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Before we start any process of negotiation, there are a number of basic principles to remember
You are the one who uses the tools, so you must know how to use them best.
The other side also uses the same mechanisms, both as tools of information and from an intuitive point of view. Because of this you must learn the means which can be used by the opposing side.&
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Work in an automatic fashion. This will make it easier to act rationally and cope with your own emotional reactions.You will then be able to use the tactics required and react in the most advantageous way.
Commercial negotiations start from the moment you meet the other side. They are not limited by time boundaries within which it has been announced that the negotiations will now be officially done.
There are rules of negotiation, just as there are for a game of chess. There is no guarantee that the other side knows or follows the rules, but research studies have shown that they usually behave as expected. It is for this reason that we can relate to negotiation as a scientific process, not a creative one. Chess players practice regularly. If they do not practice, their skill decreases, especially when their level of expertise is high. You cannot let your negotiation skills rust; you must read articles and books and keep practicing.
Effective negotiations focus on producing a Win Win situation, the meaning of which is a situation in which both sides are pleased with the results. You must remember that in the process of negotiation, the goal is to win the majority of outlined conditions for long term mutual satisfaction and cooperation.
Before you start, check that you have not forgotten the following elements
1. a powerful desire to be one of the participants and partners in the action
. behaving with respect and humility in all discussions
. patience and composure
4. a real commitment to the organization of which you are a member
5. preparation, an in-depth understanding of the situation, and knowledge
6. prepared alternatives
7. clear strategies, tactics, and objectives
In your opinion, what are the most important reasons international business negotiations fail? Explain your reasoning for each one.
avoiding making the initial suggestion This causes the other side to make the first suggestion. When you need more information or when their suggestion is better than you expected, this could be an advantage. Listening to their stand does make it possible for you to think and react in a more suitable, informed way, and that too, can be an advantage. You will be able to make a suggestion which lies between the two extremes. However, not being willing to offer a suggestion can stall the entire process and lead to failure.
thinking that signing the agreement is the end of the process signing is the completion of the negotiation and the beginning of the next stage. Thinking that all that is needed is a signature, can lead to highly emotional crisies and irrational behaviors, even cancellation of the agreement.
losing your cool or withdrawing from the negotiations the negotiations can be postponed or fail either because they must replace you or because their emotional response is to stop the process.
misinterpretation or failure to accept and relate to the practices and attitudes of the other side cultural values, traditions and norms are different and all the diversities can make the process of negotiation difficult.
different goals objectives may be misunderstood, again, a cultural difference which can stop the process right at the beginning.
take it or leave it attitude this is a guaranteed recipe for failure. Negative attitudes, closed minds, and unwillingness to look for compromise all can bring failure.
When negotiations take a very long time, one of the following situations can occur
impasse lack of agreement on one issue. It is possible to continue the talks and avoid discussing the one issue which is the problem. This may or may not work.
stalemate this is a situation in which both sides continue to talk, but they do not advance toward any solution.
deadlock a deadlock is a situation in which no further advance is possible. This does not occur often, but when it does, the only possible way out is to bring in a facilitator or negotiator and to accept his final decisions.
In your opinion, what are the most important reasons international business
negotiations are successful? Explain your reasoning for each one.
all successful negotiations start by building trust Trust is based on reliable communications, honesty, and a feeling of shared goals.
friendly tactics Business negotiations are not conducted between organizations. They are conducted between people. Respect shown on both sides for both sides will achieve success.
presentation of data which shows interest The preparation of papers and graphs showing the advantages of your proposals, for example, comparing your ideas with the competition, are often more convincing than statements that are made vocally.
undermine their confidence Presenting the disadvantages of their proposal or referring to some deficiency on their side, as long as there is no personal attack, can improve the chance of success.
experience communication in the international business world is quicker and easier than it ever was. More and more business managers negotiate deals. The experience they gain helps them learn how to make the next negotiation successful.
awareness and better understanding of non-verbal communication Body language is often more important than the words which are spoken. Knowledge of non-verbal communication, both what you project and what is projected by the other side, improve the chance of success.
flexibility Adherence to plans and goals is important, but not so important that you cannot afford to be flexible. Being capable of lowering demands a little or compromising bring about success.
end the negotiations with friendly handshake successful negotiations beget more successful negotiations. Remembering to close in an amicable and cordial way will help maintain good relations.
In deciding to establish a strategic alliance or a start up subsidiary in a foreign country, what are the major factors a company should consider?
The recipe for the success of a new subsidiary abroad is to start at the right time and in the right way.
major factors
the potential market for the product. Is there a need or a demand?
the potential service providers for the equipment
the availability of qualified workers
in what geographic area the business will be situated. example - Does it have easy access? Are there other businesses in the area? Does the area attract new companies? Have there been failures in the area, and, if so, why?
population statistics (including annual income, age, number of children) in the area and population growth expected.
potential competition in the area; cost of the product/service they offer; advantages and disadvantages of their product/service
who will supply the materials needed by the business and how (if transportation is involved)
does the product/service have some competitive edge which will contribute to its success?
laws of the area
bank regulations of the area, ease or difficulty getting financial aid (loans/grants), and if large loans are needed, then the interest rates.
national problems which would interfere with production or provision of service
anticipated profits
anticipated expenses and if can survive from 1- years without showing a profit
anticipated initial funds demanded
need to advertise
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