1、1Part An Overview of International Business Negotiation2Characteristics and contents of international business negotiationNegotiation principles3The word“Negotiation”derives from the Latin word“Negotiari”,which means“to do business”Business negotiationBusiness negotiation is a process of conferring
2、in which the participants of business activities communicate,discuss and adjust their views,settle differences and finally reach a mutually acceptable agreement in order to close a deal or achieve a proposed financial goal.4(1)The objective of business negotiation is to obtain financial interest(2)T
3、he core of business negotiation is price(3)Its principle is equality and mutual benefit(4)Items of contract should keep strictly accurate and rigorous5International business negotiation International business negotiation refers to the business negotiation that takes place between the interest groups
4、 from different countries or regions.It is an important activity frequently involved in foreign trade and other economic exchange,serving a critical approach and method for these interest groups or individuals to confer together to reach an agreement or settle the issues of their interest conflicts.
5、6(1)Language barrier(2)Cultural differences(3)International laws and domestic laws are both in force(4)International political factors must be taken into account(5)The difficulty and the cost are greater than that of domestic business negotiations7(1)Sales of Goods/Services(2)Investment Negotiation(
6、3)Technology Transfer(4)Business Contract Negotiation8lCollaborative negotiation Collaborative negotiation The core of the principle is to reach a solution beneficial to both parties by way of stressing interests and value not by way of bargaining.lConsists of 4 basic components4 basic components:Pe
7、oplePeopleseparate the people from the problem.InterestsInterestsfocus on interests not positions.GainingGaininginvent options for mutual gain.CriteriaCriteriaintroduce objective criteria.910The purpose of negotiation is to reach agreements between parties with different interests.Any negotiations o
8、ccurred at home involve 2 levels of interests:(1)Personal Interests VS Organizational Interests(2)Personal Interests VS Organizational&National Interests11Trust between group leader and group members as well as trust between two negotiating parties is a decisive element of shaping relationship of al
9、l sides.There are basically 3 types of trust in professional relationships:(1)Deterrence-based trust(2)Knowledge-based trust(3)Identification-based trust12(1)Distributive negotiationDistributive negotiation,also called positional bargaining,claiming value bargaining,zero-sum bargaining,or win-lose b
10、argaining,is a competitive approach that is used when there is a fixed pie,a finite limit to a resource and negotiators have to decide who gets how much of it.13(2)Complex Negotiation5 Principles for Complex Negotiationa)To think carefully about the distribution rule to be used in allocating resourc
11、es among the parties;b)To avoid majority rule in group negotiations whenever possible;c)To avoid strict issue-by-issue agendas whenever possible;d)To focus on the differing interests and preferences of group members to facilitate creative integrative agreements;e)To recognize that coalitions are inh
12、erently unstable,often leading to agreements that are not in the best interest of the organization.14In this approach,parties collaborate to look for a solution that maximizes joint gain and allows everyone to walk away feeling like they have won something.Win-win approach is a collaborative process
13、 and the parties usually end up helping each other.15Part An Overview of International Business Negotiation16Information gathering in international business negotiationRequirements for forming a negotiation teamPlanning work before entering into negotiation17Reason for gathering information:During t
14、he actual negotiation,it is likely that your counterparts will conceal their true interests,needs and motivations.Your chance of getting this information during the negotiation is relatively small.Therefore,the earlier you start,the easi-er it is to obtain information.People are more willing to give
15、 out information be-fore any formal interaction begins.18Qualification and Credit StatusNegotiation RepresentativesMarket QuotationsLaws and Cultures19The qualification and credit status consist of the history and status quo,economic and political power,and corporate reputation(its liabilities),capi
16、tal quantity,operating capability,bank credit and such of the partner company.20(1)The history and status quo of the partner company refers to the establishing time,registered office address,main business scope and the number of the employees,etc.(2)Economic and political power refers to the annual
17、turnover,financial or fiscal conditions,market share and position in its industry at home or abroad,of the partner company or organization;whether it has any political influences or what its political tendency is like.(3)Corporate reputation refers to its status of assets and liabilities,brand popul
