Table of Contents:

Negotiations Steps of a typical negotiation Getting ready for cross cultural negotiations: Key concepts More resources

 

Negotiations

 

Preparation is key for any kind of business or negotiation.  The first step is to improve your due diligence and preparation for any negotiation.

 

 

Steps of a typical negotiation

 

The first phase of the negotiation is the planning phase. In this period of time before the negotiation actually begins, it is best to conduct the necessary cultural due diligence and be prepared to style switch as necessary. Then, you should carefully analyze the needs of both parties using a “negotiation grid”. It is useful to map out he interests of both parties, and to understand those interests that you have in common, and especially the ones that might be mutually exclusive. 

 

The key to any successful negotiation is to understand what your partners interests (and your common interests) really are, and to find creative solutions that might help them achieve those goals.

 

The field analysis exercise is extremely valuable in mapping out who is on the playing field, and has direct interests in the negotiation. Then, by expanding the analysis of players involved to include those who might be “on the sidelines”, or “in the stands”, or even “out of the stadium”, you should get a good understanding of all of the various interests that have an impact on the negotiation.

 

One of the key lessons that I took away from GTY is that in order to achieve an acceptable outcome to a negotiation, you need to first understand and anticipate the worst possible outcome that you are willing to accept. You have to know ahead of time what your bottom threshold is, and you need to be prepared to walk away from the negotiation if that bare minimum is not met. It is important to define this level to yourself ahead of time because the more time that you invest in the process of negotiating, the more likely you will feel inclined to accept any negotiated settlement to the deal. If you don’t have your minimum level clearly in your mind from the outset, you may make a deal that is not good for you. Preparing for a negotiation means thinking about your best alternative to a negotiated agreement (BATNA), but it also means thinking about your partners BATNA. During the field analysis, you should carefully consider the others BATNA.

 

You should also try to decide ahead of time which style of negotiation this is likely to be. If your needs are not compatible, and are mutually exclusive, then you should probably get ready for a competitive or distributive negotiation. If the relationships are long term and you have many needs in common, that you should prepare for a integrative or problem solving one.

 

In my current negotiations with suppliers of products from Brazil, I realized that we both needed each other’s support if this relationship was going to last. The key here is that both know that the relationship is long term and that we need the emotional support of our negotiating partners. Without a full emotional commitment to the negotiated solution, it would be difficult to maintain the relationship that was so essential to our long term success.

 

The next phases of the negotiation involve establishing a positive climate for the negotiation. It is essential that you create the right environment so that the negotiation can move forward positively. If the negotiation that you are planning for is to be integrative, then you will want to set up the meeting in a way in which both parties will face the same problem, and attack it (instead of each other).

 

In an integrative negotiation, you should minimize the competitive nature of the room environment, which might mitigate the natural tendency to become competitive.

 

In the GM AvtoVAZ negotiation we determined ahead of time that the style of negotiation was likely to be more distributive because many o four objective were mutually exclusive. (Other than maintaining a long term relationship). In that case, everything about our layout was structured to create a competitive environment. We sat on opposite sides of one long table, and faced each. But the GTY book says, you need to “face the problem and not the people”. It says that if you see the other team as adversaries, then it becomes increasingly difficult to separate the interests from the people. It warns us that by sitting directly across from each other that you risk misunderstanding their attacks on the problem as attacks on you. In order to have made a more cooperative meeting environment, we probably should have sat shoulder to shoulder and that way…attacks on the problem would not have been misconstrued as attacks on each other.

 

 

Once the negotiation begins, the next phase is the “opening phase” in which you will begin persuading and engaging your counter part.. The key in opening its to decide whether or not you will open honestly and fairly, or if you will open optimistically and then offer concessions to get what you want.

 

 

From the eLearning class, we learned that if you assumed that the situation was going to be competitive in nature, or if you did not really trust the other team, then you should open optimistically and then offer concessions to get what you want. Based on this advice, during our GM AvtoVAZ case, our team planned on optimistically asking for slightly more than what our BATNA demanded, and then to work backward to get what we wanted.

