Chapter 3 Negotiation lubrication 谈判润滑剂 Target decision 设定谈判目标 Collecting information 收集情报 Staffing negotiation teams 组建谈判小组 Choice of negotiation venues 选择谈判地点 Every negotiation requires . The preparatory work functions, in a sense, as lubrication on either or an ad hoc basis. Preparation is an integral and fundamental part of a negotiation, which prepares parties with information critical to negotiation, equips participants with weapons necessary for bargaining and builds up negotiators’ . A most important cause for in international negotiation is insufficient preparation and information. Negotiation preparation begins when people related with negotiation have to make decision on the following issues: Objectives and targets to be ; Macro and micro information to be researched; Negotiation team members to be ; Locations where negotiations to be . TARGET DECISION 设定谈判目标 Target decision has two components: preference of interests and target levels. 1. Preference of interests The first important task to be done at preparatory stage is for negotiators to decide which interests to be fulfilled first and which to be obtained at the cost of . Discussion in this regard facilitates negotiators to make their target decision. When the interests of negotiating parties are of simple nature and related with single issue the target decision can be made. Otherwise it will be difficult to decide. Here are two examples to illustrate the point: When the focus of negotiation is price, while for the buyer he would try his best to make a deal at the possible price. When the issue concerns extending a loan, under the condition that there is no repayment risk, then at least two points will be considered by both borrower and lender, which are and . If the lender pursues higher interest rate he would have to make concession on maturity of the loan, and also take the risk of having his money being tied up for a time. On the contrary, the borrower has to make a choice between time and interest rate. The target decision in this regard is expected to be difficult since a ______ point has to be located among several things. The difficulty lies in how much of these will be attained at the cost of others. Very often, the result will be found out with the progress of negotiation. 2. Target levels In addition to interest preference decision, negotiators, in view of negotiation strategy, will set at least three objective levels, which are target, ______garget and target. The desirable target is what negotiators wish to attain but in reality reach. It serves two purposes in negotiations: setting a goal for negotiators to strive for and leaving room for in negotiations. The acceptable target is what negotiators make all efforts to achieve. If negotiators take advantage of their power and strength, and manage the negotiations skillfully, the acceptable target is and very often can be gained. The bottom target is what negotiators will defend and safeguard with all their . Unless the bottom target is met, the negotiators would block _______discussion and announce of negotiations. Setting a bottom line is for one purpose to a “walk away point”, and for the second purpose to maintain a psychological if the efforts for fulfilling the first and the second targets end up in failure. More importantly, the negotiators are sure of their points by setting the bottom target. COLLECTING INFORMATION收集情报 1. What is information? Information has the power to reduce . The more we know about a situation, the more certain we are about possible outcomes. The more certainty we possess, the less we face in making decisions and planning in the negotiations. Information essentially has two valuable applications in negotiations: problem _______ and strategic . Information can reveal possible solutions to the problem and prevent _____ mistakes. In strategic planning, it reduces the uncertainty of an unknown future. It is all necessary for negotiators to acquire as much information as needed, although it is actually impossible to collect information because of its boundless nature. Differences in culture, consumer tastes, market demands, different environments abroad, different labor rules, distribution systems, the different availability of media, or advertising regulations may be entirely different from those in the market. 2. Where to collect information There are two kinds of information: macro information and micro information. Macro information: a ’s data on population, tariff information, non-tariff measures, foreign export/import data, data on government trade policy, general trade flows among countries, world industrial and agricultural production etc. Micro information: specific to the relative activities and events--- of market, local standards, specification, distribution system, competitive activities, materials on specific industries in a country, their growth prospects etc. It is both economical and reliable if negotiators learn and identify the information from other sources and make good use of them. International organizations. Some international organizations provide useful data for researchers. The typical one is the United Nations’ Statistical Yearbook which contains international trade data on products and provides information on exports and imports. Governments. Governments in most countries publish national and international economic data, addressing either macro or micro issues or offering specific