01 j = managing political risk n negotiation

Managing Political
Risk and Negotiations

INTERNATIONAL NEGOTIATION
 More complex than domestic

negotiations
 Differences in national cultures and
differences in political, legal, and
economic systems often separate
potential business partners

STEPS IN THE INTERNATIONAL
NEGOTIATION PROCESS

STEP 1: PREPARATION
STEP 2: BUILDING THE
RELATIONSHIP
STEP 3: EXCHANGING
INFORMATION/FIRST OFFER
STEP 4: PERSUASION

STEP 5: CONCESSIONS
STEP 6: AGREEMENT

STEP 1: PREPARATION
Is the negotiation possible?
Know what your company wants
Know the other side
Send the proper team
Agenda
Prepare for a long negotiation
Environment
Strategy

DIFFERENCES IN CULTURES IN
KEY NEGOTIATING PROCESSES
 Communication styles—direct or
indirect
 Sensitivity to time—low or high
 Forms of agreement—specific or

general
 Team organization—a team or one
leader

STEP 2: BUILDING THE
RELATIONSHIP
 No focus on business
 Partners get to know each other
 Social and interpersonal matters
 Duration and importance vary by culture

STEP 3: EXCHANGING
INFORMATION AND THE FIRST
OFFER
 Task-related information is

exchanged
 First offer

STEP 4: PERSUASION

 Heart of the negotiation process
 Attempting to get other side to

agree to a position
 Numerous tactics can be used

VERBAL AND NONVERBAL
NEGOTIATION TACTICS
 Promise
 Threat
 Recommendation
 Warning
 Reward
 Punishment
 Normative appeal

OTHER NEGOTIATION TACTICS
 Commitment
 Self disclosure
 Question

 Command
 No
 Interrupting

EXHIBIT 3-4: FREQUENCIES OF VERBAL NEGOTIATION
BEHAVIORS
Commitment

Brazilian

Command

U.S.

Recommend

Japanese

Promise
NO

Interrupt
0

20

40

60

80

100

“DIRTY TRICKS” IN
INTERNATIONAL
NEGOTIATIONS
Dirty tricks are negotiation tactics
that pressure opponents to accept
unfair or undesirable agreements or
concessions

PLOYS/DIRTY TRICKS POSSIBLE RESPONSES
 Deliberate deception - point out what is

happening
 Stalling - do not reveal when you plan to
leave
 Escalating authority - clarify decision
making authority

 Good guy, bad buy routine - do not

make any concessions
 You are wealthy and we are poor ignore the ploy
 Old friends - keep a psychological
distance

STEPS 5 AND 6:
CONCESSIONS AND
AGREEMENT

 Final agreement:

The signed
contract, agreeable to all sides
 Concession making requires that
each side relax some of its demands

STYLES OF CONCESSION
 Sequential approach - consider each

issue as a separate point
 Each side reciprocates concessions
 Holistic approach - more common in
Asia
 Concession making begins after all
issues are discussed

BASIC NEGOTIATION
STRATEGIES
 Competitive

– The negotiation as a win-lose game
 Problem solving
– Search for possible win-win situations

COMPETITIVE OR PROBLEM SOLVING
INTERNATIONAL NEGOTIATION
 Cultural norms and values may

predispose some negotiators to
one approach
 Most experts recommend a
problem solving negotiation
strategy

THE SUCCESSFUL INTERNATIONAL
NEGOTIATOR: PERSONAL
CHARACTERISTICS
 Tolerance of ambiguous situations
 Flexibility and creativity
 Humor

 Stamina
 Empathy

 Curiosity
 Bilingual