 

As the negotiation will move forward, you will next move into the exploring phase where you will identify the underlying needs and brainstorm potential solutions.

 

In the book GTY, the authors make a point that you need to get the person involved in the process so that they have a stake in the outcome. The more you get them involved in the process of finding a solution, the more likely that they will buy into the solution that you came up with together. In this manner, creative brainstorming with the other negotiator can be a very powerful tool to use during a negotiation, especially if both parties are truly interested in finding a “win-win” solution.

 

Style switching may come in handy at this phase. You may want to slow the negotiation down and asking more questions. From our mock negotiations during class, I learned that I need to do a better job in listening and trying to style-switch when appropriate. There comes a point when you need to tone down your competitive juices, and allow the other team to regroup and save face. Taking too many concessions without giving many in return will make the other team feel upset, and will encourage them to retaliate with anger.

 

Next will come the closing phase where you need to come to an agreement by exchanging currencies with the other party. At this point, I recommend that you should consider “leaving something on the table”. Although I’d heard this lesson before (in our class), I don’t think I had properly internalized that lesson until this GM exercise.

 

The final phase after the negotiation is completed is to follow-up and make sure that the agreement is implemented.

 

 

Getting ready for cross cultural negotiations:

 

Before going out to analyze the counter party, I would suggest that you should first take a look at your own cultural style and preferences. The emotional intelligence component of a negotiation is even more essential when dealing with negotiations across borders.

 

As our professor said in class, sometimes in heat of a negotiation, your “guts will take over for your logic”. You plan with your logic, but in the emotional charged environment, we often revert back to what our instincts command us to do. But a person with a high level of emotional intelligence and ability to control their emotions will have more success. With emotions, both yours and of your counterparts, it is best to acknowledge their legitimacy, and to allow people to let off seam. Once you make emotions explicit, and understand their role in the negotiation then you can refocus the negation back to the interest and needs of the case.

 

Before beginning a negotiation with someone, it is advisable to first conduct some level of businesses intelligence in order to get a background understanding of who you are working with. I say “working with”, instead of “negotiating against”, because it is important to see your counterpart as an ally and not as an adversary in this process. By conducting cultural due diligence prior to the meeting, you are increasing your chance of operating in a cooperative and friendly environment.

 

The cultural due diligence should start from the macro level and work down the individual. By looking at the Cultural Orientations Indicator (COI) wheel, you will begin to get a general impression of the cultural preferences of people from particular countries.

 

For example, I am often involved in negotiations with people from Brazil, so before engaging in those negotiations, I find it useful to consider that most Brazilians have a cultural preference for an indirect and formal communication method. I know that not all Brazilians are the same, but I recognize that this is significantly different than my preference for direct and informal communication.

 

Therefore, when entering into negotiations with Brazilians, I need to remind my self to style-switch and to be aware that Brazilians typically will not like to be challenged in an open way during the negotiation. The way in which I am accustomed to address problems head-on, and to speak my mind openly, may not be well received when conducting business in Brazil. Armed with my knowledge of the cultural gap in our respective COIs, I am more sensitive, and more ready to style switch when appropriate. If I am not aware of their cultural preference of “saving face”, I may endanger the relationship if I openly and directly confront them in front of a group.

 

On an individual level, it is important to remember that the COI wheel only gives you the general styles and preferences of a country as a whole. It is important to dig a little bit deeper and to conduct a more thorough cultural due diligence. Within countries there are significant regional preferences that you should take into consideration. People from the north might be significantly different from the south, for example.

 

In addition to just looking at the COI wheel, you should read and try to identify other cultural differences that might impact the negotiation. While it might be customary for Americans to get down to business quickly, I would recommend that when conducting negotiations in Brazil, that you should allow the parties to warm up slowly, and placing a higher emphasis on relationships before starting the details of the case.

 

By conducting cultural due diligence, you are preparing for the negotiation and will be better able to overcome cultural obstacles that might otherwise have impeded the progress of the negotiations.

