1、1Chapter 2Game Principles of International Business Negotiation2Key points:nGame principles of negotiationnThe intention of equality and voluntarynNegotiation strategies of seeking common ground while maintaining differencesnEight crucial elements which influence the negotiation3What are the game Pr
2、inciples of International Business Negotiation?They are also called fundamentals or guidelines of international business negotiation,which are the basic rules,beliefs or norms accepted in international business negotiation that all participating parties are obliged to observe.42.1 Equal and Voluntar
3、y ParticipationnCase study Please look at the case study in the textbook of P28,the negotiation between Boeing Company in the United States and Chengdu Aircraft Company in China.Q:Why the Chinese and American parties were able to reach such a cooperative agreement?52.1.1 All Parties,big or small,sho
4、uld be equal nIn international business negotiation,all parties must be equal participants and be willing to participate in it,no matter how great the gaps are in their economic power and organizational scale.nThe participants in negotiations have the same option for choosing the trade items and ter
5、ms.nThe more powerful party makes fewer concessions while the weak one makes more.(Please read the case continued on P29)62.1.2 Veto power embodies equalityIn international business negotiation,no situation exists in which one party is entitled to make the final decision or the minority must be subo
6、rdinate to the majority.All parties have the power to veto any clause under negotiation,and so no agreement will be achieved if either party is not satisfied.7As the case above mentioned,if China had refused to assembly only the vertical fins or the American had refused to allow assembling any part
7、in China,then the negotiation would have broken down and ended in failure.82.1.3 Respect embodies equalityAll parties concerned should show respect regardless of their power and size,being careful to avoid showing discrimination or disdain to their counterparts.If any party abuses its power and bull
8、ies others,the negotiation will fail.9Take the above case for example:Although Boeing was powerful,it needed Chinas big orders for airliners,so it had to consider Chinas request for technology transfer.Chengdu Aircraft Company itself was less powerful,but it had a Chinas big market behind it.Therefo
9、re,it did not need to be servile to the American company.102.1.4 Voluntary agreement embodies equalityIt means that all parties can participate in the negotiation willingly and make their own decisions.Only if you are willing can you be equal,understand one another,make concessions,and finally reach
10、 a mutually beneficial agreement.112.2 Credibility FirstCase study:The story of Li Ka-Shing,the richest Chinese,and Zhou Zhengyi,the richest man in Shanghai.Q:What can we learn from this case?122.2.1 Understanding derives from credibility and trustworthinessIn international business negotiations,bei
11、ng credible and trustworthy does not necessarily mean revealing your objectives and plans directly and totally,but it does require saying frankly what the other party wants to know and ensuring his or her satisfaction.132.2.2 Credibility enhances trustworthinessnBeing honest and credible in internat
12、ional business negotiation helps to remove psychological barriers and suspicion,laying a solid foundation for mutual trust.nPlease see the case study on P33.142.2.3 Be aware of the level of the counterparts credibility152.3 Mutual reciprocity&mutual benefitsn Mutual reciprocity and mutual benefit is
13、 the goal of international business negotiation.nPlease read the case study on P35 and answer questions as follows:Q1:What did the Brazilian footballer do when the Manchester United Club couldnt pay his salary on time?Q2:Why didnt he resort the Manchester United Club to the law?162.3.1 Interests fir
14、st,position secondnNo matter what scale it is,no matter what form it takes,an international business negotiation is centered on pursuing the interests of each party.nNegotiation must be arranged around the central goal of gaining realistic interests.nFocusing on interests rather than positions is a
15、golden rule and precious precept in negotiation at all times and in all countries.17 For example:Two students quarrelling in a library.One wants the window open and the other wants it closed.They bicker back and forth about how much to leave it open:a crack,halfway,three quarters of the way.No solut
16、ion satisfies them both.18 Enter the librarian.She asks one why he wants the window open:”To get some fresh air.”She asks the other why he wants it closed:”To avoid the draft.”19 After thinking a minute,she opens wide a window in the next room,bringing in fresh air without a draft.20Q:What can we le
