Chapter 1

Fundamental of International Business Negotiation

Achieving consensus

Questions in focus

1. What are the key principles of negotiation?

2. What are the common mistakes in negotiation?

What is negotiation?

• Negotiation is the process where interested parties resolve disputes, agree upon courses of action, bargain for individual or collective advantage, and/or attempt to craft outcomes which serve their mutual interests. Negotiation is usually regarded as a form of alternative dispute resolution.

What is negotiation? (Continued)• The essential qualities of

negotiation are: 1. The existence of two parties who

share an important objective but have some significant differences.

2. The purpose of the negotiating conference to seek to compromise the differences.

3.The outcome of the negotiating conference may be a compromise satisfactory to both sides, a standoff (failure to reach a satisfactory compromise) or a standoff with an agreement to try again at a later time.

What is negotiation? (Continued)• To negotiate is to exchange

concerns, reconcile needs and demands, resolve disputes and conflicts, protect our interests.

• To negotiate is not necessarily to win everything at any cost, even not necessarily to win, but to get what is fair and reasonable, and to reduce our losses.

• To negotiate is to change the current situation, it is not necessary to be a verbal tug of war to be successful

• To negotiate is to let both sides get what they want

Basic Principles1. Negotiation is a voluntary

activity in the sense that either party can break away from or refuse to enter into discussion at any time.

2. A negotiation usually starts because at least one of the parties wants to change the status quo and believes that a mutually satisfactory agreement is possible.

3. Entering negotiations implies acceptance by both parties that agreement between them is required (or desirable) before a decision will be implemented.

4. Timing is a critical factor in negotiation.

5. A successful outcome in negotiation is not always winning at any cost or even ‘winning’, but getting what both sides want.

6. The progress of all types of negotiation, even when it is conducted through third parties, is strongly influenced by the personal values, skills, perceptions, attitudes and emotions of the peoples at the bargaining table.

What are the implications of these principles for an actual

negotiations?1. Negotiation does not have to be a

verbal tug of war to be successful.2. Successful negotiation involves the

ability to a. determine through observation

and analysis the best means of persuasion

b. to put that persuasive approach into the way into practice at the appropriate time.

(Continue)3. Not all situations warrant

‘negotiation treatment’4. Because timing is

important in negotiation, you need to recognize where you are in the negotiating process, and plan your actions accordingly.

• If you do not have time to plan, don’t negotiate!

Common negotiating mistakesA skillful negotiator will most carefully distinguish between the little and the great objects of his business, and will be as frank and open in the former, as he will be secret and pertinacious in the latter.

What are the most common mistakes?1.Entering negotiations with a preset

mental mindset.2.Entering a negotiation with only a

general goal to be obtained upon the final outcome of the negotiation.

3.Not knowing who has final negotiating authority.

4.Failing to advance positions and arguments of substance

5.Failing to let the other side make the first offer.

6.Ignoring time and location as a negotiating weapon.

7.Giving up when negotiation seems to have reached a deadlock.