 

From our CCC class, I learned the importance of style switching in a negotiation in order to find a common style to make your partner feel more comfortable. This is even more important when you are negotiating with someone from another culture. Whether that means taking a more indirect communication method, or by addressing the partner in a more formal method, I discovered that crossing over to match the other persons style is quite a powerful tool.

 

During our case study “Mt Spencer”, I recognized that my counterparts’’ Latin American preference was likely to be indirect and formal, so I switched to that style to find a better way to relate to her (and to get concessions that I was interested in). I think that there was real power in switching to her style of negotiating, and by taking the initiative to present my interests in a manner that was indirect and focused on our common goals in the case. By getting her involvement in helping to brainstorm creative ways in order to solve our common interests, and I was successful in getting her to willingly concede on issues which were important for me.

 

While preparing for the negotiation, the next area that you should consider (and probably the most important), is the relation of power and how it will affect the outcome. Carefully consider which party has greater structural power, and if its not you, then you should consider other means in which you can leverage some power during the upcoming negotiation. Structural power of authority is difficult to overcome. A negotiation between a boss and an employee is a classic case of where one party has clearly defined structural power over the other. In theory, the negotiation is an open and shut case favoring the boss (with greater structural power), but in reality there are things that can be done to marginally increase your power in a relationship. The key is to find a way to improve your negotiating position.

 

Influential power is necessary in a negotiation. The basic principal is that you need to find a way in which you will meet your counterparts needs as a way of building a “working trust” between you. The concept of reciprocity is very powerful, and is often called “productive power”. By helping the counter parts meet their needs, you create a cycle of trust that helps you build influential power. You need to conduct due diligence and discover what are their underlying needs, and then find some sort of common currency with which to trade. When preparing for a negotiation, and especially one across cultures, it is essential that you brainstorm various ways that you will be able to build influential power.

 

It is also important to notice that different cultures have different perspectives on power. While the US culture may be relative equal, and may value the idea that people are all created equal, there are many other cultures in the world that have a “hierarchical” view of power. For example, in class we discussed how American business people often talk about their humble upbringing and like to show-off how far up the social ladder they have climbed though their own personal efforts, many Latin Americans would find discussions of a poor-upbringing as shameful, and would never mention it during a business relationship.

 

In my line of work, I am often negotiating with companies from Brazil. From a personal standpoint, Ive realized that I might need to style-switch a bit more when dealing with Latin Americans, and to leave my natural comfort zone of negotiating that I typically use with North Americans. In the past, Ive had the overwhelming feeling that I had appeared too competitive and too impersonal during the negotiation, and that this attitude had contributed to hostile reaction from the other team. I learned that I needed to find a way to not only get what I wanted but to also manage the relationships better, and to pay better attention to how the people around me feel. In essence, I need to transition from a competitive negotiator mindset, to a problem-solving one. As it turns out, this is much easier to do in theory than it is to do in reality. It is especially tough to style-switch in the heat of the “battle” when you are the most inclined to resort back to your natural style of negotiating.

 

According to the Cultural Orientations Indicator (COI) , most Latin Americans display a strong “being” rather than “doing” orientation. One of the implications of this orientation is that you require a relatively longer period of time to get to know each other before you can conduct a negotiation. By taking longer to establish trust, the initial getting-to-know-you period at the beginning of the negotiation will take longer. This helps explain why we always take a very long time (in my opinion) to get started with the actual details of the negotiation itself. Since I know that I have a strong “doing” orientation, it helps to explain why I constantly feel frustrated with the slow initial phase of the negotiations. By doing an initial cultural gap-analysis, I have prepared myself for this difference in cultural style, and I have allowed more time in the beginning (in spite of my natural tendencies).

 

Many times when negotiating in Brazil, I feel my cultural differences from my counterparts in the manner in which we confront opposition and the way in which we view conflict in a negotiation. Coming from a highly individualistic culture, I have come to appreciate the value of constructive confrontation and the manner in which it can help people discover the best possible solution to a problem. I have grown up in a culture where you are expected to speak out against authority and you are expected to speak your mind. Open confrontation is expected and encouraged as long as its done in a constructive manner.

