Korean company created its
Galaxy line of phones.

15. Apple and Samsung -A Case Study of Successful
Dispute Resolution
Samsung countersued Apple for not paying
royalties for using its wireless transmission
technology.
The two companies have repeatedly accused each
other of copying the appearance and functions of
their smartphones and tablet devices.

16. Apple and Samsung Offer a Case Study of
Successful Dispute Resolution
Earlier in May, the companies showed some willingness to
compromise in an effort to avoid going to court: at the
California court’s suggestion, they cut the number of disputed
patents in half.
But even as the CEOs sat down at the table for
theirmediation, which was urged by the court, Apple filed a
motion asking the presiding judge to bar the sale of
Samsung’s Galaxy Tab 10.1 on the grounds that the tablet was
designed to “mirror” Apple’s second-generation iPad.

17. Apple and Samsung Offer a Case Study of
Successful Dispute Resolution
Both sides had said they hoped to avoid a legal
battle.
Yet the two-day mediated talks between the CEOs
in late May ended in impasse, with both sides
refusing to back down from their arguments.
The suit later went to trial twice, with Apple
ultimately winning more than $409 million.

18. Apple and Samsung Offer a Case Study of
Successful Dispute Resolution
•Dispute resolution techniquebetween businessnegotiatorsis far
less likely to succeed when the parties are grudging participants
than when they are actively engaged in finding a solution.
•When negotiators feel they have spent significant time and energy
in a case, they may feel they have invested too much to quit.
•The longer they spend fighting each other, the more contentious
and uncooperative they are likely to become.

19. Apple and Samsung
Successful Dispute Resolution
The lesson?
When a business dispute arises, do your best
to negotiate or mediate a solution before
taking it to the courts.

20. What is negotiation?
The definition of negotiation is very simple, while
its scope is wide. Every wish or need may cause a
negotiation. Once people exchange their ideas to
adjust their relation, or they exchange views to
reach agreements, they are negotiating.
GerafdI Niernberg, The Art of Negotiating

21. What is negotiation?
Various definitions have been given; but researchers have not
agreed on a common one. A few are quoted for your reference:
1.Negotiation is a basic means of getting what you want from
others. It is back-and-forth communication designed to reach an
agreement when you and the other side have some interests that
are shared and others that are opposed (Fisher, Ury& Patton,
1981).
2.Negotiation is a discussion intended to produce an agreement; a
treaty with another respecting sale or purchase; a transaction of
business between nations; the mutual interaction of governments
by diplomatic agents, in making treaties, smoothing differences, etc.

22. What is negotiation?
3.Negotiation is an activity that all managers and professionals
engage in. It’s necessary to negotiate at every stage of a project
or business transaction, in order to reach an agreement.
4.Negotiation is a basic, generic human activity---a process that
is often used in labor-management relation, in business deals
like mergers and sales, in international affairs, and in our
everyday activities.

23. Definition of negotiation
Negotiation
->the action and the process
of reaching an agreement by
meansof exchanging ideas
with the intentionof
dispelling conflicts and
enhancing relationship to
satisfy each other’s needs.
Zhuge, Liang Disputes With The
Southern Scholars

24. Characteristics of negotiation
(1)Every negotiation involves two or more parties.
(2)The objectiveof a negotiation must be definite.
(3)Negotiation must be conducted on an equal basis.
(4)A consensusmust be built on the basis of mutual concession.
(5)Negotiation involves exchange of ideas, communication,
persuasion, compromise and suchlike.

25. Whatisbusinessnegotiation?

26. Definition of Business negotiation
Business negotiation
->a process of conferring in which the participants of
business activities communicate, discuss, and adjust
their views, settle differences and finally reach a
mutually acceptable agreement in order to close a deal
or achieve a proposed financial goal.

27. Characteristics of Business Negotiation:
(1)The objective of business negotiation is to
obtain financial interest
(2)The coreof business negotiation is price
(3)Its principle is equality and mutual benefit
(4)Items of contractshould keep strictly
accurate and rigorous

28. Definition of International Business Negotiation
International Business Negotiation
-> the business negotiation that takes place
between the interest groups from different
countries or regions.

29. Types of negotiation

30. Approaches: Integrative vs. Distributive, Contingency
•Integrative approach is opposite to distributive(also called competitive or win-
lose approach) approach.
•Integrative approach (also called a cooperative or win-win approach) →
“Everybody wins”.

31. Distributive Negotiation
•The most distributive feature is that it operates under a zero
sum game
•the gain made by one person is loss incurred by the other
person.
•Each person involved in the negotiation defines ultimate point
where the settlement will be made.
•The sellers goal is to negotiate as high a price as possible; the
Buyers intention is to negotiate as low a price as possible
•Win –Lose Situation

32. Integrative Negotiation
•Parties cooperate to achieve maximize benefits by
integrating their interests
•Both parties involved in negotiation process jointly
look at the problem, try to search for alternatives
and try to evaluate them and reach a mutually
acceptable decision or solution.
•Win-Win Situation

33. DistributiveVerses Integrative

34. Negotiationprinciples

35. Principles of business negotiation
1. Equality principle
2. Cooperation principle
3.Flexibility principle
4. Positions-subjected-to-interests principle
5. Depersonalizing principle (Separating the
people from the problem)
6. Using objective criterion

36. Strategiesand Tacticsin International businessnegotiation

37. NEGOTIATORS
They are:
- Businessmen from other countries
- Businessmen and Government agency

38. Dos and Don’tin Negotiation

39. The Dos
•Determine goals. Decide on your objectives. Know your
bottom line.
•Anticipate the desires of your opponent. Think collegially –
envision the person as your partner in the deal.
•Analyze the assets. What do both of you bring to the table?
•Evaluate options. That means for both of you.
•Stay calm, no matter what. You’ll keep the emotional
advantage. Focus on issues, not personalities.

40. The Dos
•If you have a history with the other party, analyze your
track record and precedents with the person. What
issues have impacted the two of you?
•Assess the power you bring into the discussion, and that
of the other person.
•Try to put the other person’s needs first.
•Keep in mind plan B. Know your options for a fallback
position.
•Document the deal –get it in writing immediately.

41. •Never bargain with someone using the word,
“between”.
•Don’t signal the person that you’re done
negotiating by using the phrase, “I think we’re
close.”
•Don’t get into a bidding war.
The don’ts:

42. The don’ts
•If you need time to think, don’t establish at the
beginning that you’re the final decision-maker.
•Don’t be afraid to ask what you want –be specific
about what you want and don’t want.
•Don’t negotiate with a person who doesn’t have
authority to sign off on a deal.
•Don’t do all the talking.
•Don’t ignore the person’s body language. Know the
green lights.

43. •Don’t ignore the person’s body language.
Know the green lights.
•Don’t argue, but discuss items in which there
are disagreements.
•Steer clear of form contracts.
•Don’t forget to prepare.
The don’ts:

44. A frameworkfor
International
business
negotiation
Sources: Ghauri, P. and Usunier, J-C. 2003, International Business Negotiation,

45. The negotiation process:
1. Pre-negotiation
2. Face-to-face negotiation
3. Post negotiation

48. Question for discussion?
1.Describe briefly a negotiation process.
2.Which stage is the most important in a
negotiation process?
3.What factors we need to concentrate in a
negotiation process?

49. Group assignment
1.High-context and Low-context Culture Styles
2.Key to successful email, text negotiation
3.Principled negotiation
4.Steps in international business negotiation
5.Negotiating different types of projects
6.Negotiation in different parts of the world

50. CHAPTER 2
VIS-À-VIS: INTERNATIONAL
BUSINESS NEGOTIATION
AND CROSS-CULTURAL
COMMUNICATION

51. Chapter 1: A framework for international business
negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business
negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the wolrd

52. Learning objectives
•Identify issues that may arise when negotiating
international business
•Be aware of diverse cultural differences in values and
communication styles
•Identify some of the things that managers need to do to
successfully negotiate international business in different
cultural contexts

53. Content of Chapter 2
•2.1 A Case study
•2.2 A hierarchy of problems
•2.3 Managerial Implication

54. BASICS OF CROSS-CULTURAL
COMMUNICATION

55. “Every person is a product of his or her
cultural environment”

56. Question
•What kind of cultural misunderstandings between those
business partners?

57. CASE STUDY
•Please read and sumarizethe cases:
-The Russian Kiss (Moscow)
-Marlin Fishing in Brazil
-Glimpses in an Aisatsu(Tokyo)
-The Importance of Culture (New Jersey)

59. A hierarchy of problems

60. 4 kinds of problems in international business negotiations:
(1)Language
(2)Nonverbal behaviors
(3)Values
(4)Thinking and decision-making processes.

