Planning for international negotiations IBUS312 Lecture 17, September 19, 2011Types of Issues Distributive issue Compatible issue Integrative issue sTypes of Issues Distributive issue – when you are in competition with each other (money is usually distributive) Compatible issue – when you are in agreement Integrative issue s – when you can trade off issues.Applying the concept of issue types You applied for a job and have been the successful applicant. You are meeting the Human Resources representative to negotiate your starting package. Name two issues that are likely to be distributive. Name two issues that are likely to be compatible. Name two issues that could be integrative.Applying the concept of issue types You represent a NZ company and you are in a negotiation to develop a joint venture with a Chinese company to build a wind-powered electricity generation plant in Southern China. Name two issues that are likely to be distributive. Name two issues that are likely to be compatiband Korean steel mills for 33% price drop. Same cut offered to Chinese but they wanted 45% Chinese steel industry is fragmented and heavily influenced by the government. Negotiations were led by Baosteel until 2009. China Iron Steel Association (CISA) took over in 2010 in order to bring smaller steel buyers into line . July 5, 2009: 4 Rio Tinto staff are arrested as negotiations were fraught with CISA Rio’s computer system was violated and CISA appeared to have inside knowledge about Rio’s negotiating position Arrest authorized by highest level of Chinese governmentThe influence of culture in a negotiation between Rio Tinto and CISA in 2009 Source: Phatak , A. V. Habib , M. M. (1996). ‘The Dynamics of International Business Negotiations’, Business Horizons , 39 (3), 30–8.The influence of culture in a negotiation between Rio Tinto and CISA in 2009 Chinese government Source: Phatak , A. V. Habib , M. M. (1996). ‘The Dynamics of International Business Negotiations’, Business Horizons , 39from Chinese perspective Source: Phatak , A. V. Habib , M. M. (1996). ‘The Dynamics of International Business Negotiations’, Business Horizons , 39 (3), 30–8.The influence of culture in a negotiation between Rio Tinto and CISA in 2009 Precedent of Japan, Taiwan and KoreaThe importance of cultural differences? Depends on the context The knowledge the two parties have of each other (their history) moderates the influence of culture Cultural differences are particularly salient when the parties are beginning to deal with each other.The influence of culture CULTURAL VALUES ATTITUDES about Negotiation Negotiating BEHAVIOURSCultural values and negotiation Cultural VALUES How each issue under negotiation is perceived Expectation of how negotiation should proceedNegotiation Process – the phases of negotiation ( Greenhalgh ) Preparation (what is important?) Issue analysis and analysis of the players. Relationship building Information gathering Information using Bidding Closing deal Implementingation (what is important?) Issue analysis and analysis of the players. Relationship building Information gathering Information using Bidding Closing deal Implementing the agreement Reference: Pages 110-113 of Lewicki, R.J., Saunders, D.M., Barry, B., 2006 , Negotiation. McGraw-Hill Irwin, Boston. Not so important Strong task focusNegotiation Process – the eastern view of negotiation phases Preparation (what is important?) Issue analysis and analysis of the players. Relationship building Information gathering Information using Bidding Closing deal Implementing the agreement Reference: Pages 110-113 of Lewicki, R.J., Saunders, D.M., Barry, B., 2006 , Negotiation. McGraw-Hill Irwin, Boston. VERY importantNegotiation Process – the eastern view of negotiation phases Preparation (what is important?) Issue analysis and analysis of the players. Relationship building Information gathering Information using Bidding Closing deal Implementing the agreement Reference: Pages 110-113 of Lewicki, R.J. the players. Relationship building Information gathering Information using Bidding Closing deal Implementing the agreement Reference: Pages 110-113 of Lewicki, R.J., Saunders, D.M., Barry, B., 2006 , Negotiation.McGraw -Hill Irwin, Boston. Start Any issue can be re-opened for discussionInfluence of Culture on how we argue our point in the negotiation Individualistic cultures (e.g. Australia, U.S., Western European countries) are focused on deal-making and are value open disagreement (vigorous debate) with the other party Collectivistic cultures (e.g. Thailand, Japan, Middle Eastern countries) focus more on relationships and are concerned about “face” during the negotiationInfluence of Culture on How Negotiation Issues are perceived Negotiators also need to consider how differences in cultural values influence how the issues are perceived A negotiator from a collectivistic culture (e.g. Brazil) may view a new bonus system that rewards individual rather than group effort negatively compw}
