Negotiation Strategies for International Business Ro-Sung Kwak, Professor School of Economics and International Trade Dongguk University, Seoul 100 -715, Korea E-mail Address: rskwak@dgu. ac. kr
Contents Ⅰ Negotiations in the Global Business Ex) Opera House Ⅱ 3 Building Blocks for Integrative Negotiations Simulation) Las Flores Ⅲ Negotiator’s Dilemma Ⅳ Principled Negotiation: Fisher and Ury (1981)
Ⅰ Negotiations in the Global Business l Global business world is relationship-oriented where cooperation among interested parties is inevitable for competitive edge. - Agreement through cooperation in the business activities such as international M&A, strategic alliance and joint venture is very important for ensuring the competitiveness of firms l Also, conflict management in the global organization is necessary for securing high performance. l Therefore, learning the effective skills of negotiation as well as skills for overcoming the barriers of communication is directly related to the competitiveness of the firms involved. 3
Ⅱ 3 Building blocks for Integrative Negotiations 1. What is successful negotiation? : Definition of integrative negotiation • Successful negotiation is defined as the one where maximum value is created through problem -solving process among parties. - Thus, the negotiator play a value creator role during the process. - And the expert negotiator can handle the process well enough to create value through negotiation • Why problem-solving approach is necessary for successful negotiation? - Problem-solving approach settles the conflict of interests between parties through investigating real interests of each party, analyzing, and then exchanging and trading – off them - Thus, the approach has an advantage that the interests of parties involved are balanced and the relationship between them not harmed.
Ⅱ 3 Building blocks for Integrative Negotiations l Real Interests the thing which is at stake in the interaction that you care about. -they are either tangible and objective or intangible and subjective l In this context, the task of negotiation is to forge an agreement which is better than BATNA (Best Alternative To a Negotiated Agreement) of each party. - First thing to induce agreement through negotiation is to find what differences of interests are the real sources of conflicts since there commonly exist illusory conflicts. - And then construct agreement utilizing these differences which are seemed to be the sources of conflicts, but paradoxically are the sources of joint gains. l Therefore, negotiation with the agreement better than BATNA of each party utilizing these differences should be value creating process.
Ⅱ 3 Building blocks for Integrative Negotiations 2. Three Building Blocks for Integrative Negotiations: Sebenius (1993) 1) Focus on Real Interests: cf. Positional Bargaining 2) Negotiation is a Means of Advancing Interests: BATNA and ZOPA 3) Negotiation is a Joint Problem-Solving Process: Parties are Interdependent
Ⅲ Negotiator’s Dilemma 1. Why it happens? (Exhibit) Negative Advertizing War between Detergent Producers 2. CASES: Resolution of Negotiator’s Dilemma and Failure: Frequent-Flier Program of the U. S Commercial Air Industry in the 80 s Resolution: Manufacturer’s Rebate Competition among Big 3 Automobile Companies. 7
Ⅳ Principled Negotiation: Fisher and Ury(1981) Principle 1 Separate Problems from people Principle 2 Focus on Real Interests rather than Position Principle 3 Have a Brainstorming Session for developing jointly beneficial options Principle 4 Insist on Using Objective Criteria 8
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