61. (1)Language
(2)Nonverbal behaviors
(3)Values
(4)Thinking and decision-making processes.

62. High context culture vs low context
culture

64. 1 It is cold today. / Could you shut the window
please?
2 Absolutely right! / That is possible.
3 I think before I speak. / I always say what I
think.
4 I earn 6000 Euros a week. / I earn enough to
keep my family happy.
5 We will find a way. / It is all in the contract.

65. •Communications have multiple meanings
interpreted by reading the situation
•Asian and Arabic languages are among the
most high context in the world
HIGH CONTEXT

66. LOW CONTEXT
•The words provide most of the meaning
•Most northern European languages
including German, English, and the
Scandinavian languages are low context

67. LANGUAGE

70. Attention
Don’t speak into side conversations in native
languages. Why?
→ Can see it as impolite, and, quite naturally,
likely to attribute something sinister to the
content of the foreign talk — they’re
plotting or telling secrets or . . .
This is MISTAKE

71. •The verbal bargaining behaviors used by
the negotiators during the simulations
proved to be surprisingly similar across
cultures.
•Negotiations in all ten cultures studied
were comprised primarily of information-
exchange tactics questions and self-
disclosures.

72. INTERPRETERS
•Provide simultaneous translation of a foreign
language
•Require greater linguistic skills than speaking
a language or translating written documents
•Insure the accuracy and common
understanding of agreements

73. COMMUNICATION WITH
NONNATIVE SPEAKERS
•Use the most common words with most common
meanings
•Select words with few alternative meanings
•Follow rules of grammar strictly
•Speak with clear breaks between words

74. Communication with nonnative speakers,
continued
•Avoid “sports” words or words borrowed
from literature
•Avoid words that represent pictures
•Mimic the cultural flavor of nonnative
speaker’s language
•Summarize
•Test your communication success

75. (1)Language
(2)Nonverbal behaviors
(3)Values
(4)Thinking and decision-making processes.

76. NONVERBAL COMMUNICATION -
COMMUNICATING WITHOUT WORDS

77. Kinesics
•Communicating through body movements
•Facial expressions
•Body posture

78. Eye contact
•Eye contact establishes the nature of a
relationship.

79. Facial expressions
•Facial expressions are the
key characteristics of non
verbal communication. Your
facial expression can
communicate happiness,
sadness, anger or fear.

80. Posture
⚫Posture and how you carry yourself tells a lot about
you. How you walk, sit, stand or hold your head not
only indicates your current mood, but also your
personality in general.

81. Proxemics
•the branch of knowledge that deals with the
amount of space that people feel it necessary
to set between themselves and others.

82. Proxemics
•The use space to communicate
•The personal bubble of space -nine
inches to over twenty inches
•North Americans prefer more distance
than from Latin and Arab cultures

83. Personal space

84. Touch
•Basic human interaction
•In greeting -shake hands, embrace, or
kiss
•Latin European and Latin American
cultures-more touching than Germanic,
Anglo, or Scandinavian cultures

85. AVOIDING ATTRIBUTION ERRORS
•Attribution -process by which we interpret
the meaning and intent of spoken words or
nonverbal exchanges
•Attribution errors

86. PRACTICAL ISSUES IN CROSS-CULTURAL
VERBAL COMMUNICATION

87. (1)Language
(2)Nonverbal behaviors
(3)Values
(4)Thinking and decision-making processes.

88. VALUES
•Objectivity
•Competitiveness
•Equity
•and Punctuality

89. Objectivity
•Make decisions based upon the bottom line,
on cold, hard facts.
•We don’t play favorites.
•Economics and performance count,
not people.
➔Business is business.

90. Objectivity
•But nepotism is high in Chinese or Hispanic
cultures.
•Mexico, Spain, Philippines,… are the same

91. Competitiveness & Equity
•That is mention the competitiveness and the
fairness between the two sides (seller and
buyer) when negotiating

92. Competitiveness & Equity
•The implications of almost experimental
economics are completely consistent with our
own field work, the comments of other
authors, and the adage that in Japan the
buyer is “kinger”.
•.

93. •By nature, Americans have little
understanding of the Japanese practice of
giving complete deference to the needs
and wishes of buyers. That’s not the way
things work in America
•Win –win game

94. Punctuality
•“Just make them wait”
•Strategic reversal of the time pressure

95. (1)Language
(2)Nonverbal behaviors
(3)Values
(4)Thinking and decision-making processes.

96. THINKING & MAKE DECISIONS
•Westerners
•Asian

97. Westerners
•When faced with a complex negotiation task,
most Westerners divide the large task up into
a series of smaller tasks.
•Issues such as prices, delivery, warranty and
service contracts may be settled one issue at a
time, with the final agreement being the sum
of the sequence of smaller agreements.

98. Asian
•All the issues can be discussed at once, in no
apparent order
•Concessions are made on all issues at the end
of the discussion

99. QUESTION
•How National Culture, Organizational
Culture and Personality Impact Buyer-
Seller Interactions?

100. National Culture
•Culturehasaprofoundimpactonhowpeople
inthemarketplaceperceiveandbehave.
•Thelevelofaggregationofthisconstruct,
however,hasalwaysbeen
somewhatproblematic.
•Intherealmofinternationalmarketing,
culturehasbeentypicallyvisualizedatthe
nationallevel.

101. Cultural Value Dimensions
Values
Are a society’s ideas
about what is good or
bad, right or wrong
Determine how
individuals will probably
respond in any given
circumstances
Help managers anticipate
likely cultural effects
Allow for contingency
management
Can vary across
subcultures
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102. GLOBE Research Project Dimensions
•Low: Sweden, New Zealand,
Switzerland
•High: Greece, Austria,
Germany
Assertiveness
•Low: Russia, Argentina,
Greece
•High: New Zealand, Honk
Kong, Singapore
Performance
Orientation
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103. GLOBE Research Project Dimensions
•Low: Russia, Argentina,
Poland
•High: Netherlands,
Switzerland, Singapore
Future
Orientation
•Low: Germany, Spain,
France
•High: Malaysia, Ireland,
Philippines
Humane
Orientation
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104. Cultural Cluster
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105. Hofstede’s Value Dimensions
Power Distance
The level of acceptance by a
society of the unequal
distribution of power in
institutions
Uncertainty Avoidance
The extent to which people in
a society feel threatened by
ambiguous situations
Individualism
The tendency of people to
look after themselves and
their immediate families only
and to neglect the needs of
society
Collectivism
The desire for tight social
frameworks, emotional
dependence on belonging to
“the organization,” and a strong
belief in group decisions
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106. Hofstede's Six Dimensions of Culture
•Power Distance Index (high versus low).
•Individualism Versus Collectivism.
•Masculinity Versus Femininity.
•Uncertainty Avoidance Index (high versus low).
•Long-Versus Short-Term Orientation.
•Indulgence Versus Restraint.

107. 1. Power Distance Index (PDI)
•This refers to the degree of inequality that exists –and is
accepted –between people with and without power.

108. 1. Power Distance Index (PDI)

109. 2. Individualism Versus Collectivism (IDV)
•This refers to the strength of the ties that
people have to others within their community.
•A high IDV score indicates weak interpersonal
connection among those who are not part of a
core "family." Here, people take less
responsibility for others' actions and
outcomes.

110. 2. Individualism Versus Collectivism (IDV)

111. 3. Masculinity Versus Femininity (MAS)
•This refers to the distribution of roles
between men and women.

112. 3. Masculinity Versus Femininity (MAS)

113. 4. Uncertainty Avoidance Index (UAI)
•This dimension describes how well
people can cope with anxiety.

