1. HOW WOULD YOU DO IT (EFFECTIVELY)?
Negotiation
HOW WOULD YOU DO IT (EFFECTIVELY)?

2. What is Negotiation?
Negotiation is a decision making process that involves other people that do not necessarily have the same desires or preferences as you.

3. When Do We Negotiate? --- Examples
F(Price, Quality, Service, Quantity)
Risks(?)
Time
Changes of order ---> interruptions

4. Why Do We Negotiate?
To resolve differences
To allocate resources

5. Differences in Negotiations
Expectations
Risk
Priorities:
Quality
Quantity
Price
Service

6. Identifying Objective
Different Priorities
Identifying Objective
For Company
Priority
For Supplier
Price 1
Quality
Time 2 3
Quantity 4
“Distinguishing between Wants & Needs”

7. Goal of Negotiation
To reach the very best agreement possible, rather than just reaching an agreement.

8. What Is Effective Negotiation?
Effective Communication
Showing progress and direction
Number of issues identified/resolved over a certain period
No hard feelings
Quality of Agreement (Win-Win)

9. Before You Begin Negotiating
Consider the potential outcomes in the event that no agreement is reached.
Determine your BATNA (Best Alternative To a Negotiated Agreement).

10. BATNA “Best Alternative to a Negotiated Agreement”
The Negotiator’s best outcome should no agreement be reached.

11. Significance of BATNA Negotiated Agreement BATNAs Impasse
The value of BATNA
provides a lower bound for
a negotiated agreement
BATNAs
Impasse

12. Reservation Price
The point where a negotiator does not care if s/he reaches an agreement or impasse.
Denotes the value of one’s BATNA

13. Negotiation Principles
Separate the People from the Problem
Focus on Interests, Not Positions
Invent Options for Mutual Gain
Insist on Objective Criteria

14. Prescription #0 Identify Who is what and their concern
around the clock
Gate Keeper,Influencer,End User,Purchaser,Owner
List their concern items and estimate the weight

15. Prescription #1 Never fall in love with one of anything:
if you do, it will likely be yours, but the price
will reflect the intensity of your obsession.

16. Prescription #2
Paying attention to the alternatives of your opponents enables you to predict their willingness to concede as well as assessing your relative power in the negotiation.

17. Prescription #3
Focus on the underlying interests, rather than on positions.
Example: Camp David Agreement

18. Camp David Agreement

19. Prescription #4 Assess how important each issue is to you.
You can effectively trade-off issues by conceding less important issues to gain on more important ones.

20. Prescription #5 Assess how important each issue is to your opponent.
In so doing, you can avoid making inaccurate assumptions about the nature of the interaction.

21. Dos of Negotiation Proper Personal Appearance Mind your P’s and Q’s
Technical Competence
Good Company Establishment

22. Don’ts of Negotiation Lying/Telling bullshits Exaggerating
Acting like a snob
Asking personal questions (unless the situation permits so)

23. Classic Negotiation Tactics
Acting crazy
Big pot
Get a prestigious ally
The well is dry
Limited authority
Whipsaw/Auction
Divide and Conquer
Get Lost/Stall for Time
Wet Noodle
Be Patient
Let’s Split the Difference
Trial Balloon
Surprises

24. Dimensions of Negotiation
Distributive Dimension
Integrative Dimension

25. The Distributive Dimension
Significance
The Bargaining Zone

26. Significance of The Distributive Dimension
Determines the distribution of outcomes.
Fixed-pie Negotiation

27. Fixed-Pie Negotiations
The total amount of resources to be divided is fixed: one party’s gain is at the direct expense of the other.

28. Bargaining Zone
The overlap of the reservation prices (Positive Bargaining Zone)
If there is no overlap then a Negative Bargaining Zone exists and agreement should not occur.

29. Positive Bargaining Zone
$18M
$20M
$30M
$35M Yt Yr Xr Xt
Xr, Yr = Reservation Price
Xt, Yt = Target Price
Positive Bargaining Zone

30. Negative Bargaining Zone
$15M
$25M
$30M
$35M Yt Yr Xr Xt
Xr, Yr = Reservation Price
Xt, Yt = Target Price
Negative Bargaining Zone

31. Significance of Bargaining Zone
Consists of the range of settlements that make both parties better off by agreeing rather than by not agreeing.
Assess the bargaining zone because it organizes the distributive aspect of a negotiation by overlapping the acceptable settlement regions of each negotiator.