data services of both macro information and micro information. Such information is often available at the government websites. Service organizations A wide variety of service organizations including banks, accounting firms, freight forwarders, airlines, international trade consultants, research firms, and publishing houses provide specialized information on their special fields. Their information concentrates on business practices, legislative or regulatory requirements, and political stability, as well as trade and financial data. Going directly to these service organizations for what you need is often sufficient and moneysaving. Directories and newsletters. A large number of industry directories are available on local, national, and international levels. The directories primarily serve to identify firms and to provide very general background information, such as the name of the chief executive officer, the level of capitalization of the firm, the location, the address and telephone number, and some description of the firm’s products. On-line service. One swift way to get at needed information and analysis in the sea of information is to make use of on-line service. With electronic information services, search results can be obtained within minutes. 3. Local laws and regulations When going international, a negotiator is exposed to an environment. Many of the assumptions on which people conduct their activities may not hold true internationally. They have learnt that doing business in different countries and with different people is not at all an easy task. A qualified negotiator must have a good understanding of his counterpart’s country’s economic as well as political situations as the whole. In addition, he must understand pertinent/relevant issues in order to avoid violating local laws. The following illustrations give a glimpse of the setback in international business activities due to lack of such knowledge. Case A Chinese engineering company in Gabon dismissed quite a number of local workers after it had completed the framework of a construction, which gave rise to a strike lasting for 40 days. The company had to hold a tough negotiation with the local workers, who demanded a large sum of subsidies in line with the labor law of the country. Only by this time was the company aware of their ignorance of the local law and heavy losses thus happened. The company was informed that, according to Gabon’s labor law, a casual laborer automatically turns into a permanent laborer if he keeps the job for a week without being fired. As a permanent laborer, he is entitled to family subsidies (enough for two wives and three kids), transportation fee and unemployment subsidies. The result of the negotiation was obvious the company had to pay a large sum of subsidies which were not included in the budget. 4. Information on financial credit Financial credit means information on the three C’s: character, capacity and capital----the of the counterpart, his to repay, and the soundness of his_____ position. Some Chinese companies do not take investigation on their trade partners’ financial position seriously and thus induce great losses to their companies. Case A company in Suzhou hoped to tab into the market of South Africa. Out of consideration of cautiousness, they sent a mission to the country for field survey. The meeting with the general manager was arranged in a well-lighted and carefully furnished room in a superb office mansion. The mission was received at the gate of the elevator and immediately led to the meeting room by a smiling lady. The general manger, having an expensive cigar between his fingers and wearing confident expression in his face, introduced his company and his way of management in a detailed and enthusiastic manner. The introduction and the whole atmosphere convinced the mission of their partner’s financial strength and so as soon as they returned back to China, they sent the first batch of goods worth more than $1 million to their “rich” partner, but they did not receive anything in return. Only some time later did they find out what they saw in the room was a carefully arranged “trap”: The fatty general manager was an invited local actor and the receptionist lady was the real manager, and the well furnished and decorated meeting room was leased for this special purpose. 5. Market survey Market research is always an indispensable part of work. Marketing research should begin with consumers’ consumption , desires and needs, their present demand and demand, preference to what kind of products and loyalty to which . Other information and data include: Preliminary screening of various markets such as locality of markets,________ from warehouses to markets and connection between individual markets; Sales information: prices, sales volume in the and sales target in future; Competition: quantity of same or identical products, spending on sales promotion, market penetration ratio which measures the company’s share of the market sales, of products, designing, packing and___________ service; Mode of distribution: distribution net work, sales channels, and retail’s condition and storehouses. STAFFING NEGOTIATION TEAMS组建谈判小组 Negotiation team members may be as as one single person when it is one to one type of negotiation; a situation where the issues involved are of nature or just routine business deal. However, frequently complex negotiations will require a careful consideration of choice of members. Generally speaking, a negotiation team consists of a team leader or_____ negotiator and an if it is a bilateral negotiation. Other key members of the team include: Professionals and representing their special fields, such as production, sales promotion, technology, financial accounting, engineering, law and other areas concerned with a specific negotiation. 