114. 4. Uncertainty Avoidance Index (UAI)

115. 5. Long-Versus Short-Term Orientation
•This dimension was originally described as
"Pragmatic Versus Normative (PRA)." It refers to
the time horizon people in a society display.
Countries with a long-term orientation tend to be
pragmatic, modest, and more thrifty. In short-
term oriented countries, people tend to place
more emphasis on principles, consistency and
truth, and are typically religious and nationalistic.

116. 5. Long-Versus Short-Term Orientation

117. 6. Indulgence Versus Restraint(IVR)
•Hofstede's sixth dimension, discovered and
described together with Michael Minkov, is also
relatively new, and is therefore accompanied
by less data.

118. Hofstede’s Value Dimensions
Power Distance
MAL ARA MEX IND FRA ITA JPN SPA ARG US GER UK DEN ISR AUT
Uncertainty Avoidance
GRE JPN FRA KOR ARA GER AUL CAN US UK IND DEN SIN
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High Orientation Toward Authority
Low
High Desire for Stability
Low

119. Hofstede’s Value Dimensions
Individualism
AUL US UK CAN FRA GER SPA JPN MEX ITA KOR SIN
Masculinity
JPN MEX GER UK US ARA FRA KOR POR CHC DEN SWE
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Individualism
Collectivism
Assertive/Materialistic Relational

120. Hofstede’s Value Dimensions
Long-term/Short-term Orientation
CHI HK JPN TAI VIE BRA IND US CAN UK E/W AFR
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High
Low

122. Trompenaar’s Dimensions
Obligation
High Low
US GER SWE UK ITAFRA JPN SPA SIN
Emotional Orientation in Relationship
High Low
JPNUK GER SWEUSA FRA SPA ITA CHI
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Universalistic Particularistic
Neutral Affective

123. Trompenaar’s Dimensions
Privacy in Relationship
High Low
UK US FRA GERITA JPN SWE SPA CHI
Source of Power and Status
High Low
US UK SWE GER FRA ITA SPA JPN CHI
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124. Critical Operational Value Differences
•Time—differences in temporal values
•Change—control and pace of change
•Material Factors—physical goods and status symbols versus
aesthetics and the spiritual realism
•Individualism—“me/I” versus “we”
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125. The Internet and Culture
•Over 70 percent of Korean homes have high-speed Internet
service.
•Sweden has refused to allow airline passenger information
(e.g., meal preferences) to be transmitted to the United
States.
•About 75 percent of the world’s Internet market lives outside
the United States.
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126. Comparative Management in Focus
Japan
•“Wa”—peace and harmony
•A mix of authoritarian and
humanism in the workplace
•Emphasis on participative
management, consensus, and
duty
•Open expression and conflict
discouraged
Germany
•Preference for rules and
order, privacy
•Dislike of inefficiency and
tardiness
•Assertive, but not
aggressive
•Organizations are
centralized but still favor
consensus decision making
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127. Comparative Management in Focus
South Korea
•Respect for family, authority,
formality, class
•Are demonstrative, friendly,
aggressive, hard-working
•Connections vital for business;
most contracts are oral
•Honest criticism is rare
Latin America
•Not homogenous, but
common similarities
•“Being-oriented”
compared with
“doing-oriented”
•Work and private lives
are more closely
integrated
•Very important to
maintain harmony
and save face
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128. Developing Cultural Profiles
Managers can gather
considerable information on
cultural variables from
current research, personal
observation, and discussion
with people.
Managers can develop
cultural profiles of various
countries.
Managers can use these
profiles to anticipate drastic
differences that may be
encountered in a given
country.
It is difficult to pull together
descriptive cultural profiles
in other countries unless one
has lived there and been
intricately involved with
those people.
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129. Developing Management Styles and Ways of Doing Business: Saudi Arabia
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Tribalism
Paternalism,
nepotism
Close
friendships
Person-orientation,
Theory Y
Honor,
shame
Conflict avoidance,
positive reinforcement

130. Developing Management Styles and Ways of Doing Business:
Chinese Family Business
•Small, family businesses predominate
•“Guanxi” connections
•People are put ahead of business
•Organizations do not include “middle
management”
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131. How would the Power Distance dimension apply
within a given organization?
•Employees are hoping to rise to higher levels and
increase their power within the company.
•Employees accept that their supervisor and other
company officials have much more power than they
do
•Employees prefer to gain power within the
company individually rather than as a group.
•Employees are uncomfortable with the fact that
they don't have enough power.

132. Why is Hofstede's cultural dimensions theory relevant
to the business market today?
•Because it helps the market rid itself of
cultural prejudices.
•Because working effectively with others is
not possible without cultural norms.
•Because businesses must be effective in
the global market.
•Because different cultures must be equally
represented within any organization.

133. Organizational Culture
•1. External vs. internal emphasis: Emphasis on
satifyingcustomers, clients or whatever as
opposed to focusing on internal organizational
activities such as committee meetings and
reports.
•2. Task vs. social focus: Focus on organizational
“work” versus concern for personal and social
needs of people.
•3. Society vs. risk: Relative openessto adopting
new and different programs
•and procedures

134. Organizational Culture
•4. Conformity vs. individuality: Extent to which
organizations tolerate orencouragetheir members to be
distinctive and idiosyncratic in work and social life.
•5. Individual vs. group rewards: Whether rewards are
distributed to all members of a work unit or in repsonseto
individual contributions.
•6. Individual vs. collective decision-making: Whether
decision-making reflects the inputs of one individual or
the entire group.
•7. Centralized vs. decentralized decision-making: Whether
decisions are made by those in key positions or by those
affected by the decision.

135. Organizational Culture
•8. Ad hockeryvs. planning: Whether ad-hoc
response or elaborate plans are created in the
face of changing circumstances.
•9. Stability vs. innovation: Relative tendency to
search for novel and distinctive goods, services,
and procedures.
•10. Cooperation vs. competition: Whether peers
are considered as competitors for scarce
resources or trusted colleagues in a common
cause.

136. Organizational Culture
•11. Basis for commitment: Whether financial rewards, prestige, interesting/
challenging work, opportunity for self-fulfillment/expression or satisfying
personal relations constitutes the individual’s involvement with the
company.
•12. Simple vs. complex organization: Refers to tendency of organizations to
develop elaborate procedures and structures.
•13. Informal vs. formalized procedures: Whether extensive, detailed rules
and procedures and elaborate forms and written documents are needed to
justify actions.
•14. High vs. low loyalty: Extent to which members place their organization
above competing groups such as family and professional colleagues.
•15. Ignorance vs. knowledge of organizational expectations: Degree to which
individual members know what they are expected to do and how their
efforts contribute to the accomplishment of organizational objectives.

137. Personality Factors
•The most popular way to depict personality
is the Myers-Briggs Type Indicator (MBTI)

138. Personality factors MBTI
"Perception involves all the ways of becoming aware of
things, people, happenings, or ideas. Judgment involves
all the ways of coming to conclusions about what has
been perceived. If people differ systematically in what
they perceive and in how they reach conclusions, then it
is only reasonable for them to differ correspondingly in
their interests, reactions, values, motivations, and skills."

140. Personality types

142. Exercise
Identify your personality factors and explain.

144. •S to N: That's Not Data!
•Sstands forSensing: An S gathers facts
and data
Nrefers toiNtuition: An N focuses on
intuition and the big picture

145. Thinking
•Thinkers decide based primarily on logic, and
when they do so, they consider a decision to be
made. They tend to see the world in black and
white and dislike fuzziness.
•Perhaps because people are so variable, they
focus on tangible things, seeking truth and use
of clear rules.
•At work, they are task-oriented, seek to create
clear value. Interacting with them tends to brief
and business-like.
•They may be seen as cold and heartless by
Feelers.
Feeling
•Feelers decide based primarily through social
considerations, listening to their heart and
considering the feelings of others.
•They see life as a human existence and material
things as being subservient to this. They value
harmony and use tact in their interactions with
others.
•At work, they are sociable and people-oriented
and make many decisions based on values
(more than value).
•They may be seen as unreliable and emotional
by Thinkers.

