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IB NEGOTIATION EXAM #2 DOSSIER #1 Propositions: 1. Negotiations rarely have to be win-lose, but are unlikely to be win-win 2. Uncertainty and ambiguity are facts of life in negotiations 3. Most negotiations involve existing or potential sources of conflict that could poison efforts to reach a mutually beneficial agreement 4. Interactions between negotiators is chaotic, but there is order 5. Negotiations in diverse contexts may appear different, but have similar underlying structure 6. Most negotiations are linked to other negotiations, past, present and future 7. Negotiations are fragmented in time and movement occurs in surges 8. Most important negotiations take place between representatives of groups 9. Organisations often are represented by many negotiators, each of whom may conduct negotiations over time 10. Negotiation skills can be learned and they can be taught DOSSIER #2 Rules of International Business Negotiation 1. Patterns of Cross-Cultural Business Behaviour: o Two Iron Rules of IB  The visitor is expected to understand the local culture  The seller is expected to adapt to the buyer 2. Relationship Focus Vs Deal Focus o RF people deal with family, friends and persons or groups well known to them – people who can be trusted (Indirect Approach)  Indirect: A third party introduces to build a bridge between the relationship. Ideal introducer is a high status person, known to both parties o DF people are happy to do business with strangers. Mainly, Europe, North America, Australia and New Zealand (Direct Approach) o Pulling a Guanxi: Known in China and Southeast Asia. Knowing people in the right places 3. Hierarchical (Formal) Vs Egalitarian (Informal) o Formal cultures tend to be organised in hierarchies reflecting major differences in status and power while informal cultures value egalitarian attitudes and smaller differences in status and power o Business people from formal cultures may be offended by the easy familiarity of counterparts from informal egalitarian societies. o Those from informal cultures may see their formal counterparts as stuffy, distant, pompous or arrogant o Informal: Nordic Countries, Australia, NZ, USA, Canada, Netherland o Formal: Rest of Europe and Asia, Arab World, Latin America

IB NEGOTIATION EXAM #2 DOSSIER #3 The Japanese Negotiation Style o Loyalty and consensus decision making are key elements that bind such groups together o Listening skills and obedience, rather than debating skills and independent thinking, are rewarded in the Japanese educational system o Tate Shakai (Living and Working in a Vertical Society)  Buyer is seen as Kinger o Nagai Tsukiai (Long-Term Relationships) o Wa (Maintaining Harmony) o Ringi Kessai (Decision making by consensus) o Nemawashi (Preparing the roots) Conflict Between Western and Japanese Business o Culture Values  Western: Individual competition, individual decision making and action, horizontal business relations, Independence  Japanese: Individual co-operation, group decision making and action, vertical business relations Negotiation Process: 1. Non-task Sounding  Western: Short, informal,  Japanese: Long, expensive, formal 2. Task-related exchange of information  Western: Fair first offers, full authority, immediate reciprocity  Japanese: Banana sale; first offers include room for maneuver, limited authority long-term reciprocity, implicit communication 3. Persuasion  Western: Aggressive persuasive tactics (threats, promises, arguments)  Japanese: Nemawashi 4. Concessions and Agreements  Western: Sequential, Goal = good deal  Japanese: Holistic, Goal = long term relationship

IB NEGOTIATION EXAM #2 CHAPTER 11 Definition Culture: Shares values, beliefs and behaviours of a group of people Environmental Context: Environmental forces that neither negotiator controls that influence the negotiation Immediate Context: Factors over which negotiators appear to have some control Culture as Learned Behaviour:  Knowing what to expect when negotiating with a different culture Culture as Shared Values:  How the norms and values influence negotiations within that culture Hofstede’s Model: 1. Individualism / Collectivism  Individual: Encourage young to be independent and look after themselves  Collective: Integrate individuals into cohesive groups that take responsibility for the welfare for each individual 2. Power Distance  The extent to which the less powerful member of organisations and institutions accept and expect that power in distributed equally 3. Career Success / Quality of Life  Promoting success; were characterised by the acquisition of money and things, and not caring for others, the quality of life or people  Quality of life; concerns on relationships and nurturing 4. Uncertainty Avoidance  Indicated to what extent a culture programs its members to feel either uncomfortable or comfortable with unstructured situations Culture in Context: Using culture to understand international negotiations recognise that human behaviour is not determined by a single cause. Impact of Culture on Negotiation: Managerial Perspectives 1. Definition of Negotiation 2. Negotiation Opportunity 3. Selection of Negotiators 4. Protocol 5. Communication 6. Time Sensitivity 7. Risk Propensity 8. Groups Vs Individuals 9. Nature of Agreements 10. Emotionalism

