Flashcards in Negotiation Process and Strategies Deck (16)
What are the two elements of negotiation?
Common and conflicting interests
What is the definition of negotiation?
Interactive process of resolving conflicts and reaching agreements to provide terms and conditions for the future behaviour of the parties involves
What is distributive negotiation?
Objective of the parties is to maximise their own benefit at the expense of the other party
- Zero sum "Fixed pie"
- No relationship and unlikely to have one in the future
What is integrative negotiation?
- A process of reaching agreement that satisfies both parties
- Used when parties have a relationship or want to establish one
How is integrative negotiation win-win negotiation?
- They recognise that they both have common and conflicting interests
- Understand each other's point of view
- Open information flow: communicate preferences
How can integrative negotiation be challenging in EMs?
Challenging to build trust and collaboration between different cultural backgrounds
What are the strategies for negotiation?
- Acquire info about the counterparts; market power, networks, industrial experience
- Cultural sensitivity (UK vs Asian negotiating style)
- Know as much as you can about partner's position
- Analyse every offer for what it is worth rather than accept or reject it
What information should you acquire about the country and the business environment?
- Political climate of the country: affects stability of investment
- Long vs short term orientation
- Written agreement vs rapport and relationship building
- Knowing other players of interest: gov, TUs, shareholders, trade commission
- Establish relationship based on goodwill" consider history of colonialism
How should you maintain flexibility?
- Expand the pie - think of alternatives other than financial
- Mutually accepted agreement easier if you have multiple alternative solutions
- Problem solving mindset
What are the steps involved in negotiation?
2) Informal meeting
3) Strategy formulation
4) Face to face negotiation
What does the offer entail?
- Negotiation begins, counter offers exchanged
- Revision of original offer due to understanding of each other's needs and objectives
- Involvement of third parties and definition of problem needing solution
What does the informal meeting involve?
- Discussing the offer and getting acquainted
- Continuation depends on cooperation/conflict and degree of distance
- Identify obstacles
- Important stage in EMS
What does strategy formulation involve?
- Compare offers and decide on potential concessions
- Monitor changes in the environment and protect own position: build strength
What does face-to-face negotiation involve?
An open mind, evaluating alternatives, exploring differences in preferences, developing an atmosphere of trust
What does the implementation phase involve?
Agreeing on terms, sign contract, keep agreement clear