 

On the other hand, many of my counterparts come from a much more collectivistic society in which open confrontation is to be avoided at all costs, seeing open conflict as negative and disruptive to the group dynamics.

 

During our class negotiations I have felt the same thing (I am the only native North American in our group). I think that many of my counterparts see the open style of discussion as being a bit foreign, so I have learned to style-switch as much as possible. My style preference could best be described as principle based, but with a hint of hard negotiations. In the Spencer case, though, I was negotiating with a partner that obviously preferred a softer style, and so I found it best to tone down my style and to focus on presenting my ideas in a gentler way. Instead of aggressively pursuing my own goals, I first focused my attention on solving a common problem.

 

Also, my COI style of thinking is more of deductive and systemic in that I like to step back from the details of the case and figure out first what are the big picture objectives. Other members of our team like to focus on details first. By style switching our different approaches, we are often succes

 

 

Key concepts

 

General

- You don’t get what you deserve, you get what you negotiate

- Negotiation is:

- Two or more parties must make decisions about their interdependent goals

- Committed to nonviolent means for resolving dispute

- There is no clear/established method for making this decision.

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Preparation

- Boy scouts motto “be prepared”

- Steps:

- Define OUR/THEIR interests, issues,

objectives, limits authority, and power

- Realistic Possibilities –targets, where to start

- Best Alternatives if no agreement

- Select strategy and tactics

- Define protocol, styles, and agenda

- Field analysis

- what do you have & what willing to give up/

- trade theory –

- exchange currencies

- bundle groups (package common)

- estimate BATNA of other

- “best alternative to a negotiated agreement” (BATNA)

- LEVERAGE – how will you get?

- + leverage = needs

- - leverage = threats

 

 

Emotional intelligence

- Guts take over for logic (logic = planning, guts = actual)…know your own emotions

- empathy to leverage diversity

- make emotions explicit

- acknowledge tehm as legitimate

- allow let off steam

 

Competitive Intelligence

- Business Intelligence - Toys R Us – Sweden

 

 

 

Cultural background of other

- Cultural Orientations Indicator (COI)

- Cultural preferences

- Cultural obstacles, political obstacles, social obstacles

- Style has impact on negotiation -

- silence (different reaction)

- save face = important

 

Relationships

- Interdependency

- Conflict from divergent needs + values (scarce resources)

- Trust & power= foundation

- attack the problem not the people -

 

Types of negotiations

- Distributive – hard bargain – zero sum game – use fear to intimidate

- integrative

- problem solving – win win – use fear to facilitate

- positional bargaining – contest of wills

- hard bargaining – decide, announce, defend

- soft bargaining

- goal is to move hard bargain to problem solver

 

Negotiation styles

- competitor

- avoider

- problem solver

- accommodator

 

 

 

Interests based

- focus on meeting others interests

- each side has multiple interests

- id shard interests

- compatibility

- acknowledge their interests

- basic human needs: security

- put problem ahead of answer

 

Principal based

- attack problem, not people

- ask lots of questions (people can attack statements, but respond to questions)

- invent options for mutual gain

- brainstorm

- broaden options

- look for win-win

- don’t deduce their intentions from your fears (PEMBERTON)

- give them a stake in outcome by participate in process

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Influence

- structural power

- reciprocity

- build influence

- working trust = source of power if you don’t have structural power

 

 

 

More resources

 

Interneg

 

This site for and about negotiation is a community linking people and institutions working in negotiation-related areas.

 

www.pon.harvard.edu/publ/negojnl/index.html

 

This site contains a negotiation publication called the Negotiation Journal.

 

www.academyofdiplomacy.org

 

The American Academy of Diplomacy undertook a program of study in the area of the processes of multilateral negotiation.

 

www.negotiate.co.uk/

 

This site is dedicated to the dissemination of sound practice in the skills of negotiation.