IB NEGOTIATION EXAM #2 DOSSIER #4 A Complex Combining Process:  Dominantly distributive with integrative aspects Mobile Warfare:  Conceived as a fight within a frame of conflicting interest  Ones counterpart is defined as an adversary  Tactics used: o Control of the ground – controlling the factors, used by the person organising the negotiation o To lure the tiger down from the mountain – foreigner coming to China to do business o Includes:  Harassment: Overwhelm the opponent  Destabilisation: Managing negotiation smoothly, with occasional brutal outbursts  Exhaustion: Exploit the physical and psychological weariness of the other side  Squashing: Lower the demands of the other party by making counter-offers  Chinese negotiators are not risk takers Joint Quest:  Conceived by the Chinese as an encounter between civilized and barbarians  This approach leads to the implementation of principle of fairness that can be described as a search for symmetry moderated by the inequality of the participants’ needs  Four action types: observing, listening, asking and feeling  It is a succession of exchanges aimed at clarifying problems instead of establishing one’s position on a problem

IB NEGOTIATION EXAM #2 DOSSIER #5 Negotiating Skills in India  Become comfortable with ambiguity o Do not rush judgment, both positive and negative o Rely on local contacts or networks to make sense of situation o Resort to incrementalism: Negotiator undertakes or initiates small steps to test the water  Be Patient  Do not be overly aggressive  Become comfortable with Indian idealism  Negotiate with a long-term perspective  Be mindful of Indian negotiating stratagems (tricks)

CHAPTER 7  Power used to dominated and control the other (power over definition)  Power used to work together with the other (powerlessness and dependence) Major Sources of Power  Informational o Information: Accumulation and presentation of data intended to change the other person’s point of view or position on an issue o Expertise: An acknowledged accumulation of information, or mastery of a body of information, on a particular problem or issue  Personality and Individual Differences o Power derived from differences in:  Psychological orientation  Cognitive orientation  Motivational orientation  Dispositions and skills  Moral orientation  Position-based Power o Power derived from being located in a particular position in an organisational or communication structure  Legitimate Power  Resource Control  Relationship-based Power o Goal interdependence: how the parties view their goals o Referent power: based on an appeal to the other based on common experiences o Access to control over information  Contextual Power o Power derived from the context in which negotiations take place o Common source of contextual power include:  Availability of BATNAs

IB NEGOTIATION EXAM #2 

Organisational and national culture

Dealing with Others Who Have More Power  Never do an all or nothing deal  Make the other party smaller  Make yourself bigger  Build momentum by doing deals in sequence  Use the power of competition to leverage power  Constrain yourself  Goal information is always a source of power  Ask lots of questions to gain more information  Do what you can to manage the process CHAPTER 8 Ethics Definition: What is right or wrong in a given situation Ethically Ambiguous: Reflects a carefully considered choice of words; open to more than one interpretation The dilemma of trust: A negotiator who believes everything the other says can be manipulated by dishonesty The dilemma of honesty: A negotiator who tells the other party all their exact requirements and limits will, inevitably, never do better than their walkaway point Lie by omission: Not revealing the whole truth Lie by commission: Falsely answering a question when asked How Can Negotiators Deal with the Other Party’s Use of Deception:  Ask probing question: Q’s that will reveal details  Phrase questions in different ways  Force the other party to lie or back off: ask question that forces them to lie  Test the other party: Ask question you know the answer to  “Call” the tactic: Indicate you know they are lying or bluffing  Ignore the tactic: Ignore the lie or bluff...