146. With thinkers:
•Be brief and concise.
•Be logical; don’t ramble with no apparent purpose.
•Be intellectually critical and objective.
•Be calm and reasonable.
•Don’t assume that feelings are unimportant; they may
have a different value.
•Present feelings and emotions as additional facts to be
weighed in a decision.

147. With feelers:
•Introduce yourself and get to know the person; full
acceptance may take a considerable amount of time.
•Be personable and friendly.
•Demonstrate empathy by showing areas of agreement first.
•Show how the idea will affect people and what people’s
reaction would be.
•Be aware that how you communicate is as important as
what you’re communicating.
•Let them talk about personal impact; accept decisions that
may not be based on facts.

148. Judging (J)
•Planned and organised.
•Feel supported by structure,
guidelines and standardised
methods.
•Dislike surprises and last
minute changes.
•May gain satisfaction from
ticking off completed tasks
on a list.

149. Perceiving (P)
•No plan
•Flexible and adaptable.
•Enjoy freedom and variety.
•Enjoy surprises and last
minute changes.

152. Managerial Implications

153. Managerial Implications
•International business negotiations have
much potential pitfalls
•But an appreciation of cultural differences can
lead to even better international commercial
transactions

154. •International business negotiations need the
large number of skillful international
negotiators.
•These are the managers who have lived in
foreign countries and speak foreign languages.
•If they live in some different countries, they
can understand some different cultures.

155. Choosing National Markets
•National culture can be used as an important
entry criterion along with such traditional
criteria as:
-population
-per capita income
-the existence of infrastructure,
-etc….
with which to evaluate the attractiveness of
various national markets

156. •Thus, if a firm has to choose between two
markets with comparable levels of market
potential, economic well-being, competition,
and infrastructural facilities, it should first
choose one with the smaller “cultural
•distance”.

157. Fine-Tuning Organizational Culture
•If a firm is operating in a group of culturally homogeneous
countries which have a national culture different from its
own (such as a British trading company in West Africa), it
can consciously design its organizational culture to better
reflect the national culture of its markets.
•This will enhance the skills of the firm’s boundary personnel
in dealing with buyers who share a different national
culture.
•Coca Cola in Japan has adopted the collective orientation of
Japanese society

158. Recruiting and Training of People
•A cosmopolitan salesperson needs to possess a “flexible
personality” (Simurda, 1988).
•It has been suggested that the key attributes desired in a
salesperson in a cross-cultural selling situation include:
-openness and sensitivity to others,
-cultural appreciation
-awareness, ability to relate across cultures
-awareness of one’s own culturally derived values
-and a certain degree of resilience to bounce back after
setbacks (Noer 1975)

159. The selling sequence
•7 steps, read textbook, P.91

160. CONCLUSIONS
•Successful negotiators:
–Have good language
–Build cross-cultural communication skills
–Understand nonverbal communication
–Avoid attribution errors

161. Case study
•Discuss the situation of Ford how they
improved the negotiation capacity of sales
staff uses to develop competence in
employees who interact with the Japanese to
increase the car number export to Japan.

162. Questions for Review
•1. What are the problems in international business
negotiation?
•2. What psychological and cultural factors can affect
international business negotiation?
•3. Why can personal characteristics influence international
business negotiations?
•4. What are the management implications of studying the
influence of culture and individual personality on
international business negotiations?

163. Chapter 3
Principled Negotiation

164. Chapter 1: A framework for international business
negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the world

165. Learning objectives
•Explain and implement certain basic
negotiation principles
•Aware of and able to identify BATNA and
boundaries in each international business
negotiation
•Identify Fujitsu negotiations

166. Content of Chapter 3
3.1. The problems
3.2. The method
3.3. BATNA
3.4. Negotiation Fujitsu

167. THE PROBLEMS

168. Distributive/ Integrative negotiation
•Distributive negotiation: A negotiation in which
the parties compete over the distribution of a fix
sum of value. Win-lose situation
•Integrative negotiation: A negotiation in which
the parties cooperate to achieve the maximum
benefits by integrating their interests into an
agreement. These deals are about creating value
and claiming it. Win-win situation.

169. Positional/Principled negotiation
•Positional negotiation
•Principled negotiationseeks a winning
outcome for parties by bargaining over the
interests of both parties, not on the positions.

170. Positional Bargaining
Principled Negotiation
Soft Hard
ParticipantsFriends Adversaries Problem-solvers
RelationshipSoft on the people and
problem
Hard on the peopleand
problem
Soft on the people,
Hardon the problem
Position Changes position easilyDug into position Focuson interests,
not positions
Resolution Search for answer that they
will accept
Search for answer thatyou
will accept
Inventoptions for mutual gain
Criteria Yield topressure Apply pressure Insist on using objective criteria.
Yield to principle, not pressure
(1)Substance/
(2)Relationship 2 1 1 2
1
2

171. Vietnam white rice
long grain, 5% broken
9,000 MT
USD375/MT
FOB Cat Lai port,
Incoterms 2010
Seller
Buyer
Vietnam white rice
long grain, 5% broken
8,000 MT
USD365/MT
DDP Rottedam port,
Incoterms 2010

172. Distributive negotiation –An example

173. •People: Separate the people from the problem
•Interests: Focus on interests, not positions
•Options: Generate a variety of possibilities
before deciding what to do
•Criteria: Insist that the result be based on
some objective standard.

174. THE METHOD
•Separate the PEOPLE from the Problem
•Focus on INTERESTS, not Positions
•Invent OPTIONS for Mutual Gain
•Insist on Using Objective CRITERIA

175. Don’t negotiate over positions
•Unwise agreements
•Inefficient
•Endangers a long term
relationship
•Being a nice person is no
help
•Focus on interests and
negotiate in a principled way.

176. Separate peoplefrom problem
•Negotiators are people
first
•Two basic interests: the
substance and the
relationship
•Positional bargaining
puts the two in conflict
•Deal with relationship as
a separate consideration

177. Manage your perceptions
•Put yourself in their shoes
•Don’t deduce their motives from your
fears
•Don’t blame them for your problem
•Discuss each perceptions
•Give them a stake by getting them to
participate
•Make your proposals consistent with
their values

178. Control your emotions
•Be aware and identify your own
emotions
•Same for them
•Talk about emotions explicitly
•Allow them to vent interfering
emotions
–Anger and fear, common
•Do not react to emotional outbursts
•Use symbolic gestures

179. Concentrate on communication
•Listen actively and
acknowledge
•Speak to be understood
•Speak about you, not them
•Speak for a purpose

180. Start before problems arise
•Build a working relationship immediately
•Focus on the problem, not them

181. Focus on interestsnot positions
•Reconcile interests
•Identify their interests
•Talk openly about interests

182. Reconcile Interests
•Interests define the
problem
•Behind positions lie
interests
•Interest categories
–Compatible
–Shared
–Conflicting

183. Identify their interests
•Ask “Why?”
•Ask “Why not?”
–What are their other choices?
•Multiple interests
–Recall our earlier class
discussions of this
•Interests: the power of basic
human needs
•Making lists

184. Talk openly about interests
•Show concern for their interests
•Put their problem ahead of your
answer
•Make your interests come alive
•Look ahead, not behind
•Be concrete but flexible
•Hard on problem, soft on
people

185. Invent optionsfor mutual gain
•Diagnosing the problem
•Solving the problem

186. Diagnosis before prescription
•Be the Problem Doctor:
–Problems of premature solutions
–Searching for the single answer
–Fixed pie? Are you sure?
–Solving their problem is my
problem.

187. Prescription methods
•Separate inventing
from deciding
•Broaden your options
•Look for mutual gains
•Make their decision
easy

188. Separate inventing from deciding
–Before brainstorming
–During brainstorming
–After brainstorming
–Helping them brainstorm
Invent Options First Decide which is best
1.
2.
3.
4.
5.