IBUS312 Lecture 16, September 14, 2011 Debrief of Best Books / Paige Turner Planning for international negotiationsGetting information in negotiations Open-ended questions Start with how , what , who, where or why Don’t permit a yes or no answer Can use them to gain information about the preferences of the other party Can ask process questions or content questions Aim is to understand their needs Listen to their answer!!!Reflective questions Used in counselling and therapy to show that actively listening. Uses other party’s own words back to them. “So – you are saying that …” Ask questions that result in a ‘yes’ Builds rapport and commitment – ‘ Once you have said yes once, you are more likely to say yes in the future, even if it is to something much bigger.’Combining open reflective questioning to buy a house What is the most important issue for you in the sale other than the price? “The date I get the money” So settlement date is very important? “Yes.” How soon do you want settlementwant to be paid your normal wage when you are in Germany. You also want the company to pay the exchange university fees. Form some open-ended questions and reflective questions to get your boss to agree to your going away. Work in pairs – have one party play the colleague to see if your planned questioning will work.Devising open-ended and reflective questions You work as a Management consultant and want to get a very busy colleague to work with you on a time-consuming pro-bono job for a low profile charity. Form some open-ended questions and reflective questions to get your colleague to agree to participate. Work in pairs – have one party play the colleague to see if your planned questioning will work.Overview of Negotiation Planning What do I want? What are my objectives? What are my needs in this negotiation ? (complete iceberg of needs analysis for yourself) Which needs are most important? (rank order them) What is my BATNA to this negotiation? What is my range on each issue ? Whicost important? (rank order them) What is their BATNA to this negotiation? What is their likely range on each issue ? Which issues are likely most important to them? (rank order them) Are their likely to be issues they want to bundle together? trade-off ?Overview of Negotiation Planning Formulate open-ended questions to find out their Important issues Range Concerns InterestsOverview of Negotiation Planning What assumptions have you made? Make them explicit (write them down; share amongst team) What do you think are the other side’s assumptions? Based on what? Assumptions can be about: rules / procedures that need to be applied; rationality; ethics; trust; likely reciprocity; power; time frames; continuity of the relationship; third parties; prejudices; stereotypes; shared understandings.Overview of Negotiation Planning Determine concern for self and for the relationship you have with the OP to determine whether you will be distributive or integrative. Anticipate reciprocity. Trade don’ Dominating What type of negotiation was this? Distributive or integrative? Why?Debrief of Best Books/Paige Turner What type of negotiation was this? Distributive or integrative? Why? Did the relationship matter in this negotiation? What does the dual concerns model say about our negotiation type if we care about the OP? But was it always integrative? Mixed motive negotiations are the most common type.BB PT outcomes Plot of points What approach did the students who both achieved low scores use? What approach did the students who both achieved high scores use?Plot of scores by class dyadsBB PT outcomes What approach did the students who both achieved low scores use? What approach did the students who both achieved high scores use? Why did students who achieved low scores leave money on the table?Types of Issues Each negotiation has a number of issues (or topics). In this negotiation you had 8 issues.Types of Issues Royalties . What was the best outcome for BB? 5% (5000 points) Best outcoth want the same thing should you be competitive or co-operative? Called a COMPATIBLE ISSUE What other compatible issues were there? Number of book clubs Number of print runsCompatible Issues Did any team NOT discover that they agreed about Number of Countries Number of Book Clubs Number of Print Runs What should you do differently to discover compatible issues?Types of Issues Who discovered the trade off between number of week that Paige had to promote and the number of books? How? When you have two issues that can be traded these are called INTEGRATIVE ISSUE S Number of weeks promotion Best Books score PT score 35 30 25 20 15 3000 2500 2000 1500 1000 100 200 300 400 500 Number of Books 6 5 4 3 2 500 400 300 200 100 500 1000 1500 2000 2500Types of Issues Distributive issue – when you are in competition with each other (money is usually distributive) Compatible issue – when you are in agreement Integrative issue s – when you can trade off issues.Applying the concept of issue types Youw}
