The Solid Building Blocks of an International Agreement

Western business people are sometimes in too much of a hurry to rush right into the deal making. In international partnerships, we should spend more time thinking about how 'Haste makes waste', rather than succumbing to the belief that 'Time is money'. We've all seen psycho thrillers and what happens when two strangers jump into bed, before getting to know each other. It usually doesn't end very well and after watching the carnage on the screen, you swear you'll never do that again.

Any solid relationship should begin with a period of introduction, or courtship. It's the same when we start the initial stages of a global negotiation venture with a prospective foreign nation business partner. We need to know something about their culture, the companys background, structure, and goals. Likewise, they will want to know the same about us. If we don't have the expertise to check out a prospective partner, it might be wise to spend a little cash to hire an experienced consultant, or professional third party to do a little snooping and to initiate introductions. The phrase 'Look before you leap' has survived the test of time for a very good reason.

The time and money spent before the negotiation courtship even begins, is well spent. We need to prepare the groundwork, to lessen the possibility of unnecessary expenses later on. Remember, when the fat hits the fire, we'll have to invest a lot more time and money, putting out the fires later.

Here are 6 tips to enhance our Pre-negotiation time effectively. To help us think ahead of time, about what will transpire during the negotiation, and what might happen after the contract is signed.

1) The Negotiation Never Really Ends

Never stop talking after the contract is signed. There are very few seers who can accurately predict the future while gazing into their crystal ball. Nothing remains static out there in this big, wide-open world of ours, as everything is constantly in a state of change. Prices rise and fall, governments with different ideologies come and go, on an almost weekly basis, like a game of global dominoes. Let's not even think what the weather is going to do. 

If we're naive enough to think we can toss the contract into the file cabinet; put our feet up and have ourselves a nice little snooze - think again! Put the coffee back on, and stay vigilant. Be prepared to re-negotiate a whole host of potential problems. Most of them will be small, annoying problems that will spring up here and there along the way, throughout the life of the partnership. Don't ignore them. Deal with them immediately, or risk the dire consequence of putting the negotiated relationship on a rocky footing.

Because there is so much instability and uncertainty out there, it would be prudent to make certain that one of the key clauses in the contract, specifically ensures that both parties re-visit the contract on a periodic basis. By controlling the process in the early stages, we can prevent our arrangement from spinning wildly out of control later. Keep the dialogue rolling and prevent needless problems from festering due to a lack of attention.

2) What do we do when we still can't agree?

As in some relationships, sometimes the only thing that people can agree upon is that they disagree. It's like being snookered or getting caught behind the eight ball. Neither position is very desirable. If not addressed soon, both sides can end up dissatisfied. We may not necessarily be thinking objectively, and if both parties get ensnared in the mesh of their own self-serving interests, their problem solving is not likely to be very productive, is it?

To guide our way through what might otherwise be an unseen minefield of potential disaster, we might well be advised to use the expertise of third parties to mediate our disputes. There are several possibilities to choose from. Our own senior management could negotiate the minor disputes at the operational level. We could use the professional services of legal advisers, specialized consultants. or a neutral third party mediator to smooth the way.

A detailed dispute mechanism must be visibly in place if we want our operations to run smoothly. If the operation shuts down because we didn't bother to put an effective dispute resolution in the contract, and the CEO roars 'Heads will roll for this!' - can you guess whose neck is going to be on the chopping block?

3) Keep on Talking

Before we sign on the dotted line, we need to give thought to what a successful and durable relationship really entails. It means that the lines of communication have to be kept open. No! - This does not mean just picking up the phone or firing off an occasional email. A relationship means that we have to sit down in the same room and talk face to face, perhaps breaking bread together. Communication at many different levels, is the only way to keep the relationship both productive and vibrant. By agreeing to meet regularly to keep the lines of communication open, we can prevent many hurdles from tripping us up over the long haul.

4) Do it the right way

Anyone who has participated in a joint relationship based negotiation, will tell you that we always need to go back to the basics. Whether our agreement is in the domestic market or the international marketplace, we need to go beyond the simple scope of our limitations and understand the real motivating reasons that support our positions. Remember, the main question we must try to answer is not 'What?' do they want, but 'Why?' do they want it.

Now you're probably asking why - right? The reason is simple but not necessarily obvious. We might be able to make an agreement based on our relative positions, only to find out later that the other parties real goals, and as a consequence our own, are actually in direct conflict with each other. 

5) Who are they - really?

Each company has its own unique structure and way of doing things. It's common for many small companies to be family owned, but so are many medium and large sized companies as well. Each company has its own individualistic sub-culture. Depending on the business philosophy of the owners, the business culture of a company can present a wide range of possible business outlooks and differing organizational perspectives. One company can be very informal, while another might be very structured, or even bureaucratic and formal in how it conducts business, or interacts with its personnel.

It would be very helpful to understand your prospective partners approach to business and how they function internally. Similarly, it's equally smart to let them know how our own company works. For example, a larger corporation may have to make a decision by going through several layers of management and departments, while their overseas medium sized partner, might simply have to refer the matter to the Company president, who has the ability to make a decision on the spot. We can alleviate a lot of frustration and potential misunderstanding by knowing how our partner operates.

6) Understand how the deal will be put in place

Every partnership is going to require numerous and demanding decisions that will take place, on both sides of the international equation on an ongoing basis, despite all the exhaustive efforts that initially went into the contract. Remember that the contract is only a part of the process, and not the whole, because our interaction goes far beyond the contractual bonds. A contract cannot foresee all eventualities and possibilities. So, if an issue arises that is not covered in the contract, or springs to mind as the parties work out the minor technical clauses, both parties should agree how they will manage these issues. It all boils down to building a solid base to keep the communication lines open.

Summary

The explosion in international business ventures, dramatically illustrates the challenges we face through our many differences. It is imperative we learn how to do it the right way, as our international partners are just as eager as we are, to make our respective businesses grow. Language however, is not the only barrier we need to overcome. We must also learn the many other facets that lay behind the complex social and cultural fibres, of our prospective international business partners. Preparation is vital in laying a solid business foundation. We would not want a contractor to skimp on a home they are building for us, so we must not neglect to do the same when constructing an international business agreement either. Always be thinking down the road.

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