189. Broaden your options
•Look for help from a variety of experts
•Invent agreements of different strengths
•Change the scope of a proposed agreement
•Multiply options: the Circle Chart exercise
(next)

190. Circle Chart for Inventing Options
Step I: Problem
What’s wrong?
Symptoms?
Reality vs Desired Future
Step II: Analysis
Sort symptoms into groups
Possible causes
What’s missing
Barriers to solving
Step III: Approaches
Possible strategies
Theoretical fixes
Broad ideas about what to do
Step IV: Action Ideas
What specific steps
Goals
Verify

191. Look for mutual gains
•Identify shared interests
•Merge differing interests
–What is the difference?
–Different beliefs?
–What is their value of time?
–Different forecasts about the
future?
–Risk aversion differences?
•What are their preferences?

192. Make their decision easy
•Whose shoes?
•What decision?
•When threatening is not
enough

193. Insist on using objective criteria
•Deciding based on strength of will
•Case for objective criteria
•Developing objective criteria
•Negotiating with objective criteria
•Joint search for objective criteria
•Reason and be open to reason
•Never yield to pressure

194. Deciding based on strength of will
•Too costly
–Substance
–Relationships
•Someone has to back
down
–No one wants to do
that, loss of face
–Leads to irrational
choices

195. Case for objective criteria
•Principled negotiations
–Smarter
•Finding data, information that help inform a better
decisions for both parties
–Efficient
•No time wasted in testing each other’s will
–Less hostility
•No need to get angry if we looking for objective data
–Protects the relationship
•Mutual hunt for an objective basis

196. Developing objective criteria
Fair standards
–Market value
–Precedent
–Scientific judgments
–Professional standards
–Efficiency
–Costs
–Court decisions
–Equal treatment
Fair procedures
–Coin flips
–Cut and choose
–Veil of ignorance choices –
not knowing your part
–Taking turns
–Drawing lots
–Letting a third party decide
–Choosing the last best offer
Criteria need to be independent of each side’s will
Legitimate and practical

197. Negotiating with objective criteria
•Frame each issue as the joint search for objective measures of
value, facts, etc.
•Reason and be open to reason as to what to accept as
appropriate standards
•Never yield to pressure, only to principle.

198. The joint search for objective criteria
•What is fair to both sides?
•What is your theory about
what is fair?
•Agree first on principles.

199. Reason and be open to reason
•Keep an open mind
•Possibility of multiple criteria of fairness
–What objective basis is there to decide?
–Splitting the difference or compromising

200. Never yield to pressure
•Pressure to yield takes many
forms
–Bribes
–Threats
–Stubbornness
•Question the process, look for
objective criteria
•This is why you have a
BATNA!!!!

201. Yes, but . . .
•What if they
•are more powerful?
•won’t negotiate?
•won’t negotiate fairly?

202. What if they are more powerful?
•Protect yourself from making a bad decision.
–The problem of being too accommodating
–The problem of being too inflexible
–Know your BATNA: all offers are measured against it.
•Make the most of your assets
–Better BATNA = More Power
–Develop your assets into a BATNA
•Invent a list of actions you could take if the
negotiation fails
•Improve the ideas and convert to practical
alternatives
•Tentatively select the alternative that seems best

203. What if they won’t negotiate?
•You can concentrate on
interest / merits not
positions.
–Everything we have
looked at so far
•If they don’t respond,
focus on what they
might do. Negotiation
jujitsu.

204. BATNA

205. Set your limits
•Set your upper and lower limits

206. Set your limits
Bargaining zone
Highest (most that I want)
Lowest (less I will accept)

207. Set your limits -Seller
Bargaining zone
$1600
$1300
WIN!!

208. Set your limits -Buyer
Bargaining zone
$1500
$1150
WIN!!

209. Set up your BATNA
1.develop a list of actions;
2.improve some of the more promising ideas;
3.select, tentatively, the one option that seems
best.

210. What is your BATNA?
WHAT WILL YOU DO IF YOU CAN’T GET
THE MINIMUM THAT YOU WANT?
Best Alternative To a Negotiated
Agreement

211. What is your BATNA?
Bargaining zone
Highest (most that I want)
Lowest (less I will accept)

212. Bargaining zone
ZOPA
Buyer’s
lowest target
Buyer’s
highest
target
Seller’s
lowest target
Seller’s
highest
target

213. NEGOTIATION FUJITSU
•The typical attack has three parts;
–Aggressively asserting their own position
–Attack your ideas!
–Attack you!
•You should
–Look behind attack for motivating interests.
–Treat their position as one possible option.
–Don’tdefend your ideas
•Invite criticism and advice
–Re-frame attacks on you as attacks on the
problem
–Use more questions, make fewer statements

214. What if they won’t negotiate fairly?
–Deliberate deception
•Unless you have good reason to
trust someone, don’t trust them.
•Check facts, assertions, etc.
–Unclear authority
•Making you think they have
power to decide
•Asking you to concede but
claiming they don’t have power
•Before you begin, ask how much
authority they have to make the
decisions.
–Questionable intentions of the
other side
•Make your doubts public
•Negotiate assurances in the
agreement
–Creating purposely stressful
situations
•Acknowledge the stressors
and ask for some adjustments
–Personal attacks
•Recognize it and call it to their
attention
–Threats
•Recognize and call attention
to it. Treat as pressure.

216. Case synopsis
•Two large-scale, complex business entities are profiled. Students
are asked to enter into and reach contractual agreement for an
international business negotiation. The negotiation involves the
transportation of vehicles manufactured in Japan to Hawaii,
Alaska, and the United States west coast. The specific elements
of the negotiated contract include the number of automobiles
and thus vessels to be used under the agreement as well as the
identification of the destination ports.

217. •Also,thelogisticalsupportprovidedbytheUnited
Statestransportationenterprisewillbenegotiated.
Finally,theshippingcostswillbedetermined.
Studentsarerequiredtoformulatetheirnegotiation
strategiesbaseduponthefactspresentedinthe
caseandthenationalculturalconsiderationsthat
influencethebusinessdecisionmakingprocessin
JapanandtheUnitedStates.

218. The case deliverables
•a research paper presenting the influence of
national cultural considerations in the
business decision making process;
•a written contract, signed by all
representatives, presenting the agreements
reached by the two business entities during
the two negotiation sessions.

219. The companies
•This case study presents the operations of Nippon
Automobile Corporation (NAC),a Japanese vehicle
manufacturer, and US Shipping Lines, Inc. (USSL),
a United States transportation enterprise. These
two business entities have entered into
negotiations to discuss the possibility of
transporting vehicles from Japan to Hawaii,
Alaska and the west coast of the United States.

220. The negotiations to date
•The first round of negotiations took place in an
undisclosed major city in Europe. This negotiation
round was kept out of the public eye so as not to
arouse interest on the part of either NAC’s or USSL’s
competitors. NAC representatives at the first round of
negotiations included:
•Team Leader: Senior Vice President, Product Placement
•Team Members: Assistant Vice President, World-wide
Logistics; Director, North American Markets; Director,
Vehicle Engineering; Senior Engineer, Vehicle
Engineering

221. NAC representatives
•Team Leader: Senior Vice President, Product
Placement
•Team Members: Assistant Vice President,
World-wide logistics; Director, North American
Market; Director, Vehicle Engineering; Senior
Engineer, Vehicle Engineering

222. •The Senior Vice President reports directly to the President who, in turn, reports
directly to the CEO who is also the Chairman of the Board of Directors. At the
present time, the Assistant Vice President has responsibility for developing the
firm’s global strategy. The Director, North American Markets reports to the
Assistant Vice President and has specific responsibility to develop the United
States vehicle market for NAC. The Director, Vehicle Engineering report to the
Vice President for Vehicle Engineering and has been brief thoroughly and is
very knowledgeable about US consumer preferences with respect to the
vehicles that they consider for purchase decisions. The Senior Engineer is the
technical adviser to the Director for Vehicle Engineering. All members of the
negotiation team are fluent in English based on their graduate education in US
educational institutions. They have been selected for their positions and the
negotiation team, in part, for their English language skills. This, in itself, is most
unusual but represents NAC’s commitment to be a global leader in the industry

223. USSL representatives
•Team Leader: Senior Vice President, Ocean
Shipping
•Team Members: Assistant Vice President,
Pacific Shipping; Director, West Coast Port
Facilities; Director, International Sales;
Director, Finance; Corporate Lawyer.