17、arn from the example above?The librarian did not focus only on the two students stated positions of wanting the window open or closed.Instead she looked to their underlying interests of fresh air and no draft.212.3.2 Bargaining over position,a taboo in negotiationn Bargaining over positions will bre
18、ach the following negotiation taboos:(1)Violating the equal negotiation game principle For example:In the WTO Doha round,which centered on agricultural issues,all parties insisted on its own positions and made no concessions,and so it lasted five years without any outcome.22(2)Sabotaging the harmoni
19、ous atmosphere(3)Hiding a snake in the grass:intending not to honor an agreement 232.4 Maximizing commonalities&minimizing differencesnSeeking common ground while reserving differences is a bridge to success in international business negotiation.nRead the case study on P37 and consider what are the
20、differences between the two negotiating parties?242.4.1 Seeking common goalsnPutting the relatively greater discrepancies aside,and starting from their mutual interests.nThe principle of“easy issue first and difficult one later”.nQ:From the case above,what is a common objective of both parties?We ca
21、n learned that to launch the world famous brand sedans in Chinese market quickly at the lowest cost was a common objective of both parties.252.4.2 Abandon minor pointsNegotiators should cling to the principle that the most important objectives and the negotiating criteria should be identical and min
22、or discrepancies and disagreements can be temporarily ignored if they do not affect the accomplishment of the major goals.26 From the case study above,we can learned that the Chinese company agreed to negotiate about the introduction of other car models after a few years.Actually,this meant the over
23、all arrangement of this brands introduction into China-the“mega-commonality”-was made first;and the“minor differences”,the impossible early launch of other high quality sedans in China,was omitted temporarily.This finally resulted in a successful negotiation.272.4.3 Compromise is the mother of succe
24、ssn Negotiators have to go through a process of not only seeking mutual gains but also making concessions.n“Necessary concession is the mother of successful negotiation and seeking commonalities while reserving differences is vehicle for breaking up negotiation deadlocks”.nTo keep your bottom line a
25、nd give up some minor interests for achieving the main target is necessary and requisite.282.5 Speak on Good GroundsnCase study on P40:Case A&Case BnSpeaking on good grounds is a most powerful talisman in international business negotiation.292.5.1 Facts speak louder than wordsn You must list data an
26、d facts and convince people by sound reasoning if you want to ensure your benefits,eliminate your counterparts doubts and refute their objections.302.5.2 Using objective criterianStudy case of P42 and tell us why was it possible for the model from Americas Massachusetts Institute of Technology to se
27、ttle the disputes?nIt is because the model exemplified the effective,equitable and scientific aspects of objective criterion.31Q:What is an acceptable objective criterion?nIt should have objectivity independent from the subjective will of all parties.nIt should be legitimate and operable.nIt should
28、be authoritative and scientific.32 Besides,Experts opinions,agreements between countries,routine international practices and legal practices of a country or an international organization,can all be viewed as objective criteria.332.6 Separate the People from the ProblemnStudy case of P432.6.1 The rel
29、ationship between the negotiators and the negotiationnThree situations could develop in negotiation:(1)the negotiation may proceed successfully.nWhen the negotiators are feeling happy and comfortable they are also more willing to put themselves into the shoes of the other side and will make concessi
30、ons more easily.34n(2)the negotiation may end in a deadlock,or stalemate.n(3)one party may tend to become agitated,making angry out bursts and even launching an attack in offensive language as a means of defense when they fear that the other side proposes a demand with the deliberate intention to do
31、 then great harm;or when their nationalistic feelings are offended.n In each of these three situations,the negotiators fail to separate the people from the problem under negotiation.352.6.2 Specific methods of separating the people from the problemn(1)See the situation from the other sides point of
32、view.n(2)Present more objective information and avoid blaming the other side.n(3)React tactfully to emotional outbursts.n(4)Help them save face and do not hurt them emotionally.36 The Eight-World Maxim of Business NegotiationNegotiation power comes from 8 sources:”NO TRICKS”.n“N”represents needn“O”represents optionsn“T”represents timen“R”represents relationshipn“I”represents investmentn“C”represents credibilityn“K”represents knowledgen“S”represents skills
