Article of the month - March 2010

**The BEST way
To negotiate internationally**

Pierre Casse, in his book “Training for the Cross Cultural Mind”, lists three key skills for the international negotiator. You should be able to see the world as others see it. You should be able to deal with ambiguous situations. And you should be able to express yourself so that everyone can understand.

Tom Peters, the American management guru, says the key attributes of the successful negotiator are the willingness to take risks, the ability to think under stress, and stamina and patience!
In fact you need all of these skills and attributes in order to be able to negotiate effectively internationally. But you need something else as well – a clear structure in which to operate.

There are many ways of looking at the negotiation process. Some people see negotiation as a battle or a chess game with tactics, strategies, gambits and surprise attacks. Others follow the Harvard Business School approach of principled negotiation. But when we are working cross-culturally and in a second language it helps to have a clear understanding of the stages of the process in which we are involved. Then it’s easier to move that process along to a successful conclusion.

So what is the best model for the negotiation process? There’s a simple answer – the BEST model!

B for building relationships
E for exchanging information
S for structured bargaining
T for total commitment.

All negotiations should go through this process. If we have this clear outline structure in our heads, we can then more easily apply the appropriate language to each stage.

Preparation

The scouts’ motto is “Be Prepared”. This is not only true for scouts. It’s also absolutely necessary for international negotiators. (One tip: if the negotiation is to be held in English then do the preparation in English. It might take you a little longer but you will soon discover and then have time to correct any linguistic shortcomings.)

Having clear goals for the outcome is vital. You need to ask yourself three basic questions:

What are my goals and priorities?
What is my “walk away” point?
What is my BATNA? – My Best Alternative to a Negotiated Agreement.

In other words you need to decide what you hope to gain, the level where agreement becomes impossible and what alternative you have if the negotiation fails.

Then you need to put yourself in the other side’s shoes and ask yourself the same three questions. This way you can see where the potential areas of agreement are and the possible bottlenecks.

Don’t forget to take into consideration the history of the relationship – has it been positive or negative so far? And what do you know about the cultural background of your negotiation partners? What’s their level of English like?
Remember that failing to plan is planning to fail.

B for Building Relationships

“When all things are equal people prefer to do business with friends.
And they even prefer to do business with friends when things are not equal.” Mark McCormack, in his book “What they don’t teach you at Harvard Business School”, says that a good relationship built on trust and mutual respect can compensate for problems with delivery, quality and price. A good relationship is the platform for good business.

In some cultures you have to spend time creating the right relationship before it’s possible to do business together. As an international negotiator you need to be sensitive to the culture you’re working with. In Japan or the Middle East taking time for relationship building at the start is critical. In Finland or even Germany this is usually less important at the start, but is often a gradual process during and even after the negotiation itself.

We need to listen for relationship building signals. In Scandinavia, the USA, the UK and Australia, the use of first names in business shows the desire to be more informal and more personal. Comments might be made about interests outside work or about the family. Listen and respond with some information about yourself. Be prepared to share appropriate personal information. Our friendships are based on shared interests and common experiences. Our business relationships are too.

Mark McCormack gives another reason for going through this process. He claims that in any negotiation you learn more about your business partner’s intentions in the socialising over coffee, lunch or the after-work drink than you can ever discover during the negotiation itself! In other words, besides being fun and culturally appropriate, socialising is often good international business practice.

E for Exchanging Information

“It’s not necessary to understand things in order to argue about them.”
In our preparation we will have made assumptions about the needs and goals of our negotiation partners. We have to check these assumptions, especially when we are the sellers and when working in a new culture. And for this process we need two techniques – questioning and listening.

The best way to find out what you want is to ask the right question at the right time. Think of the process as a funnel. You guide your partner from the more general, open end of the funnel to the more specific, closed end. Start by asking open questions about attitudes, opinions and feelings. Encourage your partner to open up by using the “TMM” technique – whenever you feel there is more to be learnt simply say, “Tell me more.” Gradually move to more specific questions about, figures, statistics and hard facts. Use silence to encourage your partner to add on to what they’ve already said.

And listen attentively to the answers. Show interest with body language signals – nod, lean forward and look at the other person. Use encouraging sounds, words and phrases. It’s not enough to simply listen. You have to show you are listening.

Don’t forget to check understanding frequently by summarising what you’ve heard. In fact regular summaries should be made throughout the negotiation. This is extremely important when working cross-culturally and in a second language.

There is a well-known saying “What you don’t know won’t hurt you.” This might be true in your personal life but in an international negotiation what you don’t know could destroy any chance of success you might have.

S for Structured Bargaining

“There are two sides to every question – my side and the wrong side.”
As you gain more information, you need to reformulate your negotiation strategy. This is where your creativity and your ability to tune in to the other side’s needs become important. Your powers of persuasion and your understanding of their motives for doing a deal are also key success factors. In most business negotiations both sides are looking for a win-win outcome. That’s why it’s so important to talk in terms of mutual benefits rather than simply technical specifications or financial arrangements.

