International Business Negotiation

Table of Contents

1.0 Introduction..........................................................................................................................1

1.1 Defining the term: negotiation..........................................................................................2

1.2 Characteristics of negotiation...........................................................................................2

1.3 Situations when not good to do a negotiation..................................................................2

2.0 Context of Negotiation in current globalized business environment...................................4

i
3.0 Negotiation Skills.................................................................................................................5

4.0 Importance of Negotiation Relationship..............................................................................6

4.1 Use of BATNA in Negotiation Process............................................................................7

4.2 Importance of BATNA.....................................................................................................7

5.0 Negotiation Process..............................................................................................................8

5.0 The 4 C’s Of Negotiation.....................................................................................................9

6.0 Social Context in Negotiation............................................................................................10

7.0 Cultural Impact on Negotiation..........................................................................................11

7.1 Effect of Emotions, Power and Gender on Negotiation.................................................11

8.0 Conclusion..........................................................................................................................12

References...................................................................................................................................I

ii
1.0 Introduction
Companies are developing and expanding their businesses all around the world as the time
pass such as Unilevers, Amazon and H&M. with the expansion of internet and e-commerce
the organizations planed their business to the international context. Thus the transactions
have grown in the international business and it will continue (Ting/Toomey, 2015).

In the middle of all these events, companies found that the “Negotiation” is important. As the
focus for foreign markets increases the demand for international professionals has increase.
The aim of this report is to elaborate the statement ‘Negotiation is not a process reserved only
for the skilled diplomat, top salesperson, or ardent advocate for an organized lobby; it is
something that everyone does, almost daily’ (Lewicki et al 2011: 2).

1
1.1 Defining the term: negotiation

Negotiation is also called as bargaining. It is a process between two or more than two parties.
These parties might have their own aims, point of views, and different needs and wants when
they are looking forward to found a mutual space to co-op up with the agreement to settle the
issue of mutual matters or solve conflict. It is something that professionals through different
company and position do.

Moreover, negotiation is something which can see in both professional and personal lives.
Saying that “Negotiation is a powerful tool which used by skilled professionals and also by
house wives”. Negotiation includes two or more than two parties and this will be the basic
rule of negotiation (Franke & Richey, 2010)

1.2 Characteristics of negotiation

 Negotiation involves two or more parties. They can be individuals, Groups,

Organizations, etc.
 There is a conflict of needs and desires which means that the parties have a disagreement
on a mutual concern.
 Then the parties will decide whether they have to negotiate or not.
 Parties are ready to sacrifice for a gain.
 Parties wish to determine the alterations
 Negotiation factors are existing can be:
o Tangible factors – critical and will be managed (price or agreement terms)
o Intangible factors – primary psychological motivations that can effect outcome
negotiations

1.3 Situations when not good to do a negotiation.

1) When there is a possibility that the vendor or the negotiator can lose everything.

2) When the company is running out of capacity.

3) When the demand is illegal.

4) When the company or the personnel doesn’t have enough time.

5) When we cannot trust the other party

2
 6) Sometimes delays can make a benefit to the company.

7) When the negotiator is not prepared for the task.

There are some Common Differences in Negotiators which can impact the negotiator’s
attitude

1) Objective or goal.

2) Decision about the future under the general understanding of opportunities exists.

3) How far the negotiator can tolerate the risk.

4) Time preferences – anticipated time to deal or receive consideration may vary

There are Conflicts in Negotiations that can be listed as follows;

1) Stages of conflict

a. Intrapersonal – stays within an individual and that can be an idea, thoughts,

emotions.

b. Interpersonal – arise in between individuals such as peers, siblings

c. Intragroup – within a group. Such as in an organizations, political parties, family

d. Intergroup – between groups, organizations

2) Disadvantages of Conflicts

a. Types unnatural competition

b. Misrepresents awareness

3
2.0 Context of Negotiation in current globalized business environment

We can see that the organizations which compete with each other are now sharing their
information in the context of international business. This can be identified as an evidence for
the importance of international business negotiation. Starting from the very beginning there
are few step to follow through this process. This is known as “Organizational life cycle” and
it will continue to the conclusion (Groves & Feyerherm, 2015).

These steps also known as structures of improvements which are not accidental actions. It’s a
must to mention that business professionals must need the skills of negotiation at each and
every step.