224. •The Senior Vice President reports directly to the President of the Ocean Shipping
subsidiary who, in turn, reports directly to the CEO of USSL who is also the Chairman of
the Board of Directors. The Assistant Vice President has responsibility for developing
the Pacific Maritime transportation strategy. The Director, West Coast Facilities reports
to the Assistant Vice President, World-wide Port Facilities. The Director, Finance
reports to the Vice President, Finance of the Ocean Shipping subsidiary and has earned
a bachelor’s degree in accounting and a MBA specializing in finance. Additionally, the
Director, Finance, a certified public accountant, is rumored to be in consideration for
the Vice President, Finance position when the incumbent retires next year. The
Corporate Lawyer has slightly more than twenty years experience as in-house counsel
for USSL. All members of the negotiation team have neither traveled to Japan nor done
business with Japanese companies previously. They are not conversant in the Japanese
language. They have been selected for their position and the negotiation team, in part,
based on their years of service working for USSL and its subsidiaries and
recommendations form their immediate supervisors.

225. Meeting minute

226. The second round of negotiation

227. Meeting room arrangement

228. QUESTIONS FOR REVIEW
1.What are distributive and
integrative negotiation?
2.What are positional and principled
negotiation?
3.How is the method of principled
negotiation?
4.Can you explain about BATNA?

229. Chapter 4
PROCESS IN INTERNATIONAL
BUSINESS NEGOTIATION

230. Chapter 1: A framework for international business
negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the world

231. Learning objectives
•Understand the stages and steps in the
negotiation process
•Able to prepare in advance for international
business negotiations
•Able to negotiate directly in international
business
•Know and do the necessary tasks after
negotiating in international business

232. CONTENT OF CHAPTER 4
4.1. Pre-negotiation
4.2. Face to face negotiation
4.3. Post negotiation

233. •The process of international business
negotiation presented here is divided into
three different stages:
-Pre-negotiation
-Face to face
-Post negotiation

234. The negotiation process
1. Pre-negotiation
2. Face-to-face negotiation
3. Post negotiation

235. The
Negotiation
Process
Sources: Ghauri, P. and Usunier, J-C. 2003, International Business Negotiation,

236. Pre-negotiation

237. Pre-negotiation

238. Pre-negotiation
•Set your objectives (precisely what you want
to achieve)
•Seek our precedence
•Create series of tradables
•Set your limits
•Collect information

239. Pre-negotiation
•Set your objectives (precisely what you want
to achieve)
•Seek our precedence
•Create series of tradables
•Set your limits
•Collect information

240. Set your objectives
Setting
objectives
Top objectives
Target objectives
Bottom objectives

241. Pre-negotiation
•Set your objectives (precisely what you want
to achieve)
•Seek our precedence
•Create series of tradables
•Set your limits
•Collect information

242. Seek our precedence
•Rice price

243. Pre-negotiation
•Set your objectives (precisely what you want
to achieve)
•Seek our precedence
•Create series of tradables
•Set your limits
•Collect information

244. Create series of tradables
Specification
Money
Time

245. Pre-negotiation
•Set your objectives (precisely what you want
to achieve)
•Seek our precedence
•Create series of tradables
•Set your limits
•Collect information

246. Set your limits
•Set your upper and lower limits

247. Set up your BATNA
1.develop a list of actions;
2.improve some of the more promising ideas;
3.select, tentatively, the one option that seems
best.

248. What if?
•Develop a series of “What if” scenarios?

249. Developing “what if” scenarios?
What if? Our response would be?
They want the services for $30?
They will compare our price to our
competitor

250. Pre-negotiation
•Set your objectives (precisely what you want
to achieve)
•Seek our precedence
•Create series of tradables
•Set your limits
•Collect information

251. Collect information
•The parties gather as much relevant
information as possible on each other
•Information of the operating environment: the
involvement of other third parties,
influencers, competitors and the
infrastructure, exchange rate,…

252. Pre-negotiation
•Trust and confidence can establish by inviting
individuals from the other side to visit your
office/country

253. Pre-negotiation
The pre-negotiation stage is often more
important than the formal negotiations in an
international business relationship.

254. Face-to-Face Negotiation

255. Face-to-Face Negotiation
•They compare the alternatives available,
make check lists and assign arguments for
and against these alternatives.
•They also decide on possible points of
concession and their extent.

256. Face-to-Face Negotiation
•Parties try to foresee and take precautions
against predictable events.
•Ex: Remittance of funds, taxes and import
duties and work permits
•Have some options, some solutions,

257. Face-to-Face Negotiation
•The parties should evaluate the alternatives
presented by the other party and select
those.
•The best way is to determine criteria for
judging the alternatives and then rank order
each alternative.

258. Guidelines for a successful negotiation session
•Host welcome;
•Agenda;
•Eye contact or lack of eye contact;
•Interruption;
•Silent periods;
•Listening skills;
•Patience;
•Understanding cultural differences;
•Building relationship;
•Business cards;
•Familiarity issues;
•Gift giving;

259. Guidelines for a successful negotiation session (cont)
•Gift giving;
•Age;
•Gender;
•Introductions;
•Small talk prior to business discussion;
•Assigning a company representative to interact directly with an
opposing company representative;
•Written agreement after the first negotiation session;
•Sequential attention to issues and resultant decisions vs all
issue presented then decisions made;
•Opening comment
•Closing statements; and
•Next host’s formal invitation.

260. Meeting room arrangement

261. Post negotiation

262. POST NEGOTIATION
•At this stage, all the terms have been agreed
upon.
•The contract is being drawn up and is ready to
be signed: Read the contract carefully
•Writing the contract and the language used can
be a negotiation process.
•Discussion should be summarized after
negotiation.

263. Another approach: 6 STEPS in 3 negotiation process

264. STEP 1: PREPARATION
STEP 2: BUILDING THE
RELATIONSHIP
STEP 3: EXCHANGING
INFORMATION/FIRST OFFER
STEP 5: CONCESSIONS
STEP 6: AGREEMENT
STEP 4: PERSUASION

265. PRE -NEGOTIATION
Includes 3 steps:
•Step 1: Preparation
•Step 2: Building the relationship
•Step 3: Exchanging information/first
offer

266. STEP 1: PREPARATION
•Is the negotiation possible?
•Know what your company wants
•Know the other side
•Send the proper team
•Agenda
•Prepare for a long negotiation
•Environment
•Strategy

267. STEP 2: BUILDING THE RELATIONSHIP
No focus on business
Partners get to know each other
Social and interpersonal exchange
Duration and importance vary by
culture

268. STEP 3: EXCHANGING INFORMATION AND THE FIRST
OFFER
•Task-related information is exchanged
•First offer

269. Raw cashew nut
1,000 MT
USD 1,950/MT
CIF Dar Es Salam port,
Incoterms 2010
BuyerSeller
Raw cashew nut
1,200 MT
USD 1,900/MT
FOB Cat Lai port,
Incoterms 2010

270. INTERNATIONAL NEGOTIATION
•More complex than domestic negotiations
•Differences in national cultures and differences
in political, legal, and economic systems often
separate potential business partners

271. FACE –TO-FACE NEGOTIATION
Includes 2 steps:
Step 4: Persuasion
Step 5: Consessions

272. STEP 4: PERSUASION
•Heart of the negotiation process
•Attempting to get other side to agree to a
position
•Numerous tactics used

273. VERBAL AND NONVERBAL NEGOTIATION TACTICS
•Promise
•Threat
•Recommendation
•Warning
•Reward
•Punishment
•Normative appeal

274. Negotiation Tactics, Continued
•Commitment
•Self disclosure
•Question
•Command
•No
•Interrupting

275. “DIRTY TRICKS” IN INTERNATIONAL NEGOTIATIONS
Dirty tricks are negotiation tactics that
pressure opponents to accept unfair or
undesirable agreements or concessions

276. PLOYS/DIRTY TRICKS -POSSIBLE RESPONSES
•Deliberate deception -point out what is
happening
•Stalling -do not reveal when you plan to
leave
•Escalating authority -clarify decision
making authority

