Analysis of International Business Negotiation Strategies

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INTERNATIONAL BUSINESS NEGOTIATION

Table of Contents
INTRODUCTION............................................................................................................................. 2
MAIN BODY....................................................................................................................................3
CONCLUSION............................................................................................................................... 10
REFERENCES.................................................................................................................................11
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INTRODUCTION
Negotiation is a part and parcel of the life of the people even if they tend to ignore it.
Negotiation could be anything about raising salary, convincing customers to purchase the
products, conduction of an agreement between two countries and many more. So it could be
well said that- “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”. So, negotiation is not only part of the political and business life, but also of daily
communication. A person who could not negotiate well would not be able to get success in
their life. So although it is a complicated procedure, yet it is more developed and increases the
change of integration with others in an effective manner (Hofstede and Usenier, 2002).
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MAIN BODY
Negotiation as defined by Lewicki, et al. (2011), is a procedure where two or more than two
parties try to compromise and reach to an agreement so as to fulfil their own goals and
objectives in an effective manner and also take a joint decision so as to minimize the chance of
conflicts between them. On the other hand, Hofstede and Usenier (2002) stated in single terms
that negotiation could be defined as a discussion between two disputed parties who are trying
to find out ways to find a solution for their problems.
By applying the concept of the negotiation, it would be better for both the parties to effective
arrive at the solution so as to fulfil their common interest and that too in an effective manner. If
the process of negotiation becomes successful, then it could help in improving relations
between the two parties and help them to maintain a long-term relationship so as to obtain
mutual benefit (Mattlin, 2018).
As per the studies of Carnevale (2019), negotiation is a basic method which helps in achieving
what is required by one party from the others. According to the given researcher, negotiation is
a communication process which has been designed to reach an agreement between the two
parties with sharing rights and accessing benefits among them. The situation in the given
negotiation process is same that they negotiate for a business contract between buyer and
seller and between management and labour, so as to resolve any case of conflicts between
them and enhanced the profitability which could be shared among them inappropriately. When
international business is considered, negotiation has been considered as an important activity
and has been an indispensable part of it.
The process of negotiation starts when there is arising of needs as the rate of personal conflicts
with others is surging to a higher extent. At that time, this process helps in maintaining the
relationships and achieves an agreement between the negotiable parties so as to minimize the
conflicts. Everyone likes to participate in decisions which are negotiable and are not forced
upon them and also help in resolving differences between them. The whole world is a huge
negotiable table where there is a frequent occurrence of negotiation (McSweeney, 2002).
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Brewster et al. (2011) have defined three main aspects of negotiation procedures. First is the
personal situation where the individual person has large negotiation so as to allow them to
negotiate in fulfilling their needs and requirements such as buying a car, valuable assets and
house. Second is an organizational situation where the internal aspect of the management is
given due consideration such as setting goals, negotiating with other companies and enhancing
business contract in respect to the acquiring of the resources. The third is the situation of the
client where the products and services of an organization are sold to the customers so as to
increase long-term relationship.
In terms of business, negotiation has been considered as a price where the desire of both
buyers and sellers has been somewhat different. The sellers want to enhance the prices on the
products while buyers want to slash the prices of the products. This is the reason that for every
purchase process, negotiation has been an essential part. In terms of management also,
negotiation has been an important part. From the studies of Weiss (1997), the negotiation has
been happening in the management for effective management of its internal and external
affairs.
The given study could be defined by considering the two sides of the management namely;
labour and management. For most of the organization, managing the people or labour working
within their organization occupies most of their operational cost. Furthermore, they aim at
increasing their revenue by compromising with the welfare of their employees causing a rift in
the relationship between them. The labours try to fight for their rights in the form of trade
unions and threatened the organization with strikes if their needs and requirements are not
fully met. This results in the creation of a stressful relationship between the management and
workers even if the financial condition of the given enterprise is bright (Brewster et al. 2011).
In such situations, a negotiation procedure comes to rescue both the management and labours.
The management would effectively negotiate with the workers by bringing improvement in the
payment system so that the workers would be getting at least the minimum amount of wage
and also helps in reducing resentment among them. Another method to decrease anger among
the labours has been bringing changes in the negotiating positions of the annual salary rate.
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This could be done by introducing a new wage policy which allows the application of the new
payment period to extend for a few numbers of years. Due to such negotiable changes, the
satisfaction among labours surge to a higher extent and this, in turn, helps in bringing
significant improvement in the workers-management relationship (Lewicki, et al. 2011).