18、arity and word-of-mouth in the market.21(4)Capital quantity refers to total assets,fixed assets,current assets,cash flow,etc.(5)Operating capability refers to status of operating profit and loss,contribution ratios of major products,the ability to develop new products,etc.(6)Bank credit includes the
19、 names and numbers of contacting banks,credit it enjoys and whether it has bad accounts in banks,etc.22Information about the negotiating representatives from the other side mainly includes:(1)the number of the negotiating representatives,(2)the composition of the negotiating team(3)limits of their a
20、uthority(4)their identity and status.23lNegotiators should make synthesis comparisons concerning the technological specifications,uses,purchasing costs,quantity available,freight charges,domestic market prices,international market prices,products life cycle and competitiveness,patents,necessary acce
21、ssories and after-services and the like of the negotiating item.2425Before the negotiations,we need to know whether the transacted items will be regulated or restricted by the laws and regulations of our own country or our partners country,or by international lawswhether the politics,cultures,religi
22、ous customs,economic development levels,infrastructures,natural resources,climates and geographythe relationship between other countries and our own country or our partners country will affect the trade transactions or not.26Size of the Negotiation TeamThe Staffing of the Negotiation TeamCollaborati
23、on and Support from the Outside Members27The following factors should be taken into consideration when we decide the size of a negotiation team:(1)The number of the negotiation team members of your counterpart(2)The complexity of the negotiation(3)The need for technical experts(4)The number of the a
24、ssociates in the project28The composition of the negotiation team refers to the consideration about:the professional backgrounds or credentialsexpertise and the status of the team membersthe role they play in the negotiation29When building a negotiation team,make sure the members are complementary i
25、n knowledge and characters and define their roles,responsibilities and tasks clearly.(1)Complementary knowledge.(2)Complementary character.(3)Clearly-defined roles.30A relatively“standard”negotiation team should contain the following members:(1)Leading personnel(2)Business/Commercial personnel(3)Pro
26、fessional and technical personnel(4)Financial personnel(5)Legal personnel(6)Interpreters(7)Secretaries31Besides the negotiation personnel,some full-time or part-time personnel should be arranged to provide support and services for the negotiation activities.These kinds of people include the followin
27、g:(1)Related personnel in other functional departments(2)Administrative personnelThe basic principle of organizing a negotiation team for an international business negotiation is to keep the team as as small and efficient as possiblesmall and efficient as possible.Small:a principle that can demonstr
28、ate the high efficiency and authority of one part.Efficient:a principle that can show the high quality of the negotiation personnel and the power and management concept of a company.3233Identifying TargetsBATNA-Best AlternativeSetting an Agenda34 Targets of an international business negotiation can
29、be generally divided into three categories:(1)The highest target,or the maximum expectation or target(2)Acceptable target,or expected target(3)The lowest target,or limited target,basic target or must-be-realized target35You need to have your BATNA-Best Alternative to a Negotiated Agreement.Determini
30、ng Your BATNASome of the most crucial factors which should be considered include;The costFeasibilityImpactConsequences36Positive Thinkinginstead of just focusing on one aspect of the negotiation，you need to think positively by defining realistic，optimistic，and pessimistic outcomes.37Scheduling of th
31、e negotiationNegotiation siteNegotiation issuesOpen agenda and restricted agenda38Key points that need attention when making the agenda for ones own side(1)Make good use of the factors of climate,favorable geographical conditions and the support from other people under the prerequisite of not baffli
32、ng the partner.(2)Design negotiation strategies to go along with the process of the negotiation.(3)Avoid showing all the cards in ones hand.39(1)What Kind of Negotiation?(2)What Type of Conflict Will We Face?(3)What Does This Negotiation Mean to Us?(4)The Ripple Effect(5)Do We Need to Make an Agreem
33、ent?(6)Do Other Parties Need to Formally Approve the Agreement?(7)Is the Clock Ticking?40(8)Your Place or Mine?(9)Will we be Under the Public Microscope?(10)Will We Need a Third Party?(11)Who is Going to Blink First?(12)Who Are the Decision Makers?(13)How Far Will We Push It?(14)Are We Strong or Wea