Negotiation is not limited to businesses. Because people have to do negotiation in their daily
life styles. When we talk about house hold needs, the house wives might negotiate the prices
of goods and services with the provider. (Mor & Morris, 2013). Likewise there can be various
examples for negotiation which happens in the day-to-day life. This means that the
negotiation is essential to life. Nevertheless, we need to mention that the process of
negotiation will change from different situation to situation. (Louhiala-Salminen &
Kankaanranta, 2011).

As an example the procedure of negotiation between the professionals of two leading

companies might be entirely different from the process of negotiation between a house wife
and a vendor. The process of negotiation may differ according to the objectives of the
companies. The process of negotiation becomes smoother when the participating parties need
to achieve a win-win situation. And also it will depend on the importance of situation and the
company ethics and according to the countries.

4
3.0 Negotiation Skills

The negotiation skills are not same everywhere. The negotiation required different number of
skills depends on the different factors and the parties which involves with the process of
negotiation. Thus we can say that the professionals of the companies may need more formal
skills compared to the household (Shell, 2011). A sales personnel needs cunning negotiation
skills when a manager collaborative negotiation skills. These skills may differ according to
the type of negotiation. The investors likely to be more comfortable when negotiation is
internal from its nature and the investors tend to more destructive when negotiation is
external from its nature. When it comes to the negotiation process it is important to have a
good understand and learning about the other party. Jennings & Faratin (2001) state that the
process of negotiation becomes easy when the parties involved in the negotiation process
know each other well.

Furthermore, the leadership guides leader and followers when it comes to trust and creating
relationships, the existence of executive members who are interested in only doing their tasks
and duties, is also a possibility. They are strictly prescribed and job focused without personal
relationships with the leader in the office or work place (Fisher, 2016). These kinds of groups
are not willing to take expanded accountabilities and new tasks to make extra hard work.
Task motivated or relationship motivated negotiations can be resulting from this perspective.
This may lead the way in which the leader interprets the capabilities of this culture, with a
defined need to satisfied prejudgments obvious in this study. Long-time employees declare
that confidence has been better than in previous years since they have taken over and this has
been conceivable with their excellent business negotiation skills.

5
4.0 Importance of Negotiation Relationship

The success of negotiation in the international and local business world may depend on the
skills of professionals and diplomats. In order to make future actions in negotiation the
managers or the leader must analysis the information which they are receiving internally and
externally and this action will be very important to the company.

In some situations there might be massive amount of data and information available for
company professionals. In situations like this they need to filter the information in order to
grab the most appropriate ways to use them in a helpful way. According to Luo & Shenkar
(2011) by using contacts or links will help to filter the data and information. Moreover
communication will change according to the working teams in order to keep staff aligned to
the defined objective. Furthermore we can identify that the successful negotiation will depend
on successful communication in the business arena.

We need to note that the negotiation skills may differ according to the type of negotiation.
We can see that the negotiation in business world is more formal with professionals and
processes compared to personal life negotiations. These kind of differences can be arise from
the differences in the cultural backgrounds (Phelps & Adams, 2007). When we are doing
negotiation there can be relationships between various issues. Thus, it is very much important
for the parties who are involving in the negotiation to have a better understanding of the
relationships and also the variables which are link to the process initially (Huffmeier &
Mazei, 2015). This understanding will give the opportunity to the managers to take the
successful actions and continue on the negotiation without any hesitation.

6
4.1 Use of BATNA in Negotiation Process

BATNA is stands for Best Alternative to a Negotiated Agreement. It is defined as the next
most beneficial alternative solution that a negotiating party can take if negotiations fail and an
agreement cannot be continued. The term BATNA was initially used by Roger Fisher and
William Ury in their 1981 book entitled “Getting to Yes: Negotiating without Giving In.”

4.2 Importance of BATNA

BATNA is usually used in negotiation strategies and always should be measured before the
negotiation process takes place. It is never intelligent to start into a grave negotiation process
without knowing the company’s BATNA. The value of knowing the company’s best
alternative to a negotiated agreement will provide followings;

 It provides an alternative if negotiations fails from the process.

