The purpose of this business negotiation guide is to provide helpful steps for consultants with their business negotiations. This guide follows similar steps recommended by Frank Acuff, a professor of domestic and international business negotiation at Northwestern University, who is the author of dozens of books on the topic1Saee, J. (2008) "Best practice in global negotiation strategies for leaders and managers in the 21st century” [Online]. Available: https://msc-dml.digitaledge.education/wp-content/uploads/2017/01/M4L4T1-Saee-Neg-Best-Practice-in-Global-Negotiation-Strategy.pdf [Accessed 13 April 2020]. ,2LinkedIn (2020) "Frank Acuff” [Online]. Available: https://www.linkedin.com/in/frank-acuff-182b15b/ [Accessed 30 May 2020]. . His methods supposedly work anywhere in the world3Kosar, M. (2012) "Negotiation strategies and skills in international business” [Online]. Available: https://publications.theseus.fi/bitstream/handle/10024/42807/Mahmoodi_Kosar.pdf?sequence=1- p.19 [Accessed 13 May 2020, p.19]. .
Prepare and plan before a business negotiation
One of the biggest mistakes negotiators make is to enter negotiations without preparing and planning for a meeting. It is not enough to simply know what the goals are from the deal but also thinking about the interests of the other company and the person(s) the negotiations will be conducted with.
Furthermore, all the pertinent facts should be researched in order to be able to clarify your position during the discussion. This would include familiarization of what products or services the other party offers, their industry, and their competitors. By conducting research, it will provide valuable insight into their strengths and weaknesses, as well as predict what’s negotiable. By also researching the other party, it shows a genuine interest from you, as many successful discussions are aided when offers are made that appeal specifically to the corporate aims and objectives of the other party.
It is also important to take the time to analyze other aspects of the business negotiation carefully. An alternative to a negotiated agreement (BATNA) a term coined by Roger Fisher and William Ury, should be thought of by the negotiator4Thompson, E. (2005) "Preparation: What to do before negotiation” [Online]. Available: https://msc-dml.digitaledge.education/wp-content/uploads/2017/01/M4L4T1-Leigh-Thompson-Ch2-The-Mind-and-Heart-of-the-Negotiator.pdf [Accessed 31 March 2019]. . This could be the best course of action if an agreement is not possible in the negotiation. Another important point is to calculate the walkaway point and try to estimate the BATNA of the other party. All these calculations will help with more rational decisions in the negotiations. This is particularly useful when renegotiating contracts with your existing customers, as it allows alternative options/ideas in the negotiations.
Adopt a win-win approach
Adopting a win-win approach will help you get what you want while trying to achieve this, one must consider the “what’s in it for them”. This could mean different things in different cultures. For example, going into a joint venture partnership with a Hungarian company could mean taking advantage of a skilled, inexpensive workforce for you, while the “what’s in it for them” could mean forming business relationships outside Central Europe for the other party. A win-win result does require scrutiny of both parties’ overall goals. It doesn’t matter where the negotiations take place, focusing on a win-win situation sharply increases the chances of success.
In addition, be careful of personal biases when pursuing a win-win situation, as it can lead to flawed decision-making. Negotiators tend to be biased, so when analyzing offers/counteroffers, this needs to be considered. When assessing offers, ask the question of what the personal biases are and why. By doing so, it will bring a degree of alertness to the influence of biases that may be present when making decisions. It will help identify the source of the bias and how it influences the decision-making process. It will prove a point from which a better negotiation decision can be made.
Aim high during the dialogue
Aim high in negotiations, as people tend to agree on larger requests easier once smaller points have been agreed upon. Smaller points of the agreement allow us to build towards larger points. Any starting ‘real’ requests should for example be high i.e. £20,000 even though £10,000 is the price wanted. This sets an anchoring expectation and will make the ‘real’ request appear smaller. This will also enhance the probability of getting the ‘real’ request as the result of getting agreements on the smaller points mentioned.
Use simple language
Use simple communication, so that the other party understands what is being negotiated. This is especially true when conducting business in countries where English is not the first language. For example, do not use cliché’s and colloquialisms that make it very hard for others to understand. Also, avoid using phrases like “annual premium”, “maturity date” and “accrued interest”. Instead, use “annual payment”, “final payment date” and “unpaid interest”. Just because the foreign party speaks English, it does not mean they understand it.
Ask questions and listen
It is important to ask good questions during negotiations, particularly, in the early stages. One of the main goals is receiving information. When asking questions, don’t do anything which would embarrass the other party. In some cultures, questions can be open and direct like in the US, Canada, Australia, and Sweden than in Korea, Japan, Taiwan, Brazil where indirectness is prized. In the latter cultures, the message is embedded in the context of what is being said, so limit talking and listen.
Build strong relationships
Do not engage in value issues, such as politics, religion, race, or even the roles of women in the workplace. These topics are full of landmines and will not help build and convert long term profitable client relationships with the negotiating party. For example, it may be OK to say even more CEO’s are needed in the United States beyond the 44%, but, the same statement in Japan may not resonate well where women make up just 13 percent of managerial positions5Larmer, B. & Kobayashi, C. (2018) "Why Does Japan Make It So Hard for Working Women to Succeed?” [Online]. Available: https://www.nytimes.com/2018/10/17/magazine/why-does-japan-make-it-so-hard-for-working-women-to-succeed.html [Accessed 12 April 2020]. . It’s the personal relationship that is developed between the counterparts that provide the basis or context for the content portion of the business negotiation. In many cultures, it is the quality of the relationship that is established, rather than the work that went into it.
Maintain personal integrity
When negotiating with foreign organizations, personal integrity is critical, as no one will share information of importance if there is no trust. If you are not perceived as trustworthy in a negotiation, the other party may only share what they absolutely must in order to win. However, in many cultures it is usually the person or the business relationship the counterpart may trust, not a piece of paper. Furthermore, building trust with foreign clients can be a long process, which can be harmed in subtle ways such as using a phrase like “to be honest”, as this may come across as you are not usually an honest business partner.
Negotiations are a matter of give and take. One must give concessions in order to get concessions in return. Assumptions should not be made in negotiations when it comes to actions that speak for themselves. The other counterpart might ignore, overlook or downplay the concessions as to avoid the social obligation to reciprocate. Therefore, always label the concession that has been made by you to the other party. This can be done by making the other party know of what has been given up or stopped demanding. By doing so, the concession has been clarified to the other party, as well as, emphasizes the benefits to the other side.
It is necessary to have patience, as negotiations with a foreign company’s tend to take longer. It may also be one of the tactics deployed by the other counterpart so that they can wear down the patience of the opposite side. They may be counting on the anxiousness and on the concessions the other party may never make. Patience and concession are interlinked, as impatient negotiators tend to make more concessions and counter-proposals.
Be culturally savvy and authentic, while adopting business negotiation strategies of the host country
It is advisable to gain an insight into the culture of the other party, as this allows the negotiator to bridge the cultural gap and any predisposition before the negotiations. This allows the ability to understand the culture and environment the foreign company may be operating in. The business negotiation process must be completed through the culture and rules of the host country, where the negotiations are taking place. For example, in certain countries like Hungary, Russia, Romania, etc. one should not send a mid-level manager to do negotiations where senior managers/decision-makers might be at the negotiation table. This may be perceived as very disrespectful and looking down at the other counterpart.
This negotiation guide provided helpful steps for consultants to make improvements on their negotiating skills in different areas. Particularly in the areas of understanding common negotiation strategies, improve preparation, understand the effects of “personal bias” and how to convert more opportunities to profitable, long-term, client relationships in foreign markets.
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