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

Negotiator’s DilemmaⅢ

3 Building Blocks for Integrative NegotiationsⅡ

Negotiations in the Global BusinessⅠ

Principled Negotiation: Fisher and Ury (1981)Ⅳ

Ex) Opera House

Simulation) Las Flores

Negotiations in the Global Business Ⅰ

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

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

Also, conflict management in the global organization is necessary for securing high performance. Also, conflict management in the global organization is necessary for securing high performance.

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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.

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 Building blocks for Integrative NegotiationsⅡ

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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.

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

5

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

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

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.

Therefore, negotiation with the agreement better than BATNA of each party utilizing these

differences should be value creating process.

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.

Therefore, negotiation with the agreement better than BATNA of each party utilizing these

differences should be value creating process.

3 Building blocks for Integrative Negotiations

Ⅱ

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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

3 Building blocks for Integrative Negotiations

Negotiator’s DilemmaⅢ

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1. Why it happens?

(Exhibit) Negative Advertizing War between Detergent Producers

2. CASES: Resolution of Negotiator’s Dilemma and Failure

Failure: Frequent-Flier Program of the U. S Commercial Air Industry in the 80s

Resolution: Manufacturer’s Rebate Competition among Big 3 Automobile Companies.

Principled Negotiation: Fisher and Ury(1981)Ⅳ

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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