In addition to the above-given examples, Pfetsch and Landau (2000) have revealed in their
studies that negotiation is not only a business activity but also human activity. One such
example is related to purchasing a vehicle such as bikes. A person is riding a bike for years and
now it has started to give up even after continuous repairing and servicing program. The person
gets attracted to the new advertisements about the arrival of a new bike in the city which could
be exchanged with the old bikes. The person discovers that there is not much difference
between the features of new bikes as compared to the old ones. At this stage, the person
make-up his mind and decides to get the new bike by entering into a negotiable process with
the shop owners so as to get the new bike without much expenditure.
Fulcher (2000) has reminded in their studies that with the advent of the globalization of the
business and economic activities, the businessmen and organisations from different
backgrounds to negotiate with other companies so as to get a better deal for their business. So
in order to get a good negotiation deal, the negotiator must be fast enough to take decisions
and make a deal in a flexible and appropriate manner without compromising with their
interests. In business terms, negotiation is a discussion process where there is a mutual
agreement between the two parties in an effective manner. Thus it could be defined as the
process where the requests are being made if there is a successful concession. Moreover, it
would also be considered as successful if each party has been able to achieve its objectives and
fully ensure protection to their own rights (Carnevale, 2019).
So it has been revealed in the studies of the Edwards and Rees (2011) that negotiation
objectives should be fully prepared for providing a good argument for effectively convincing
their partners and allowing them to work together to achieve their mutual goals and also
defend them in an appropriate manner. Furthermore, there should be a quick and flexible
analysis of the negotiable procedures so as to bring mutual benefits to both the parties. Even in
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some cases if there are some changes to be made in the procedure, it should be acceptable to
both the parties and thus help in achieving the ultimate goals of enhancing their profit in the
given business.
In order to maintain and developing a good and cordial relationship with the partners, the
negotiator must be able to protect their interest in a harmonious manner. Negotiation is a
process of exchange and discussion between the parties so as to have a common platform to
solve their grievances and issues and increase the chance of mutual flow of faith among them
even in case of any disagreements between them. A good and successful negotiation helps in
keeping a good relationship between the parties and helps them to get mutual benefits. Thus it
could be said that the negotiation procedure is an agreed process which acts as a significant link
between conflict and collaboration (Cooke, 2005).
As it has been evident from the studies of Caputo et al. (2019) that the negotiation style is a
somewhat soft strategy, so more focus should be provided to the relationship between the
negotiable parties and help those to get some concessions so that they would get huger benefit
in their business in a significant manner. On the other hand, the negotiation strategy should
not be too hard as it would create a clash of interests between the negotiators and would result
in significant decrease in their performance in terms of profitability and productivity. In
international business, the negotiators need to ensure the role that the mutual benefits are the
only way to move forward. This is evident because there has been stiff completion in the
present scenario and the organisations which are working alone are facing the threat of getting
extinguished in the given market (De Moura and Costa, 2018).
According to Niu et al. (2018), negotiation is not a game of chess, it is not something that the
negotiator has to fight in a war and need to destroy its opponents. It is essentially a procedure
where two negotiators work together to accomplish their common objectives and enhance
their benefits to a higher extent. It is required for the negotiators to protect their interests and
also identify their range where they would be profitable and would be able to satisfy their
needs and demands without compromising with their partners. Thus, it could be said that the
negotiators should be considered as a win-win situation where both the parties should work
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together to achieve mutual benefits and results in an enhancement in their growth and
productivity in a significant and appropriate manner.
When international business is taken into consideration, negotiation has been considered as an
international exchange activity. This implies that negotiation depends on political relations as
well as the diplomacy of the concerned countries. When negotiation is done with a foreign
organization, the negotiation should be done keeping in mind the foreign policy of that country.
This would help the negotiating company to learn the legislation, policies and regulations
related to the given organization and thus help in avoiding any risks associated with the given
country (O'Neill, 2018).
As per the studies of and Choi (2019), there are various negotiation strategies and skills which
are utilized by the negotiator to achieve their goals in a significant manner. First is a
cooperative strategy which helps in finding a solution by resolving the conflicts and retaining
personal relationships so that both the sides are able to achieve their goals. This approach is
based on integrative bargaining which results in negotiating parties achieving win-win
situations. Second is the compromise strategy where the possibility of achieving a win-win
situation is impossible, but the negotiator arrives at "win-less and loss-less" situation where
none of the parties suffers huge losses in their business. This approach utilizes influence and
persuasion to achieve a significant result.
The third strategy is mediation strategy; where maintaining a personal relationship is given high
prominence and the compromising principle is used to reduce conflict among the negotiating
parties so that one party is allowed to remain in winning a position in order to maintain a
significant relationship. The fourth strategy is controlled strategy, where negotiation is done to
achieve the winning situation either by force or power and the main objective is to achieve
success at any cost. Although this strategy is not utilized much, yet it is important in the
situation where securing a good deal is given more prominence (De Moura and Costa, 2018).
In the case of the micro-political approach, it is required to lay emphasis on strategic behaviour.