277. Ploys/Dirty Tricks, Continued
•Good guy, bad buy routine -do not make any
concessions
•You are wealthy and we are poor -ignore the
ploy
•Old friends -keep a psychological distance

278. STEPS 5: CONCESSIONS
•An open mind
•Discussing both conflicting issues and those of
common interest.
•An initial discussion on items of common
interest can create an atmosphere of
cooperation between parties.
•The choice of strategy depends upon the
customer or supplier
•Concession making: requires that each side
relax some of its demands

279. STYLES OF CONCESSION
•Sequential approach
–Each side reciprocates concessions
•Holistic approach
–Concession making begins after all
issues are discussed

280. BASIC NEGOTIATION STRATEGIES
Competitive
◦The negotiation as a win-lose game
Problem solving
◦Search for possible win-win situations

281. COMPETITIVE OR PROBLEM SOLVING
INTERNATIONAL NEGOTIATION
•Cultural norms and values may predispose
some negotiators to one approach
•Most experts recommend a problem solving
negotiation strategy

282. THE SUCCESSFUL INTERNATIONAL NEGOTIATOR: PERSONAL
CHARACTERISTICS
•Tolerance of ambiguous situations
•Flexibility and creativity
•Humor
•Stamina
•Empathy

283. Personal Characteristics, Continued
•Curiosity
•Bilingual

284. DIFFERENCES IN CULTURES IN KEY NEGOTIATING
PROCESSES (EXAMPLES)
•Communication styles—direct or
indirect
•Sensitivity to time—low or high

285. Cultural Differences in Key Negotiating
Processes, Continued
•Forms of agreement—specific or broad
•Team organization—a team or one leader

286. POST NEGOTIATION
•Includes 1 step: step 6

287. STEP 6: AGREEMENT
•Final agreement: The signed contract,
agreeable to all sides

288. Review questions
1.Describe briefly a negotiation process.
2.Which stage is the most important in a
negotiation process?

289. Negotiation exercises
You are negotiating terms with a supplier of a critical
component in your manufacturing process. You receive 100
units monthly. You project needing 150 units for the next 6
months and perhaps as many as 200 units ongoing after that.
You’ve been satisfied with the supplier’s quality, however
there have been two occasions where late deliveries have
forced overtime to meet customer commitments. An out of
state vendor has offered you a 20% discount for the 200 units
per month for a one year contract. Analyze the power factors,
set up your negotiation strategy, walk through a scenario with
your partners (observers).

290. Win-win negotiation strategy
#1: Make multiple offers simultaneously.
#2: Include a matching right.
#3: Try a contingent agreement.
#4: Negotiate damages upfront.
#5: Search for post-settlement settlements.

291. Negotiation exercises
You have been analyzing your cash flow for the next thirty
days and realize you will be significantly short in meeting
your financial commitments. One account you owe equals
your shortfall by itself, and the check must be mailed
tomorrow. Two other accounts combined also equal your
shortfall, and both checks need to be mailed the day after
tomorrow. You cannot afford to create a poor credit history
because of a pending loan approval with all three accounts
being critical credit references. Analyze the power factors,
set up your negotiation strategy, walk through a scenario
with your partners (observers).

292. Chapter 5
NEGOTIATION OF
DIFFERENT TYPES OF
PROJECTS

293. Chapter 1: A framework for international business
negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the world

294. Learning Objectives
•Apply the knowledge of previous chapters to
situations of negotiating specific international
business contracts
•Have good skills to negotiate international
business contracts

295. CONTENT OF CHAPTER 5
5.1. Negotiating Sales, Export
Transactions,and Agency Agreement
5.2.NegotiatingLicensingAgreements

296. Forms of international business
•Exports –Imports
•Foreign Direct Investments
•Licensing
•Franchising
•Agency
•Turnkey project
•PPP
•…

297. International Agreement
•Definition: People of different nationalities
and people from different countries often sign
business contracts.

298. Which law applies?
•This issue must be resolved according to general principles of
private international law:
•Regarding formal conditions, the law of the place where the
contract is signed applies.-
•Regarding the capacity of the parties, it is based on the law of
each party's country.
•If the contract has consequences for property rights, it is based
on the law of the place where the property is located. .
•Finally, for content issues, especially for difficulties in agreeing
on the court that will arbitrate the dispute. That is the principle
of autonomy of will

299. NEGOTIATING SALES CONTRACT/
EXPORT AGREEMENT

300. Definition:
An international contract for the sale
or export of goods is a contract for the
sale or export of goods in which the
goods being bought and sold move
across the border of a country or
territory. Borders can be geographical
territorial borders or legal borders that
do not move territorially.

301. According to the provisions of the current
Commercial Law, international purchases and
sales of goods must be carried out on the basis
of a written contract or other form with
equivalent legal value

302. Characteristics of Export Sales and
Distributorship/Agency Agreements
EXPORT SALES
AGREEMENT
DISTRIBUTORSHIP/
AGENCY
AGREEMENTS
Signed contracts
every day
thousands few
Objective profit profit in the
future
Price can be sale offrelationship

303. Characteristics of Export Sales and
Distributorship/Agency Agreements
EXPORT SALES
AGREEMENT
DISTRIBUTORSHIP/
AGENCY
AGREEMENTS
Issues to be
negotiated
contract scope, delivery,
terms of payment,
performance,
specification, service
and arbitration to simple
reduction in price or
minor revision in terms
exclusivity, extent of
territory, supplier
support, terms of
payment, commission
and commitment to
the relationship in
terms of investing in it

304. The Bargaining Framework of Sales
Contract
Setting price: Sellers will normally know their
costs and will have established a minimum
price below which they are not prepared to
go while buyers will have determined a
maximum amount over which they cannot
or will not pay.

305. Face to face
Playing the strong negotiator can be overdone. If a
negotiator is compelled to withdraw from a position of
extreme firmness in the face of an opponent’s pressure,
the loss of image will be carried over to other issues and
subsequent negotiations.
A buyer or seller has to strike a balance between firmness
and credibility. If on the other hand they have got
themselves into an attack/defend spiral, then to escape
this dilemma they have to signal a willingness to move
from initial stances they have taken up.

306. The Agenda
The negotiation agenda can itself be negotiated and
can be used to strengthen the position of one or
other of the parties.
For example, if the sellers have discovered in pre-
negotiation contact that the potential buyer puts
a premium on performance guarantees and wants
to use this leverage on performance to draw out a
better price, then they can ask to have performance
guarantees put ahead of price on the agenda and
put up strong resistance when guarantees come up
for discussion.

307. Finding the Negotiation Range
The language used at this juncture will,
certainly for Europeans and Americans, be
forthright and uncompromising.
If the other’s language is strong and simple,
there is a presumption that the commitment is
considerable. The less ambiguity there is in their
statements, the greater can the other’s
commitment be taken to be.

308. Escaping Impasse
Playing the strong negotiator can be overdone.
If a negotiator is compelled to withdraw from a position of
extreme firmness in the face of an opponent’s pressure, the loss
of image will be carried over to other issues and subsequent
negotiations.
A buyer or seller has to strike a balance between firmness and
credibility.

309. Identifying Common Ground
When movement has been initiated, the negotiators can test the
assumptions they have made concerning the commitment of the
other side to the issues on which they appear to be adamant and
can ensure that the commitment to the issues that matter most to
themselves is maintained.

310. Sales Agreements with Governments and
Government Sponsored Agencies
Despite galloping privatisation of the public sector, there will always
remain a substantial government market for suppliers. Negotiations
with government departments go through a similar process to that
described above but they are played out to a different set of rules
and assumptions.

311. Example:
Importing rubber products from Thailand is
entitled to 0% tax incentives by the government
because - Being in ASEAN - The government
negotiates to get preferential treatment

312. Negotiating international sales agreements in
the private and public sectors : reading table
10.1 in your textbook, pages 234 – 236

313. DISTRIBUTORSHIP/ AGENCY
•The relationship is more likely to be
characterisedby unequal rather than by equal
power.
•The parties are committed to a cooperative
arrangement which takes the form of fulfilling a
negotiated role in the channel.
•The arrangement is regulated by the
distributorship agreement.