1. Team leaders A qualified chief negotiator should be both in the areas related with negotiation, and able in leading the whole team to achieving the set for the negotiation. In general, the negotiation team leader will be the person holding major in a company or an institution. He is in the position, so he is in , which implies he can mean what he says and make decisions. 2. Professionals Professional team members should, in the first place, be the real experts in their own fields, and secondly they should be able to provide opinions and_____ answers to their counterparts’ questions, and offer to the team leader with their professional knowledge and judgment. The involvement of professional members in a negotiation is indispensable. However there are occasions when there is a limit on of team members, say when going abroad, the names of professionals will be deleted first. There are many cases demonstrating the losses incurred due to absence of professional advice. 3. Interpreters In a negotiation between two countries, interpreters are often at the core of the negotiation. A qualified interpreter should not only be a expert but also be able to memorize and comprehend accurately the points expressed by speakers. He should be able to judge correctly the of the speakers, and fill the gap of words omitted deliberately or habitually. He should also be able to convey the meaning and intention of the negotiating parties appropriately and . 4. How big should the team be? Usually it just depends. A big sized committee will have the problems of ensuring communication between team members and the problems of ensuring that each member has a satisfying element in the negotiation. All these problems of satisfying the team members can the problems of negotiation with the other party. This is verified in the words of one highly experienced negotiator. He says: “When we were in Mexico, we had a lot of trouble negotiating with the Mexicans. But that was compared to the trouble I had with my own colleagues.” However, there is often need to have more information and more available. It is more than any one person can contribute. An international expert who has commercial knowledge, financial knowledge, transport information is . A case can be put up for a dozen or more people, each having a contribution to make within some major international negotiation; but if we take a dozen people and the other party takes a dozen that is a total of and obviously twenty-four is not a comfortable number to be negotiating. So it is quite important to keep the negotiating team as small as possible. There are several reasons to this. Firstly, when your team has to operate overseas, then you’ll have a lot of flights, ground transport, meals, hotels, communication and conference centers. It can make a trip for even a small team extremely . It can easily become unmanageable to arrange for passports, visas, inoculations, and potential medical care for a group. Secondly, communication is a source of strength the negotiation team. The chief negotiator must be able to seek the input of the team , and large groups are cumbersome. Pre-meetings, recaps and mid-meeting breaks that communication be both precise and concise, as major decisions are made in a matter of . Thirdly, the chief negotiator must be able to tactics as counterparts bring new issues to the table. Keeping the negotiation team small enables the chief negotiator to make adjustments to the negotiation plan and to disseminate that information quickly. Bill Scott suggests that the number is probably four. The main reasons for this number include: ● Size of group. ● Control of team. ● Range of expertise. ● Changing membership. (1) Size of group If a work-group is to be productive and fruitful of ideas and everybody is , the group should not be so big. That maximum is about eight people. In negotiation, a group consisting of two teams and the maximum of eight would be generated by two teams of . (2) Control of team Management principles suggest that the span of control for any manager operating in such dramatic and changing circumstances as the conduct of a is about three or four people. If the team leader is required to oversee as many as six or seven people responsible to him, then the team leader has too large a span to comfortably. (3) Range of expertise The range of expertise required in a protracted negotiation, lasting over several months, may well need the contribution of a dozen or a score of different perspectives from team. But within the scope of any negotiation meeting, it will not be possible to take more than three or four different perspectives. There may be need for more detailed discussion than can be by the leader and three or four members. For example, a production member may not have sufficient detailed information on production plans, material supplies, technical feasibilities, etc. and may need the____ of specialists from those fields. When this happens, it is normally possible to arrange a ___-negotiation. The