32. Integrative Dimension
Joint rather than distributive benefit.
Need a clear understanding of the interests and associated levels of importance of the parties.
Eliminate the bias that negotiations are distributive undertakings that provide little opportunity to create value.
Assess where the trade-offs exists

33. Strategies for Finding Trade-Offs
Build Trust and Share Information
Ask Lots of Questions
Give Away Some Information
Make Multiple Offers Simultaneously
Search for Post settlement Agreements
Use differences to create opportunity

34. Build Trust and Share Information
Key factor: Relationship Between the Negotiating Parties

35. Ask Lots of Questions
Obtain the necessary information to create trade-offs
The answers provide the basis for understanding the structure of the other side’s interests.

36. Give Away Some Information
Good when there is low trust between parties.
Breaking Informational Deadlock

37. Make Multiple Offers Simultaneously
Collect information before putting an offer on the table.

38. Use Differences to Create Opportunity
Differences are opportunities rather than barriers to any negotiation!

39. Search For Post-Settlement Settlements (PSS)
Offers a last attempt for the parties to find a fully efficient agreement which they failed to reach during the negotiation with limited risk to either party.

40. Differences in Negotiations
Expectations
Risk
Time

41. Expectations
Differences in expectations can create mutually beneficial trade-offs.
Use contingent contracts

42. Contingent Contract
An agreement that creates multiple options for different outcome conditions.

43. Risk
Use differences of risk preferences to create mutually beneficial (perceived) trade-offs.
Offer the more risk-averse party more guaranteed money and the more risk-seeking party more of the upside potential.

44. Time
Use differences of time preferences to create mutually beneficial trade-offs.
Future consequences can often be rearranged in a way that gives earlier return to the more impatient party.

45. Added Strategies for Creating Integrative Agreements
Add Issues to the Negotiation
Cost-cutting
Obtain Added Resources
Search for a Novel Solution Not Currently Under Discussion

46. Add Issues to the Negotiation
In so doing, a party can get what they want in the original negotiation, and compensate the other party on some additional, unrelated issues as well.

47. Cost-Cutting
Can be done by having the party who makes the major concession received something to satisfy the precise goals that were frustrated by the concession.

48. Obtain Added Resources
When there is a shortage, expand the available resources.
This strategy is viable only if the parties’ interests are NOT mutually exclusive.

49. Search for A Novel Solution
Remove immediate definitions of the conflict
Identify the parties’ underlying interests
Brainstorm potential solutions

50. Negotiation Phase A B C Westerners Japanese Agreement Negotiation
maturity A B C
Time & Effort
Westerners
Japanese

51. Using Differences to Create Integrative Agreements: The Cross-Cultural Component
Don’t assume a common knowledge base or a well-understood set of practices.
Culture
Emic vs. Etic
Strategies

52. Culture
A set of norms, rules, and expectations about social interaction.
It is defined by shared elements such as language, opportunity to interact, and common fates.

53. aspects of cultures that are universal
arise because of similarities in human beings’ biological or physical environment
aspects of cultures that are unique
a function of the unique histories or ecologies of the culture

54. Culture As A “Normal Distribution”
Each culture shows the total variation of its human components.
The “average” or “most predictable” behavior will be different for each culture.
Stereotyping

55. 5 Orientations in Human Relationship
Universalism vs. Particularism
Collectivism vs. Individualism
Neutral vs. Emotional
Diffuse vs. Specific
Achievement vs. Ascription

56. Universalism vs. Particularism
Rules vs. Relationship

57. Collectivism vs. Individualism
The group vs. the individual

58. The range of feelings expressed
Neutral vs. Emotional
The range of feelings expressed

59. The range of involvement
Diffuse vs. Specific
The range of involvement

60. Achievement vs. Ascription
How status is accorded

61. The Emotional Quadrant
Affective
LOVE
HATE
RESPONSIVENESS
REJECTION
Diffuse
Specific
ESTEEM
DISAPPOINTMENT
APPROVAL
CRITICISM
Neutral