The suitable strategy is chosen based on time, place and behaviour and also includes the way
negotiator protect their own interests so as to achieve a successful negotiation for the
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company. Furthermore, the way negotiator uses its skills to successfully conduct negotiation
also helps in making a whole negotiation procedure a fruitful one. In order to get success in the
art of negotiation, the negotiator should be able to speak fluently with good intonation and
their volume is matching with their speech (O'Neill, 2018).
Secondly, there should be an understanding among negotiator in taking notes and listen to the
other negotiating parties carefully so as to create a rational space for negotiation so as to bring
down competition among them. In addition to this, more attention should be given to the body
language for building effective leadership and it includes building a relationship, observing
changes of the opponent and learning the negotiation culture of different countries (Edwards
and Rees, 2011).
As per the studies conducted by Khan and Baldini (2019), the life of an individual is full of
negotiation. It starts from their rising early in the morning to the time there are about to fall
asleep. One such example of negotiation in a real life is when a person is moving with their
family to a new town and is in constant search for a new house. Nevertheless, they are able to
find a new home but find out that it's overpriced to say $650,000. However, you are expecting
to purchase this house to she figure of somewhat around $550,000. In such a situation, the
process of negotiation comes to the rescue. If the person has good negotiation skills, they
would be able to get the house at a price they could able to afford.
Another example as stated by Kenny (2018) is the lawsuit between two mobile companies. One
mobile company accuses the copying of certain features of its mobile to their model and vice
versa. So in order to reduce tarnishing of the brand image and bring down slashing of their
revenue, both the companies would opt for negotiation. The reason behind this is that the
negotiation procedure would help them to avoid legal battle which would incur them with
severe losses. Moreover, adopting a suitable negotiation strategy would be a win-win situation
to them and would help them to mend ways to increase their business growth without getting
in the path of each other.
So, good negotiation skills and strategies is an essential part of the life of the people and it
would help them to gain access to a compromising position without facing severe losses in their
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personal as well as the professional life. In addition to this, the international market would not
be capable enough to enhance its business growth due to globalization and would face a huge
setback if they are unable to procure a good negotiation deal with their competitors.
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CONCLUSION
From the given study, it could be concluded that each and every person is a negotiator in their
daily life. Nevertheless, in order to become a leading negotiator, certain rules and regulations
are to be followed and various elements of an effective negotiation process are to be
implemented so as to achieve a good and highly favourable deal via negotiation. Basically,
negotiation is behaviour and process where parties collaborate together to exchange the
conduct, discuss the deal and arrive at a favourable position to achieve a good result for the
given organization especially in case of an international scenario. The study also revealed that
with the advent of globalization, the negotiation has become an important part of any
organization for succeeding in their business life in a significant manner.
At last, by evaluation of various personal life example of the individual, it could be said that
negotiation has become an indispensable part of the life and has been essential in business,
career and even personal life so as to achieve mutual benefits which would be favourable to all.
Thus it is well said that negotiation is done not only by skilled businessman but also by common
people in their daily life.
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REFERENCES
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Institutional Influences. London, CIPD.
Caputo, A., Ayoko, O.B., Amoo, N. and Menke, C., 2019. The relationship between cultural
values, cultural intelligence and negotiation styles. Journal of Business Research, 99, pp.23-36.
Carnevale, P.J., 2019. Strategic Time in Negotiation. Current opinion in psychology.
Cooke, W.N., 2005. Exercising power in a prisoner’s dilemma: transnational collective
bargaining in an era of corporate globalisation? Industrial Relations Journal, 36(4), pp.283–302.
Available at: http://doi.wiley.com/10.1111/j.1468-2338.2005.00359.x.
De Moura, J.A. and Costa, A.P.C.S., 2018. Personality Traits and Negotiation Style Effects on
Negotiators' Perceptions in a Web-Based Negotiation. Journal of Organizational and End User
Computing (JOEUC), 30(2), pp.1-19.
Edwards, T. and Rees, C., 2011. International Human Resource Management: Globalization,
National Systems, and Multinational Companies.
Fatehi, K. and Choi, J., 2019. International Communication and Negotiation. In International
Business Management (pp. 109-143). Springer, Cham.
Fulcher, J., 2000. "Globalisation, the Nation State, and Global Society." The Sociological Review:
522-543.
Hofstede, G. & Usenier, J.C., 2002. Cultural Aspects of International Business Negotiations. In
International Business Negotiations. pp. 97–136.
Kenny, C., 2018. The power of silence: Silent communication in daily life. Routledge.
Khan, M.A. and Baldini, G.M., 2019. Understanding the Scope and Importance of Negotiation. In
The Palgrave Handbook of Cross-Cultural Business Negotiation (pp. 19-51). Palgrave Macmillan,
Cham.
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