separate work-group consisting of the production member from each team, together with three or four specialists assisting each to meet as a separate group. The respective specialist members will report back to the negotiation. (4) Changing membership There is no need to keep the team throughout. As negotiations develop, the need for particular forms of expertise changes. For example, production and technical expertise may be invaluable in exploratory and creative phases, but when it comes to the legal embodiment of settlement. It is not necessary for the team membership to remain . The production member might well be present for the first three or four meetings in a series, leaving a seat vacant for the next couple of meetings, and bringing in a for the final settlement. There are reasons to suggest that should be regarded as a maximum size for a negotiation team. If further experts are needed, they should be there in the role of advisers to the members who are negotiating and not as members of the team. They should just sit the members in case they are needed to solve particular problems. However brilliant in their own field, specialists and experts are often to the world of negotiation，if they are to participate as negotiation members of the team, they need which should cover the following: The presentation of information. Negotiation tactics. Team work---both role handling and support of colleagues. Rehearsals, which should include exposure to tough opposition if that is the style the Other Party is expected to adopt. The individuals selected for any particular negotiation should always be into a team before meeting with the Other Party. This requires a discipline of preparation and the creation of between team members. 5. The importance of team solidarity Whenever possible, the chief negotiator should have control over the selection of negotiation team members. There can be no disputes over the chief negotiator’s . However if success is to be attained, effort should be made because of the rivalry nature of international negotiations. While team members will have levels of authority and responsibility, all directions must come from the chief negotiator. Lastly, because of the need for centralized decision-making, it’s wise to appoint a______ in command (in case illness or calamity should befall the chief negotiator). The ideal person to head up or to assume responsibility for negotiating efforts should: ① Be thoughtful and sensitive to the of others. ② Understand human nature. ③ Be adaptive in order to the psychological needs of others. ④ Not have a strong compulsion to be by peers. ⑤ Be able to creatively and patiently. ⑥ Be respected by the other members of the negotiation team as well as the____ party. ⑦ Be goal- . ⑧ Be highly logical, with good probability estimating and decision-making _____ in order to the best business judgment possible during the of negotiation. CHOICE OF NEGOTIATION VENUES选择谈判地点 Generally speaking, negotiation sites can be divided into three categories: host venue, guest venue and third party’s venue. 1. Host venue Host venues can be one party’s own country, own city or own office building or any other places where the party the negotiation. As the host party, it can enjoy several advantages that it may not otherwise. waiting at ease for exhausted ; familiar surroundings with no novel and foreign attractions distracting its members’ from their tasks assistance at hand and of security, comfort and relaxation. The host side may also create pressure or obstacles to its counterpart if there is the necessity by making use of the of the meeting room, accommodation and other devices. Comparatively speaking host venue enjoys more advantages than other choices because the host party can from all those favorable conditions as they are described by an old Chinese saying: good , favorable geographical and_______ at hand from people all around. 2. Guest venue When negotiations take place at ’s country, city or office buildings, they are conducted at guest venues. For the guest part, almost all advantages enjoyed are reversed to be barriers and difficulties. In such cases the guest party has to be more patient, steadfast and perseverant. The inconvenience to sufficient information for sound judgment and absence of authority for a decision can always be explored as acceptable for asking for a halt or even from the on-going negotiation. There are also cases when one party can host negotiation but gives it up for obtaining some petty benefits like a chance to go abroad for a . 3. The third party’s venue Historic events and modern international affairs, numerous cases have illustrated the importance and necessity of choosing a third place when dialogue channel between two adversary parties is . The famous long lasting Middle East Peace Talks between Israel and Palestine has almost been conducted in a third place, usually in the United States. And so is the six-party talk of the Korean Peninsula, usually held in China. When a negotiation goes into an and there is no sign of rapprochement, it is apparent that it would be to carry on such negotiation in either party’s places. A third place has to be considered if the two sides wish to resolve their through peaceful means. A third party has to be chosen due to the dispute that both parties demand strongly to the negotiation. Therefore, a place of neutrality is the only choice for settling the disputes.