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Global Negotiation – Valley International Association Newsletter, April 2007

Negotiation is the process of communicating back and forth between two or more parties for the purpose of reaching a joint agreement on different needs or ideas. In the art of negotiation, persuasion, rather than power, is used. Framing the negotiation is the process of defining issues that are important to you. It is much like placing a simple painting in an elegant frame to help enhance its features, making it easier to sell. Likewise, framing your side of the issue in a negotiation makes it extremely appealing to your audience.

What can we negotiate?

  • Price
  • Terms
  • Delivery
  • Quality
  • Service
  • Training
  • Resources (people, money and materials)

Win-win negotiation is crucial in international business to get what you want. We need to focus on interests, not positions, and meet the needs of the other side and respond to the question of, “What’s in it for them?” A good example of where interests prevailed over positions was when companies from the U.S. and Japan were trying to negotiate a joint-venture agreement. The negotiators had made progress until they reached the arbitration clause in the agreement. The Japanese wanted to have arbitration held in Japan, while the Americans wanted it to take place in the United States. The Japanese were motivated in their insistence in part by nationalistic pride as well as convenience, while the Americans shared the convenience factor yet also believed that the process would be more fair and efficient in the US. The Japanese, feeling that since the Americans had never arbitrated, and also sensing that neither side would ever go to arbitration, suggested the arbitration to be held in Hawaii. That way, in the unlikely event an arbitration did take place, everyone could play golf while the dispute was being resolved. With that shared interest, agreement was reached.

Cultural factors also play a huge role in negotiations. People who are involved in negotiations have to do their homework before sitting at the negotiating table with their foreign counterparts. For example, in Saudi Arabia, bargaining back and forth shows people’s sincerity about striking a deal. American executives who were Saudi Arabia for the first time explained their proposal with extreme politeness and patience, and in the end did not achieve anything. The second time they changed their tactics, and used heavy bargaining, and ended up not only sealing the deal, but also winning the admiration of their Saudi colleagues. However, this kind of business practice will not work in England, due to the fact that British people favor discussion of facts in a formal and procedural way during the negotiation process.

The Stages of Negotiation

  • Orientation and fact-finding. Orientation and fact-finding. Orientation involves learning about the organizations of the other side, understanding the cultural factors and individual style of your counterparts, and knowing the history of similar negotiations.
  • Resistance. If there is no resistance there will not be genuine interest on the part of your counterpart. The most common strategy in negotiation is people resisting the price.
  • Reformulation of strategies. As you gather new data you will need to assess entirely new situations.
  • Hard bargaining and decision making. This is the time to create options that will be mutually agreeable for both parties.
  • Agreement.
  • Follow up.

Successful global negotiation requires identifying and prioritizing the issues, taking into account the cultural factors and finally arriving at win-win solutions in achieving long-term relations with our counterparts.