 It can give negotiating power to the professional.
 It controls negotiator’s arrangement point

The role of BATNA mainly escalates when the parties have the choice to use several
decisions (Fischer & Bajaj, 2017). BATNA is to negotiate contract by a most useful option in
a negotiation process. The relationship alternatives can be:

1. Alternative 1: The local player will but the small firm in an equity payment of 24
installments
2. Alterative 2: The international player will buy the firm at a 45% mark up for 60
installments
3. Alternative 3: The other international firm will buy the firm with cash deal at 90% of
the market price

7
5.0 Negotiation Process

This is a very exposed process. Usually, every negotiation process would have five steps.
These steps can be deliberated as follows:

Step 1: Preparation & Planning

This is the step in where parties involved in the negotiation process, plan how the negotiation
should happen. In this step, the parties will focus is on the expected outcome from the
negotiation process (Saunders, 2012).

Step 2: Defining the main rules

In this step in all the parties will agree on the defined main rules. This step can also know as
the step where the parties established their limits for the negotiation process. (Lin & Kraus,
2014).

Step 3: Clarification & Justification

Here each and every party which involved in the negotiation process will clarify or justify
clearly what they are expecting and what they want from this negotiation process. This may
differ upon their objective. (Beenen & Barbuto, 2014).

Step 4: Bargaining & Problem Solving

This is the step where the actual bargain taking place. We can say that this is the most
important and critical step of the entire negotiation process (Donahue, 2013).

Step 5: Conclusion & Implementation

This is where the all the parties which involves in the process agree on one common solution.
As the output of the process all the participated parties of the negotiation process will finalize
the terms and conditions of the negotiation process and conclude it. (Acheson, 2016).

8
5.0 The 4 C’s Of Negotiation

The 4 C’s is existing to make sure that all participating parties will gain during the
negotiation process. This also can be considering as a different strategy for negotiation. When
using these negotiation strategies, normally recommended to use a structure or a pattern.

Compelling
This means that one party need to claim the other party to accept the terms. Sometimes
according to the company’s business procedures the sales personnel will force the supplier to
accept their terms and conditions (Mircica, 2014). When one party has more power than the
other party normally this strategy can be seen.

Collaborating
When the compelling strategy does not going on well this Collaborating approach comes to
the arena. Here we can see that this strategy is focusing on the mutual benifits in the
negotiation process. When the both parties which are participating in the negotiation process
have equal powers this strategy can be seen.

Compromising
Generally when above both strategies failed and still one party needs to continue the
negotiation process, compromising strategy can be used. As the outcome of this strategy we
can see that one party of the participating parties have to corporate on some parts of the
negotiation process.

Caving In
When all above three strategies did not able to provide successful results Caving in strategy
implemented. Caving in strategy means that the negotiation process has failed and it should
be begin all over again from the very beginning (Long & Javidi, 2016).

9
6.0 Social Context in Negotiation

To have a successful negotiation the negotiator should have a proper understanding on the
social context of the negotiation. Normally a negotiation is taking place where there are;
rules, customs, habits, situations, cultural standards, religious principle, laws, and political
pressures.

By understanding the social limitations on the negotiation, mainly social pressures, is very
important for a successful negotiation. The negotiation process can be more complex when
there are more than two parties. When there is a Team negotiations taking place each team
have several individuals representing each negotiating party. Multiple parties frequently lead
to the development of groups and partnerships.

Following sample questions may be useful in understanding the social context:

 Are there any third parties other than the involved parties?
 What interests are represented in the negotiation?
 Who is affected by the negotiation outcome other than the involved parties?
 Are there any previous relationships between the parties?
 Will those prior relationships be affected by the outcome of the negotiation?
 Is there any social norms, customs, or formalities apply to the negotiation? if so, what
are they?
 Are there legal or political pressures for the negotiation process.?

There are several factors in the social context that affect the negotiation process (Patriotta &
Kumar, 2011). The defined features of factors affecting the negotiation process can be shown
as follows:

10
7.0 Cultural Impact on Negotiation

Cultural impact can make the negotiation or break the negotiation. All the parties which
participating to the negotiation process should understand and remember this important
factor. The procedure of the negotiation process of Europe countries can be totally different
from the way the Asians doing their negotiation process.

7.1 Effect of Emotions, Power and Gender on Negotiation

The factors such as emotions, power and gender have a direct impact on the negotiation
process. When the parties trust each other the negotiation process can be very effective.
Furthermore the result of the negotiation process depend and differ according to the personal
emotions, power and also specially gender. If one party need to conclude the negotiation
because of a personal desire, then they will work on to close the deal (Schoop & Kohne,
2010).