IBUS312 Lecture 15, September 12, 2011 Planning for integrative negotiationsTypes of Negotiation Yielding 유순한 Accommodating 잘협조하는 Obliging 도와주는 Inaction 활동부족 Avoidance Concern for own outcome / needs High Low Low High Concern for OP’s outcome / needs Compromising Integrative Problem solving Collaborating Win-win Distributive Win-Lose Competing DominatingWhat makes INTEGRATIVE Negotiation Different? Attempt to address needs rather than positions Both parties have a commitment 약속 to meeting the needs/interests of the other party Exchange of information and ideas Invention of options for mutual gainNeeds analysis Substantive interests – tangible issues – what are we negotiating about? Process interests – related to how a negotiation proceeds. Relationship interests. Interests in principle – about what is right, ethical etc. Underlying needs – not always obvious, but may be more important.Identification of Needs You are going to your boss to ask for your company to support your doing a “stying an example of each type of need for the BOSS / the company.Needs analysis For Boss Substantive interests – tangible issues – what are we negotiating about? Process interests – related to how a negotiation proceeds. Relationship interests. Interests in principle – about what is right, ethical etc. Underlying needs – not always obvious, but may be more important.Identification of Needs You have been sent to your company’s new Joint Venture offices in Melbourne as part of your training program in the sales department. The office is struggling in terms of sales and with a shortage of staff. You have been given an assignment that you are struggling to understand and need help to progress. You also think that even with help, it will take more than the two weeks that your boss has given you. In pairs - spend 10 minutes identifying an example of each type of need for the Melbourne boss.Needs analysis For Boss Substantive interests – tangible issues – what are we negotiating about? Processe more information that is put on the table, the better the joint outcome in the negotiation. So how do we GET the information on the other party?Getting information in negotiations Open-ended questions Start with how , what , who, where or why Don’t permit a yes or no answer Can use them to gain information about the preferences of the other party Can ask process questions or content questions Aim is to understand their needs Listen to their answer!!!Reflective questions Used in counselling and therapy to show that actively listening. Uses other party’s own words back to them. “So – you are saying that …” Ask questions that result in a ‘yes’ Builds rapport(relationship) and commitment – ‘ Once you have said yes once, you are more likely to say yes in the future, even if it is to something much bigger.’Combining open reflective questioning to buy a house What is the most important issue for you in the sale other than the price? “The date I get the money” So settlement date is very impooad” program for 6 months in Germany. The company will need to get your job covered and you also want to be paid your normal wage when you are in Germany. You also want the company to pay the exchange university fees. Form some open-ended questions and reflective questions to get your boss to agree to your going away. Work in pairs – have one party play the colleague to see if your planned questioning will work.Devising open-ended ( 제약을 두지않은 ) and reflective questions You work as a Management consultant and want to get a very busy colleague to work with you on a time-consuming pro-bono job for a low profile charity. Form some open-ended questions and reflective questions to get your colleague to agree to participate. Work in pairs – have one party play the colleague to see if your planned questioning will work.Overview of Negotiation Planning What do I want? What are my objectives? What are my needs in this negotiation ? (complete iceberg of needs analysis for yourself) Which needs are OP want ? What are their likely objectives? What are their needs in this negotiation ? (complete iceberg of needs analysis for OP) Which needs are likely to be most important? (rank order them) What is their BATNA to this negotiation? What is their likely range on each issue ? Which issues are likely most important to them? (rank order them) Are their likely to be issues they want to bundle together? trade-off ?Overview of Negotiation Planning Formulate open-ended questions to find out their Important issues Range Concerns InterestsOverview of Negotiation Planning What assumptions have you made? Make them explicit 분명한 ( write them down; share amongst team) What do you think are the other side’s assumptions? Based on what? Assumptions can be about: rules / procedures that need to be applied; rationality 이성 ; ethics 윤리 ; trust; likely reciprocity; power; time frames; continuity of the relationship; third parties; prejudices; stereotypes 고정관념 ; shared understandings.Overview of Negotiatihow}