62. Regional Cultural Differences
Affective
Latin, Arab,
South America,
Southern Europe
USA (West Coast),
Canada
SYMPATHY, OUTRAGE
LOVE, HATE
Diffuse
Specific
USA (East Coast),
Scandinavia,
Northern Europe
Japan, SE Asia,
East Africa
DEEP RESPECT/ESTEEM,
DISRESPECT
APPROVAL, DISAPPROVAL
Neutral

63. Fulfillment-oriented
Corporate Cultures
Egalitarian
Fulfillment-oriented
culture
Project-oriented
culture
INCUBATOR
GUIDED MISSILE
Person
Task
FAMILY
EIFFEL TOWER
Power-oriented
culture
Role-oriented
culture
Hierarchical

64. National Patterns of Corporate Culture
Decentral
.USA
INCUBATOR
.Canada
GUIDED MISSILE
.Sweden
.UK
.France
.Netherlands
Informal
.Denmark
Formal
.Belgium
FAMILY
India.
EIFFEL TOWER
.Spain
.German
.Japan
Central

65. Intercultural Communication

66. Styles of Verbal Communication
Anglo-Saxon
Latin A B
Oriental A B

67. Culturally Responsive Strategies
Induce Counterpart to
Follow One’s Own Script
Improvise
an Approach
High
Counterpart’s Familiarity
with Negotiator’s Culture
Adapt the Counterpart’s Script
Employ Agent,
Advisor, or mediator
Embrace the
Counterpart’s Script
Low
Low
High
Negotiator’s Familiarity
with Counterpart’s Culture

68. After the Negotiation Trust Spirit Friendship
Networking ---> Referrals

69. Negotiations in Asia Language Eye contact Time Status and title
Decision-making style
Mediation
Informal communication

70. Effective Negotiations with the Chinese, Japanese, and Korean
Meticulous preparation
Patience
Informal relationship

71. Language Reluctance to say “No” Low fluency in English
Correctly addressing a business partner

72. Eye Contact
Maintaining eye contact = sign of aggression(?)

73. Time Time is unlimited and unending.
Preference to develop personal ties with strangers before concluding a deal with them.

74. Status and Title Elaborate and vertically organized social structure
Exchanging and studying business cards
Seniority matters
Use of ranks and titles in addressing hosts

75. Decision-Making (Japanese) Style
No “laying one’s card on the table” until a close understanding is reached
Total agreement through group consensus
Nemawashi
Illusion of surface agreement
Consultation (ring-seido)

76. Fluid Contracts Contracts = personal agreements
When conditions change, contracts must be changed
Changes will be reciprocated in the future, but contracts are fluid
Declaration of intentions backed by the integrity of the signatories

77. Mediation Role of mediators Informal meetings
Serious discussion disguised as entertainment

78. Informal Communication
Reluctance to say publicly things that might be admitted in private conversation.
Avoid radical changes
Being too flexible = sign of insincerity
Realism is preferred
Do not impose upon or overpower
Equality, mutual benefit, and reciprocity

79. Case Study 1: GAE-CMS Joint Venture
Issues
Licensing vs. Joint Venture
Shareholding issue
Result
Trust

80. GAE-CMS

81. Case Study 2: TGI Decision-making Agreement vs. Practice
Don’t overlook --- identify all the players, not just the decision makers

82. The Germans vs. The Japanese
Mediator/recommender is necessary
Emphasize on mimic/gestures/body language
Good communication habit is a must
Good listeners
Less explicit
Particularist
Germans
No need to have mediator/recommender
Emphasize on personal appearance
Technical competence is a must
Straightforward, to the point, explicit
Universalist

83. Today’s Lesson Wheel of Morality turn, turn, turn Tell us the lesson
that we should learn

84. Kotler et.al. Marketing Management. An Asian Perspective.
Neale, Margaret A. Business Week’s Guide To Cross-Cultural Negotiating.
Trompenaars, Fons. Riding The Waves of Culture.