8.0 Conclusion

This report discusses the process of negotiation and various particulars involved in the
negotiation process. According to the above argument, we can see that negotiation is an
important skill that can be used at countless situations. The term ‘negotiation’ is a general
term; but, it has enormous effects. The conclusion that can be achieved from above report is
that ‘Negotiation is not a something used by only skilled professionals or top salesperson; it
is something that everyone uses in day to day life’.

Furthermore, the negotiation skills are not same everywhere when the negotiation process
taking place. From his report we can see that negotiation skills depend on the internal and
external environment. Exactly, the negotiation skills in business world will be different from
the negotiation skills within a family.

Consequently, it is important that negotiation process must be educated and practiced within
the given arena. And also we need to remember that the professionals in the negotiation
process may good in one situation but, may fail in another situation.

11
References

Acheson, D., 2016. 6 Negotiation dynamics. International Negotiation: Process and

Strategies, p.107.

Beenen, G. and Barbuto Jr, J.E., 2014. Let's Make a Deal: A Dynamic Exercise for Practicing
Negotiation Skills. Journal of Education for Business, 89(3), pp.149-155.

Donahue, C., 2013. Negotiation, translinguality, and cross-cultural writing research in a new
composition era. Literacy as Translingual Practice: Between Communities and Classrooms,
pp.149-161.

Fischer, L.H. and Bajaj, A.K., 2017. Learning How to Ask: Women and Negotiation. Plastic
and Reconstructive Surgery, 139(3), pp.753-758

Fisher, R.J., 2016. Generic principles for resolving intergroup conflict. In Ronald J. Fisher: A
North American Pioneer in Interactive Conflict Resolution (pp. 87-104). Springer
International Publishing.

Franke, G.R. and Richey Jr, R.G., 2010. Improving generalizations from multi-country
comparisons in international business research. Journal of International Business
Studies, 41(8), pp.1275-1293.

Groves, K.S., Feyerherm, A. and Gu, M., 2015. Examining cultural intelligence and cross-
cultural negotiation effectiveness. Journal of Management Education, 39(2), pp.209-243.

Kumar, R. and Patriotta, G., 2011. Culture and international alliance negotiations: a
sensemaking perspective. International Negotiation, 16(3), pp.511-533

Lin, R., Kraus, S. and Mazliah, Y., 2014. Training with automated agents improves people's
behavior in negotiation and coordination tasks. Decision Support Systems, 60, pp.1-9.

Long, L.W., Javidi, M., Hill, L.B. and Normore, A.H., 2016. Credible Negotiation
Leadership: Using Principled Negotiation to. Handbook of Research on Effective
Communication, Leadership, and Conflict Resolution, p.430.

I
Louhiala-Salminen, L. and Kankaanranta, A., 2011. Professional communication in a global
business context: The notion of global communicative competence. IEEE Transactions on
professional communication, 54(3), pp.244-262.

Mazei, J., Huffmeier, J., Freund, P.A., Stuhlmacher, A.F., Bilke, L. and Hertel, G., 2015. A
meta-analysis on gender differences in negotiation outcomes and their
moderators. Psychological bulletin, 141(1), p.85.

Mor, S., Morris, M.W. and Joh, J., 2013. Identifying and training adaptive cross-
cultural management skills: The crucial role of cultural metacognition. Academy of
Management Learning & Education, 12(3), pp.453-475.

Mircica, N., 2014. Constructive Communication in Effective Negotiation. Analysis and

Metaphysics, (13), pp.64-72.

Phelps, R., Adams, R., & Bessant, J. (2007). Life cycles of growing organizations: A review
with implications for knowledge and learning. International Journal Of Management
Reviews, 9(1), 1-30.

Saunders, M.N., 2012. Organizational trust: A cultural perspective. Development and

Learning in Organizations: An International Journal, 26(2).

Schoop, M., Kohne, F. and Ostertag, K., 2010. Communication quality in business
negotiations. Group decision and negotiation, 19(2), pp.193-209.

Shell, G, R. (2011) Teaching Ideas: Bargaining Styles and Negotiation: The Thomas-
Kilmann Conflict Mode Instrument in Negotiation Training. Negotiation Journal, 17(2),
pp155-174.

Ting?Toomey, S., 2015. Identity negotiation theory. The International Encyclopedia of

Interpersonal Communication.

II