IBUS312 Lecture 14, September 7, 2011 Planning for negotiationsThe dual concerns model Yielding Accommodating Obliging Distributive Win-Lose Competing Dominating Integrative Problem solving Collaborating Win-win Inaction Avoidance Concern for own outcome / needs High Low Low High Concern for OP’s outcome / needs CompromisingPlanning For Distributive Negotiations 2 steps in planning a distributive negotiation Figuring out your BATNAs Establishing your bargaining rangeBATNA First figure out your B est A lternative to a N egotiated A greement What are my alternatives to negotiating with this person about this issue? Influences your power in the negotiation May decrease your reliance on your negotiating counterpart May influence € you are willing to spend Also worth thinking about the OP’s BATNA Do they need you?BATNA for car purchase What are my alternatives to negotiating with this BMW dealer to buy this red 1 series coupé ? Riding bike to work Catching a bus Buying a different car Buyinured out your and the OP’s BATNA Set your bargaining range Target point – ideal outcome Resistance point – where you would prefer no deal / walk-away Opening offer – below target if buying, above target if sellingSetting your Target Point Target Point = your IDEAL outcome Be aspirational in setting your target point Many negotiators are not aspirational . When you ask, you often get. Don’t be overly aspiring (too tough, refuse to make ANY concessions from your target) Don’t let your resistance point influence your target point – figure them out separately. Beware of focal 중심 points / anchorsAnchoring Cognitive bias where we are influenced by a suggested reference point Write down your answers to the following Is the Mississippi river longer or shorter than 5,000 kilometres ? How long is the Mississippi river? What effect would you predict if you had been asked was the Mississippi river longer or shorter than 500km? The Mississippi is 3730kmAnchoring Anchoring is an attempt to establish performance against the anchor that is provided (e.g. advertised price) To counter the anchoring effect – get someone to ask where you got the numbers from – if not from an external source – go find some information.Setting your opening price What do you want to signal? Will it be seen as too high/low and so rejected outright? Should it be close to the resistance point to suggest a more cooperative stance? Extreme or Modest Culturally boundSet a bargaining range as a house buyer BATNA Set target price Resistance Opening offer to buy the house Your neighbour and you are life partners – and you LOVE this house. It is a very tight market and there are lots of other buyers with money / offers. Negotiate together to set your range.Maleny $780,000 A REESVILLE CLASSIC Enjoy beautiful views of the valley and surrounding mountain ranges from this most charming of character homes. On offer is a lovingly maintained Queenslander with its polished wooden floors, VJ walls and decorative fretwork. Fe patch and landscaped gardens.Settlement Range / Zone of Potential Agreement on Price Resistance point Target point Seller’s Range Target point Resistance point Buyer’s Range Opening offer Opening offerSettlement Range / Zone of Potential Agreement on Price Resistance point Target point Seller’s Range Target point Resistance point Buyer’s Range Opening offer Opening offer ZOPABargaining Range for Tyre purchase Work for mining company and are responsible for buying tyres for Haulpaks Imperative ( 반드시필요한 ) you get some new tyres . List price = USD22,000 per tyre (seller unlikely to stick to this). World wide shortage of tyres due to mining boom. Mines are paying between USD30,000 – 40,000 for a second hand tyre Protective chains are selling for USD76,000 per pair (USD38,000 per tyre)Set a bargaining range as a buyer for Tyres Consider BATNA (yours and the other parties) Set target price Resistance Opening offer to buy the equipment Your neighbour will be going into the negotiation with n. Each item (issue) in the bargaining mix has a range, zone of potential settlement. Bargaining mix offers potential to bundle issues, trade them off.Distributive / Competitive Negotiation Summary What one party gains, the other party loses. Position focussed - each party has a range for each issue. Ranges need to overlap to have scope to negotiate Planning = think about BATNA, range, opening offer, tactics you can use. Process is bid, offer, bidTypes of Negotiation Yielding Accommodating Obliging Inaction Avoidance Concern for own outcome / needs High Low Low High Concern for OP’s outcome / needs Compromising Integrative Problem solving Collaborating Win-win Distributive Win-Lose Competing DominatingAttempt to address needs rather than positions Both parties have a commitment to meeting the needs/interests of the other party Exchange of information and ideas Invention of options for mutual gain What makes INTEGRATIVE Negotiation Different?Needs analysis Substantive interests – tangib}