Basically the bargaining process is a simple one. Firstly you need to define the needs of both sides and agree on this. Then you have to prove that the solution, plan, product or proposal satisfies those needs and that both sides accept this is so.

Now this is easier said than done! But if you make your proposal conditional (“If you accept delivery in 60 days then we will carry out the technical changes you asked for.”) thenyou can more easily adapt or withdraw it. It also allows you to generate different options and possible solutions to any bottlenecks in the process. “If….then….” are the two most important words in English for the international negotiator.

T for Total Commitment

At the end of a negotiation you want total commitment to any agreement reached. This means you should write down exactly what has been agreed and both sides then need to ratify this draft agreement. It should be in clear, straightforward English. Where possible avoid “legalese”. The idea is to make everything you have agreed clear to both sides. So the simpler you can make it, the better.

Total commitment is most likely if the outcome of the negotiation fulfils 4 key criteria: -

That it is profitable to both sides.
“Profit” is not only money. It can be market share, cutting edge technology or a long-term relationship.
That it must be in place “now”.
There has to be a sense of urgency for any decision to be taken. A feeling that it’s already on its way – following a trend, adapting to new technology or being first to market.
That any negative consequences are acceptable.
All change has some negative consequences – the costs of re-tooling, of training staff, of new marketing materials etc. The positive results from the co-operation must be clearly shown to far outweigh these negative consequences.
That there is a real and proven plan.
Both sides need to be convinced that the agreement can be put into place effectively – that timetables are realistic, that the figures are correct and that the processes work.

You can use these criteria as persuasion factors during the negotiation and you can use them as a basis for your final summary at the end of the negotiation.

“Getting to Yes” by Fisher and Ury stresses the fact that good negotiation is where both sides win. It’s like two children fighting over a corn-flakes packet. With enough patience and an empathetic approach you might find that one of them wants the packet for the small plastic toy inside whilst the other wants to cut out the cardboard figures from the back of the packet itself.

International negotiating is infinitely more complex than this but it’s often the case that by helping others get what they want, we can usually get much of what we want too.

Test your international negotiation skills

1) You are in Rio de Janeiro in a preliminary meeting with a potentially important customer. You speak reasonable Spanish but are much more fluent in English. Would you try to carry out the first meeting in Spanish or in English?

2) You are in the office of the CEO of a Mid-West American manufacturing company. You have been small talking for a few minutes. Should you change the subject to business at this point?

3) When dealing with a British supplier which of the following should you spend most time discussing?

Quality issues
Delivery capabilities
Price levels

4) Just when you think you have arrived at an agreement with your Finnish customer, she suddenly asks for a 6% discount. It’s a large order with high future potential. Should you say “yes”? Should you say “no”? Or should you start discussing the other conditions you have agreed on such as delivery conditions and terms of payment?

5) Your Malaysian counterpart does not seem concerned about a written agreement for the small order he has placed with you. Should you insist on one?

6) In which of the following countries will you be expected to be punctual for meetings?
Mexico – Sweden – Tanzania – USA – China – Italy – Thailand - Oman.

Answers

1) As Portuguese is the main language in Brazil it would not be particularly appreciated if you spoke Spanish. It would also place you under linguistic pressure unnecessarily. However, if your counterparts have very limited English your Spanish would then be very useful. Portuguese speakers generally understand Spanish quite well. Find out as much as you can about whom you are going to meet. Preparation involves the people as well as the business issues.

2) You should probably get on with the business as quickly as possible. There is sometimes the mistaken generalisation that all Americans love small talk. In many business situations time is money – so get on with it unless your counterpart initiates the continued small talk. Building relations in the right way means that you are not only sensitive to the culture in which you are working but also sensitive to the individual who might be the exception to the rule.

3) Get as much information as possible about their delivery capabilities as British companies have a poor reputation for delivery on time. If you exchange and gather the right information at the start of the negotiation you can judge whether you will need to negotiate stiff penalty clauses for late delivery or whether this particular company has a good delivery record.

4) Say “no”. Finnish business people like to think of themselves as straightforward, honest and reliable. And appreciate a direct approach from their partners. And you can always have the re-opening of the discussion of the other conditions as a fallback position. But if you structure the negotiation carefully and agree step-by-step, this should not happen.

5) Personal trust is very important – more important than written contracts in many cultures. But it’s also useful to have the agreement in writing so that you know exactly what’s been agreed. Use the fact that you are working in a second language to motivate writing the agreement down. And put in a generous escape clause if you think it would help the relationship. Total commitment to the outcome of the negotiation requires a feeling of mutual trust.

6) Be punctual everywhere! You are the visitor so show your hosts respect by being on time. In some cultures the meeting might not start at the appointed time – but you will be ready when it does. There is a growing international business culture. More and more business people are aware of this “standard” international business practice.

Good luck in your next international negotiation!

� COGNOSIS AB 2010