314. DISTRIBUTORSHIP/ AGENCY AGREEMENTS
•Concern: 1. the supplier’s target; 2. the
commission
•It exists either on a voluntary basis or as a
result of conflict resolution
•Agency agreements similarly depend on
relationships

315. DISTRIBUTORSHIP/ AGENCY AGREEMENTS
The agent has powerThe suppliers has power
Where alternative
intermediaries are in short
supply
A supplier’s or principal’s
hand will be strengthened
if his product is covered by
patent, trademark or
copyright.
Distributor or agent has a
special relationship with
key customers
High commission or
rewards

316. DISTRIBUTORSHIP/ AGENCY AGREEMENTS
DISTRIBUTORS ARE INTEREST IN AGENTS ARE INTEREST IN
-price
-discounts
-payment terms
-the stocks to be carried
-exclusivity in a defined area,
-how far the supplier will assist in
advertising
-may be terminated
-arbitration in
the event of unresolved conflict
-the area covered
-exclusivity
-products handled
-duration of agreement
-conditions of termination and the law
under which it will be interpreted
-his own remuneration by way of
commission
-the basis of its calculation
-the terms of its payment
-any other duties and expenses to which
he will be committed.

317. NEGOTIATING LICENSING AGREEMENT
•Case: Valerie J Toups' company, the owner of
the cartoon Sad Puppy, signed a contract to
use the image copyright of the Corgi dog, the
main character of the cartoon, with Matthew
K Jordan company to produce T-shirts and sell
them. widely in the world market

318. NEGOTIATING LICENSING AGREEMENT
•Objective: Copyright licensing of the image of
the Corgi dog in the cartoon Sad Puppy

319. NEGOTIATING LICENSING AGREEMENT
Main content:
•Goods
•Price →Financial Issues
•Time
•Conditions to use
•Payment method
•Penalty

321. Strategy and Tactics
•Win –Win game
•Obligations
•Penalty
•Indemnify

322. Discussion
•Play roltwo parties in international business
contract to negotiate:
•1. list the steps both parties doing in the
negotiation
•2. set BATNA, limits
•3. Determine the cultures effecting the
negotiation success

323. QUESTIONS FOR REVIEW
•1. What are main terms in Sales/ Export/
Import Agreement?
•2. How to be successful in international
distributorship/ agency Agreement
negotiation?
•3. Give examples licensing agreements

324. CHAPTER 6
NEGOTIATION IN
DIFFERENT PARTS OF
THE WORLD

325. Chapter 1: A framework for international business
negotiation
Chapter 2: Vis-à-vis: International Business
Negotiations and cross-cultural communication
Chapter 3: Principled negotiation
Chapter 4: Process in international business negotiation
Chapter 5: Negotiating different types of projects
Chapter 6: Negotiation in different parts of the world

326. Learning Objectives
•Reviews the economic transition in East and
Central Europe, we would discuss entry of
foreign firms into these markets.
•The second section presents key factors
influencing market entry.
•The next section is devoted to the negotiation

327. CONTENT OF CHAPTER 6
•6.1.NegotiatingwithEastand
CentralEurope
•6.2.BusinessNegotiationbetween
JapaneseandAmericans

328. Negotiating with East and Central Europe : The
Economic Transition
•The importance of East and Central Europe,
with a population of 430 million people.
•Eastern Europe has huge raw material
production and reserves including metal ores,
coal, oil, gas and agricultural products, while
Western Europe has the technology (Buckley
& Ghauri1994)

329. The Economic Transition
•However, the situation in many of the countries is
uncertain, complex and difficult to predict and is
considered an enormous challenge for companies
planning to invest in these markets.
•Issues such as trade barriers, development of banking and
loan systems, pricing mechanisms, property and contract
law all need immediate attention.
•Privatization is considered a solution to achieve market
economies and growth, but there is no easy way to
achieve privatization in Eastern Europe

330. The Economic Transition
•An important issue for negotiation is whether the potential partner
for a common venture is a state-owned company or not.
•Taking over a state-owned company implies that negotiation will
take place directly with public authorities.
•As emphasized by Djarova(1999, p.14), “There is one particular
risk involved in joint venture deals with Eastern European
companies that are still state property.
•Sooner or later the company will be privatized, which will reflect
on the joint venture. It will change the owner, which might give
rise to conflicting interests.

331. The problems
•Difficult to dismantle existing power structure from earlier years;
•No clear priorities;
•Black markets;
•Political instability;
•Obscure legislative systems;
•Unlimited, however partly unsolventdemand;
•Extremely high inflation;
•Lack of infrastructure;
•Ineffective Banking and Monetary system.
•All these problems are critical, but cannot be solved simultaneously
and immediately.

332. Factors Influencing Market Entry
•Communism meant collective property of production means.
In most countries, except Poland, a large part of agriculture
was state owned and managed.
•The same was true for foreign trade that was the monopoly of
sectoral agencies. Administered trade was the rule in the
Comecon where both production and trade were centrally
organised.

333. “Gaps” Between Western and Eastern Economies
•There exists a new set of problems and situations to be
handled in these markets.
•These countries are quickly moving towards market economy,
starting from a situation where people have little or even no
idea of what is a
•contract, a price, delivery times.
•However, the introduction of market mechanisms and
marketing knowledge is a long-term process.

334. “Gaps”…..
•There are some fundamental differences between marketing to
the West and the East.
•In Eastern Europe, despite the fact that most countries have
democratically elected governments and that there is a high
degree of privatization, government still plays a major role in
the business sector.
•This role is even greater when a foreign company is involved.
•The most important difference between the West and Eastern
Europe is the fact that there exists at least two or three
generation gaps in terms of productivity and infrastructure.

335. Entry Strategies: A Long Term Commitment
•To be successful in these markets the companies should
demonstrate long-term commitment and seriousness.
•We have already discussed that there are some differences in
the development and commitment levels of different
countries of Eastern Europe and it is not advisable to treat all
countries in the same manner.
•The companies thus have to have innovative approaches

336. •When entering these countries, a company should consider the
following step-by-step approach (Cavusgilet al. 2002):
•(1) Checking Priorities
•(2) Checking Regulations
•(3) Checking the local Agent/Partner: Is it difficult to check the
validity of the claims made by the local partner or agent? If the
claims are valid, how can they be evaluated?
•(4) Checking the Competition: It is very important to establish
who your competitors are. Local government or another foreign
company. It is important to check the potential competitors and
what your position would be in the long-term. Would you have
the same competitive advantage in five years from now?
Entry Strategies: A Long Term Commitment

337. •(5) Check the Financial Implications: Check to see whether you
would be forced to participate in Counter-Purchasing or bartering.
This should be controlled/checked at an early stage in order to
avoid surprises. In this case, you should also check the financial
position of your counterparts to determine whether they would be
able to fulfil their financial obligations.
Entry Strategies: A Long Term Commitment

338. •(6) Negotiations: It is very important to determine whether
the objectives of both parties are complementary. If you can
see that the other party has totally different objectives, then
you should analysethat situation and determine whether it
is acceptable to you. In this case, you should also evaluate
whether you would be able to achieve your objectives and
commit yourself accordingly. This issue is also discussed
separately.
•(7) Implementation: It is very important to carry out the
project wholeheartedly and think in the long term. The
potentials and opportunities should be evaluated at every
step or implementation and matched with the company’s
objectives.
Entry Strategies: A Long Term Commitment

339. Business Negotiation between
Japaneseand Americans
•The most difficult aspect of international business
negotiations is the actual conduct of the face-to-face meeting
•Differences in the expectations held by parties from different
cultures are one of the major difficulties in any cross-cultural
business negotiation.

340. •In both countries, business negotiations
proceed through four stages:
•(i) non-task sounding;
•(ii) task-related exchange of information;
•(iii) persuasion; and
•(iv) concessions and agreement.

342. •Giving information
•Getting information
•Persuasion
•Concessions and Agreement

343. Questions for Review
•1. What are characteristics of Japaneses,
Americans, East Europeans?
•2. How to be success in international business
negotiation with Mazda (Japan company in
auto industry)?

344. THANK YOU