IBUS312 Lecture 13, September 5, 2011 Language in MNCs Types of NegotiationLanguageLanguage Discourse research has shown that we infer meaning from words and have expectations about appropriate answers People from different cultures may not know the correct answer or not infer the correct meaning – e.g. How are you? At a bus stop – ‘Can you tell me the time?’ Expected answer? In a meeting – boss to secretary: ‘Do you have the minutes?’Language Connotations of words reflect cultural norms/rules Tea time ‘Bring a plate’ What would happen if you asked for a “trim flat white” or a “long black” in Jo’burg ? Different meanings of words Director Force majeure (and act of god versus unforeseeable acts) – typical contract termLessons in language Language influences culture and culture influences language Formality / power distance of a culture is often evident in the language. German – difference in formal and informal ‘you’ (inference?) Informal / egalitarian / individualistic cultures may try Each Ethnocentric approach Easy to communicate with other offices because of shared language May not be culturally sensitive and miss important points in the culture Managers may have to learn the language / culture (hard if they over the age of 28)Advantages and Disadvantages of Each Polycentric approach The manager on the ground has a good cultural understanding of local issues Difficult for cross-office communication and collaboration Potential for misunderstandings between head office and subsidiaryAdvantages and Disadvantages of Each Geocentric approach Get culturally mixed offices Potentially good for sharing information Managers may have to learn the local language / culture and deal with misunderstandings because of it Frequent moves expected and loose relationshipsWritten communication Why does it differ across cultures? What is important is different; eg . demonstrating respect versus demonstrating knowledge Way an argument is formed is different across cultures. Which orderSTUDENT OF DEPARTMENT OF MANAGEMENT IN DHAKA … THE FINAL EXAMINATION WILL BE HELD THE LAST WEK OF FEBRUARY, WITH GREAT ANTICIPATION, I WOULD LIKE TO GET ADMISSION IN YOUR FAMOUS AND WELL REPUTED INSTITUTION IN THE COURSE OF MBA FROM NEXT AVAILABLE SESSION. … IN RESPECT, I HOPE YOU WILL EXTEND YOUR KIND CO-OPERATIOON AND FURNISH ME DETAILS AND MAKE ME EVER GRATEFUL TO YOU.Written communication General rule: Adapt to your audience Chose the culturally appropriate level of formality and relationship building Easy to get people on-side by using their spellings, dates, where the address is placed, titles, paper size.Emails Check your email in the same way you would check a letter (carefully) Beware that txt languages sends impression of youth – not desirable in many cultures Txt language also assumes high-level English. Try to conform to the culture you are sending it to Try to take out any ambiguity as misunderstanding is too easy via email.Negotiation across cultures Types of negotiationTg Inaction Avoidance High Low Low High Compromising Concern for relationship Concern for your outcome Integrative Problem solving Collaborating Win-win Distributive Win-Lose Competing DominatingRelationships Outcomes Score 1 (not at all important) to 5 (very important). How important is the relationship? 1 – 5? How important is the outcome to the negotiator? 1 – 5? Buying a used car privately? An academic negotiating their workload allocation with their head of department? Negotiating with your mother which restaurant you are taking her for her 60 th birthday?What strategy/style when? Integrating when complex issues; need help (or OP’s resources) to solve problem; commitment from OP is needed to implement. Obliging ( 도와주는 ) when you think you could be wrong; issue more important to OP; in a position of weakness; preserving relationship is important. Dominating when issue is trivial( 사소한 ) ; speedy decision needed; issue is important to you. Avoiding when the issue is trivial; effectinglding Accommodating Obliging Inaction Avoidance Concern for own outcome / needs High Low Low High Concern for OP’s outcome / needs Compromising Integrative Problem solving Collaborating Win-win Distributive Win-Lose Competing DominatingPlanning For Distributive Negotiations 2 steps in planning a distributive negotiation Figuring out your BATNAs Establishing your bargaining rangeBATNA First figure out your B est A lternative to a N egotiated A greement What are my alternatives to negotiating with this person about this issue? Influences your power in the negotiation May decrease your reliance on your negotiating counterpart May influence € you are willing to spend Also worth thinking about the OP’s BATNA Do they need you?BATNA for car purchase What are my alternatives to negotiating with this BMW dealer to buy this red 1 series coupé ? Riding bike to work Catching a bus Buying a different car Buying from another BMW dealer Waiting to buy it later What are the BMW dealer’s BATNAs to nego