Business Negotiation Preparation
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All good negotiation plans are premised on good strategy and adapting our tactics to meet new challenges. Strategy is not based on guesswork but on intelligence, and even more importantly, negotiation preparation. It is one thing to prepare for a negotiation within our own country, but it is entirely different when we consider a business partnership that operates within an altogether different culture. If we don’t prepare wisely beforehand, then we’re likely to be in for a bumpy ride.
1. Understand what you’re doing
We must always make certain we understand our goals or objectives clearly, before we board the plane. Similarly, if our negotiations are through a third party acting on our behalf, we want to ensure that they fully understand our objectives.
Next, we must know our authority limits prior to the negotiations – what we can do and not do. It is vital that if any business negotiation agreement is reached, it is not to be considered binding until the appropriate decision makers, have given the agreement their stamp of approval.
It may also be helpful if our negotiator has sufficient authority to suggest to their counterpart, that the preliminary agreement has a good prospect of being accepted by the principal decision makers. This should all be determined internally prior to the start of any international business negotiation.
2. Organise your Team
Most international business agreements are prepared for and executed by negotiation teams. Some will be at the table, while others may either be in the background in the country where the deal is being negotiated, or they will be stationed at home base. Negotiation preparations amongst these various individuals should occur prior to departure.
We will want to arrange and organise our ability to communicate, pass documents and set up an appropriate hierarchical structure. Identify all the logistic needs beforehand. Carefully consider the structure of the team, so that only the relevant players are involved.
It is better if we have a single spokesperson who can integrate all the components into a single vision. Multiple speakers can cause our counterparts to become confused. For example, negotiators that have incorporated only technical experts have often become bogged down in the technical details. This might lead to needless squabbling over minor issues that cloud the bigger picture.
Team members should understand their responsibilities fully, and any tasks assigned to them. whether it be logistics for the team, communication, research, travel, etc. We may also need to arrange for the use of a qualified and competent interpreter or translator. Interpreters need to be considered as an equal and functioning member of the team. They have to be briefed on the nature of the negotiations, and how they are to provide their translation. Such as whether it will be a summary or verbatim translation. They may be asked to provide assistance in understanding the cultural nuances that might be encountered.
3. Research the other side
It is crucial we gain as much understanding about the business background and personalities of the other side. We will need to know and understand the country’s political climate, economy, culture and laws. The local or regional business climate, where the primary business is to be conducted is important, as is their international standing with their neighbouring countries.
The department that represents international trade for our own country, plus our own embassy in the country where we are conducting business, can provide us with a wealth of information. The more information we have on hand, the more we are able to consider and overcome any obstacles that might suddenly materialise out of nowhere.
4. Consider all your Options
If our deal collapses, then what do we do? It is unwise to assume that the agreement will automatically succeed. We have to consider our BATNA – (Best Alternative to a Negotiated Agreement). Skilled negotiators strive to consider many alternatives. Of the most probable and high risk options, we then have to compare our best alternative to a proposed agreement, to see how it measures up. Similarly, we need to estimate what alternatives may be available to our counterpart.
By estimating the BATNA’s of both parties, we will have a better understanding of the relative negotiating powers that come to the table. Our foreign counterpart may need us more than we need them, or vice versa.
5. Goals: know yours and theirs
Both we and our counterpart are engaging in this negotiation because each side has a reason to do so. What are these reasons? What are each sides relative strengths in comparison to each other? These reasons are the basis and underlying foundation to each sides position. They are important because they will be the driving force behind the negotiation strategy. By knowing and understanding each sides goals and objectives, affords both parties a better opportunity to explore creative solutions.
One of the best ways to determine the other sides interests, is to interact with the agent or parties who will already be involved with the preliminary arrangements. Have a ‘chin wag’ with them. Be cautious though, especially if the agent who represents the other side is acting as an independent, as they may have their own self-serving agenda.
6. Identify the Issues
It is crucial we fully understand all the issues that might arise from both parties, throughout the business negotiations, so that prior to our meeting, we can prepare to address them.
Technical and logistical problems are often the most common issues we might face. Anything that is an issue to our counterpart is also an issue that will influence our business arrangement. We need to look at the partnership from their perspective. Depending on our research and knowledge of the other side in relation to their business disposition, we may be better equipped to address their issues.
7. Consider multiple proposals
With everything else in place, we can now consider the business proposals that will best address the goals and objectives of both sides. We might choose to either present these proposals in person, or submit them in writing prior to the talks.
A draft business agreement proposal that is presented beforehand, is a common practice used by many negotiators. It permits us the opportunity to talk about the draft later. It shows the other side the type of transaction that we are leaning towards. It may also provide us with a tactical advantage. Should the other side accept the first draft in principle, then it might act as an anchor that the talks will revolve around, and set the negotiation framework.
Be cautious that the first draft doesn’t anchor us too much, as negotiations are an evolutionary and not a stagnant process. By keeping the big picture in the forefront of our business vision, we don’t become short sighted later on down the road. Be adaptable.
There are occasions where a first draft business proposal may appear as a sign of arrogance on our part. Each situation must be analysed to gauge the opening moves. Also, if we insist on the terms of our first draft, our uncompromising attitude may result in a prolonged negotiation, or a failure to find agreement.
Good business negotiation preparation is key to any successful negotiation. Perhaps even more so when dealing with a business culture that marches to the beat of its own drum. The more you adequately prepare beforehand, the more likely are you able to anticipate problems further down the road, that might hamper a successful negotiation.
1) Jeswald W. Salacuse, ‘The Global Negotiator’ Palgrave MacMillan, (2003).