34、k?41Part An Overview of International Business Negotiation42The period covered by the negotiation will be divided into three stages:opening&its review;bidding&bargaining;settling&ratifying.43Getting to Know Each OtherThe OpeningThe Review of the Opening44Many relationships in international global tr
35、ansactions begin first with the formation of personal relationships between the players.This interaction gives both parties the opportunity to gain valuable insight and deepen understanding of each other.This is particularly true when we are dealing with people from certain cultural backgrounds,wher
36、e trust based on relationships is essential.45The opening phase is influential because energy and concentration are naturally at a high point at the start of any activity.The parties attitudes are being formed at this time.46Before proceeding further with the negotiations,the party should review the
37、 results achieved from the opening phase.And then decide whether the negotiations can be placed on a bargain acceptable to both sides which can be identified immediately,or a bargain acceptable to both sides is foreseeable which will need further negotiations to achieve,or no bargain is foreseen acc
38、eptable to both sides.47This stage covers a broad period of bargaining in which concessions are made and advantage are gained,so that the gap between the two sides is narrowed to a point.generally through an ordered set of steps:1.Design and Offer Options2.Introduce Criteria to Evaluate Options3.Est
39、imate Reservation Points4.Explore Alternatives to Agreement5.Making Concession or Compromising48Once both sides interests are designated,it is time for negotiators to set forth suggestions and options for how to address the issues.Options reflect negotiators consideration,suggestions and conditions
40、for a solution.Negotiation options may include the objectives of negotiation,terms and schedules.49 Every negotiator has their own criterion for evaluating the options based on their own value system.The disparity of the criterion by the two parties is due to the fact that both parties wish to maxim
41、ize their own interests;therefore it is on this stage that conflicts of interests of two sides will confront and clash with each other,which will surely incite argument and contradiction.50What negotiating parties do next is to gauge how big the gap is between their demand and the counter partys dem
42、and.The reservation point means the target that negotiators have to achieve for assurance of their basic interests.The reservation point only sets out ones own basic interests,and to maximize ones interests is the final target of all negotiators.51When the disparity between the two negotiating parti
43、es seems too large to be mentioned,however,some negotiators do not want to give up easily.A capable negotiator can always exhibit great initiatives and high ability by coming up with new options and constructive suggestions which show the concern to the interests of both parties.52As a result of the
44、 bargaining between the two sides,it is probable that each side will modify its original objective,reassess the potential outcomes and the time taken to achieve each of these.These will enable each side to determine the conditional value for each outcome and to estimate the probability of success.An
45、d then negotiating strategy will be selected to maximize the expected value.53lThe final stage of business negotiations involves reaching an agreement.lMake sure you have an agreement that gives everyone an incentive to comply with its terms.lA final agreement will be reached if any suggestion may e
46、ffectively bridge the gap of the discrepancy so that the negotiation can be concluded successfully.54lHere are some points the negotiators should pay attention to:lPricelCompletionlClaims settlementlLast but not the least,the record of negotiation should be made in written form and initialed by the
47、two sides before they depart.5556The difference between a successful and an unsuccessful negotiator is the ability to close a deal when it has reached its maximum level of distributing enough among all participants.The deal is best closed when the agenda has been exhausted.57Normally speaking,the co
48、ntract for international business includes three parts:Opening:includes the name of contract,contract number,signing date and address,names and addresses of the parties,and so on.Body:includes basic clause(quality,packing,price,shipment,etc)and general clause(insurance,inspection,claim,force majeure
49、,etc)。Ending:states the legal effect of contract,the enclosures and signatures of both parties.58Before signing the contract,the negotiator shall check if the contents of the contract are the same;if it is in agreement with the negotiation terms;if the documents are complete;if the contents of the c
50、ontract are in conformity with the ones in the documents.Once it is signed,the contract is binding upon both parties.Neither of the party could modify the contracted terms nor be in breach of the contract.Wrapping upGiving Feedback after a Negotiation5960Content of negotiation summaryAspects that ha
