1. Introduction to International Negotiations
Verner Worm, Ph.D.
Professor of Chinese Business and Development
Asia Research Centre
Copenhagen Business School

2. What is negotiations?
Negotiation is one of the most important global business skills
Two or more parties combining their conflicting points of view into a single decision of mutual interest.
Negotiation is about value claiming, value creation and trust building

3. Learning Objectives Improved ability to negotiate
General strategy (mental model) for successful negotiation
Enlightened model of negotiation (fraternal twin)
The other party is as motivated as you.
Don’t outsmart

4. Negotiation Skills as Core Leadership Competency
Key communication & influence tool for interdependent relationships (in & outside the company)
Most people are not very good at negotiation (e.g., over 80% of corporate executives and CEOs leave money on the table)
People don’t realize this

5. Conditions of negotiations
Perception of conflict
People hold different perceptions. Objective conflicts or perception of conflict
Communication opportunities
If people cannot communicate, they cannot negotiate. In explicit bargaining people communicate with one another. In tacit bargaining they coordinate through their actions.
Interdependence
People are interdependent if their actions affect others’ outcome. In the dyadic case parties must agree to the outcome to occur. Veto power to walk away.

6. The role of conflict Predominantly negative
Competitive processes
Misperception and bias
Emotionality
Decreased communication
Positive aspects of conflicts
Discussing conflicts make people aware and able to cope with problems.
Create organizational changes
Promote awareness of self and other

7. Interdependence
In negotiation, parties need each other to achieve their preferred outcomes or objectives
Interdependence and the structure of the situation shape processes and outcomes
Zero-sum or distributive – one winner (win-lose)
Non-zero-sum or integrative – mutual gains situation (win – win)
A mix of convergent and conflicting goals characterizes many interdependent relationships

8. Stages of negotiations
Preparation
Relationship building
Information gathering
Information using
Persuasion
Making concessions and agreements
Closing the deal (final offer)
Implementing the agreement

9. B.A.T.N.A.: Best Alternative To a Negotiated Agreement
What are you going to do if you do not make a deal with this person?
Determined by your available alternatives
Defines most you will pay (buyer) & least you will accept (seller)
Key source of power: Ability to walk away
Strategic advice:
Should you reveal your BATNA?
Falling in love rule

10. Goals, Strategy and Planning

11. The Direct and Indirect Effects of Goals on Strategy
Wishes are not goals
Goals are often linked to the other party’s goals
There are limits to what goals can be
Effective goals must be concrete/specific and measurable.
Indirect effects
Forging an ongoing relationship

12. Strategy, tactics, Planning
A negotiation strategy is an integrated set of behaviors chosen because they are thought to be the means of accomplishing the goal of negotiators.
Tactics are short-term moves.
Planning/Implementation: The “action” component of the strategy process; i.e. how will I implement the strategy?

13. Getting Ready to Implement the Strategy: The Planning Process
Define the issues
Assemble the issues and define the bargaining mix
The bargaining mix is the combined list of issues
Define your interests
Why you want what you want
Your “ideal” settlement
Your bottom line

14. Getting Ready to Implement the Strategy: The Planning Process
Know your limits and alternatives
Set your objectives (targets) and opening bids (where to start)
Target is the outcome realistically expected
Opening is the best that can be achieved
Assess constituents and the social context of the negotiation

15. Getting Ready to Implement the Strategy: The Planning Process
Analyze the other party
Why do they want what they want?
How can I present my case clearly and refute the other party’s arguments?
Present the issues to the other party

16. Influencing negotiations
Reciprocity (law of the universe)
Pertain more to pattern of concessions than to degree.
We feel upset if receiving a favor we cannot return.
Consistency
Need to appear to be consistent in our behaviors to others as well at to ourselves (psychological commitment)
Social proof
The behavior of others determine what is desirable, correct.
Liking. (Flattery can get you everywhere)
Make concession to people they like
Authority
We are inclined to accept opinions of people we consider authorities
Scarcity.
Rare things appear more appealing.

17. Making the first move Making concessions Bargaining in good faith
Reciprocity (i.e.. conditional concessions)
Size (Normally higher level concession in initial phase?)
Bargaining in good faith
Don’t falsify intention nor information (reputation again)
Offers remain valid until rejected or even after
Common concerns
Sharing information about reservation price (NO)
Negotiation is a matter of strategy, not trust.
Lying about reservation price (NO), the liar gets caught.
Tough or soft negotiation stance? Strategic creativity!
Making the final offer (no rush).

18. Advice for direct information
Ask questions about interests and priorities, things that you are willing to share information about in return.
Give a little information about your own interests and priorities.
Be sure to reciprocate information with information
Be honest when rejecting to give information.
Build trust by meeting expectation.

19. Advice for indirect information
Multi-issue proposals are more efficient in getting information
Do not make proposals that are unacceptable to you
Anchor proposal so that you receive an adequate distributive outcome.
Post proposals visually on a flipchart.
Make 2 or 3 at most proposal at a time
Analyse the proposal quickly (spreadsheet)
Allow time for running the numbers

20. Mutual Adjustment and Concession Making
When one party agrees to make a change in his/her position, a concession has been made
Concessions restrict the range of options
When a concession is made, the bargaining range is further constrained

21. Strategic Options
Per Dual Concerns Model, choice of strategy is reflected in the answers to two questions:
How much concern do I have in achieving my desired outcomes at stake in the negotiation?
How much concern do I have for the current and future quality of the relationship with the other party?

22. Mutual Adjustment
Continues throughout the negotiation as both parties act to influence the other
One of the key causes of the changes that occur during a negotiation
The effective negotiator needs to understand how people will adjust and readjust and how the negotiations might twist and turn, based on one’s own moves and the other’s responses

23. The Dual Concerns Model
Avoidance: Don’t negotiate
Competition: I gain, ignore relationship
Collaboration: I gain, you gain, enhance relationship
Accommodation: I let you win, enhance relationship

24. Two Dilemmas in Mutual Adjustment
Dilemma of honesty
Concern about how much of the truth to tell the other party
Dilemma of trust
Concern about how much negotiators should believe what the other party tells them

25. Closing the deal Provide alternatives Assume the close
Take out the contract form
Split the difference
Exploding offers
Offers containing tight deadlines
Sweeteners
I will give you X if you agree
Good offter that expires within 24 hours

26. Summary on the Planning Process
“...planning is one of the most important activities in negotiation.”