US-Korea-Mexico NegoNAFTAKorea Gov.SamsungElectronicsUSDOCMexicanGov.S.S.MexicoTVFDIExportCircumbandDumpingAllianceNegopushpushNegoUS ElectronicParts&Comp. Union
Four stages of negotiation- R. Shell - Hyundai Heavy Co.: ForkliftIndonesian Construction Co. A -100units, Price-negotiable -Payment term : a lot of creditFirst timeofficial price : 12,000 $/unit-last week: 8,000$
Four stages of negotiation- R. Shell - 1. Assess the situation & Preparing your strategy
2. Exchanging information
3. Opening & making concessions
4. Closing & gaining commitment
Q4. You want to sell your yacht for $50,000. You were thinking about placing an ad in the paper when a yachting-enthusiast named Garrett, whom you don't know, approaches you and offers $65,000 in cash for the yacht. What would you do?
a) Accept his offer without hesitation b) Tell him to wait until the ad is running c) Haggle with the person to get a better deal (-10)(-10)(+15)
Q5. You want to sell your yacht for $50,000. You were thinking about placing an ad in the paper when your close friend, Kim, approaches you and offers $65,000 in cash for the yacht. What would you do?
a) Accept his offer without hesitation b) Tell him to wait until the ad is running c) Haggle with your friend to get a better offer d) Tell him that you'll sell it to him for $60,000 (+5)(-15)(-20)(+15)
Perceived Importanceof RelationshipImportance of OutcomeHighLowLowHighAccommodatingAvoidingCompromiseCollaborativeCompetitiveLose-loseLose to winWin-winWin to loseSplit the difference12345
Importanceof RelationshipImportance of OutcomeHighLowLowHighAccommodtingAvoidingCompromiseCollaborativeCompetitiveRelationship SituationR. Shells Nego SituationTransactional SituationTacit coordinationBalanced concerns
The priority of these two negotiation concerns will direct the strategy you choose for a particular negotiation. Buy an used car from - a dealer - your neighbor - your close friend - your director - strange on the street
Importanceof RelationshipImportance of OutcomeHighLowLowHighAccommodtingAvoidingCompromiseCollaborativeCompetitivestrange on the streeta dealeryour directoryour neighboryour close friend12345
Your director asks you if you have an intention/willingness to by his car. He wants to sell his car because he will be dispatched to oversea mission in next month.
What kind of negotiation strategy will you conduct in the context of the Lewicki-Hiam's Five Types of negotiation strategies? And explain the reasons Why?
# Quiz Nt : Your directors used automobile
Q11. As the head of the negotiation team for a large conglomerate in Korea, I arrived in Beijing to negotiate a possible joint venture with the Chinese state-owned oil company. We had scheduled the trip for six days and arrived here on Monday, planning to wrap things up by Saturday. However, today is Thursday, which is four days into the negotiation, and so far the Chinese counterparts have not shown any real or serious intention of negotiating. All they've been doing was to invite us for drink every night since our arrival here on Monday. The Chinese have once again invited us for drink tonight. I should...
a) Flatly refuse their invitation b) Make a polite excuse (e.g. an important meeting with the Korean diplomats) and decline their invitation c) Accept to having dinner together but not drinks d) Accept their invitation wholeheartedly (-15)(+5)(-5)(+10)
Step2. Exchanging information
Information exchange depends on effective interpersonal relationshipHow? 1. Build relationship1. Entertainment2. To find some common interest or background experience, unrelated to the negotiation
3. Relationship-building moves * Armand Hammer, CEO of occidental petroleumTied with ribbons bearing the Libyan national colors, green and black * Green Book (Dea Woo)
2. Build CredibilityTo make your CP have a good perception/image of you.
Two kinds of Credibility Initial Credibility Your partners perception of you before you begin to communicate This credibility comes from the perception of "who you are decent-- "what you represent" bad company-- Acquired Credibility -created on the process of Nego.
A. U.S.: Hard-Positional Negotiation strategy* Korea unfairly limits US access to Korean auto market Market share of imported car below than 1% Imbalance in US-Korea Automobile Trade * Intentional tax audits on foreign car owner * Consumer misperception on foreign cars* police : traffic ticket (tinted window)
3. Not Blabber mouth negotiatorFirst listening (listening skill) - let the opponent become talkative and disclose information first
And then ask questions
Finally, disclose my information
Communication researchTalker Listener Speak at a rateOf 2 words persecondHear a rate of 8 wordsPer secondGive plenty of time to a listener To think/investigate physical action Of others while talkers are Consumed by the act of speech
Information-gathering behavior as a % of all behavior observed Rackham & CarlsleSkilled negotiatorsaverage negotiators
Monitored the negotiation behavior of English negotiators in labor-management negotiation
Skilled negotiators spend 38.5% of their time arguing and clarifying information - 17.9% for average negotiatorsRackham & Carlsle
Step 3. Concessions Making Process1,2th preparatoryShut your mouth, let the other make a first offeryou first-No! No !you firstQ1. Should I be the first to open?1. Never Open RuleTwo contrasting answers -anchoring effect
2. Anchoring Effect ZOPA TheoryBy making a first offer(price), you have a chance to set the Zone of Possible Agreement (ZOPA)Social scientists have discovered - A Human Tendency to affected by first impression price offered by the other- Tend to unconsciously negotiate from that starting point (first offered price)- first offer : anchoring effect
Conclusion Information(1) If you are confident that your information Is better than your counterpartsFeel free to offer first Enjoy anchoring effect
(2) Unless Never open ruleTry to let the other offer first
But, be careful for the anchoring effect
Q2. Should I open aggressively(High-Ball) or reasonably(Low-Ball)1. Relationship situationReasonable opening (Low-Ball)
2. Transaction Situation (Bazaar, competitive) 34 case-study between 1960 and 1980 - aggressive offering is the best * carpet store - especially if direct communication between the parties is limited * home sale medicated by a agent (broker)aggressively(High-Ball)
Why aggressive opening(High-Ball)?Target price
1. Contrast principle50$45$30$10$Reasonable first opening?Outrageous oneSellers Walk-away price(wap)40$Buyers WAP60$
If I opened at 30$ - moved up 20$ (my concession) - stopped at 50$ the seller would feel both greater relief and satisfaction more willing to say yesIf opened at 45$ only 5$ concession - seller would are really willing to say yes.
2. Reciprocity principlePerson A AggressivePerson B Rejects --repeat-----Person A moderates his demand by making a significant concessionPerson BFeel pressure imposed by the Reciprocity principle to make A reasonable response(to say yes)
Does an Aggressive(High-ball) always work in a transaction?Exception1. You lack leverage and the other knows itFish vendor on The street in themorningAggressive Fish vendor on The street in theevening- No leverage (no refrigerator)- People know it
Exception 2. When the other wont hagglingRoughly 15% of American hate bargaining (haggling)You : seller of neck-tieYoung studentFifty years lookingWealthy gentlemanAggressive Reasonable
From consumers standpoint, What negotiation strategy?1. Resist at the initial offer(price)but, identify yourself as a serious buyer
- show your cash or checkbook
2. The declining size of hagglers (sellers) concessions sends a powerful signal that they are getting close to a resistance point (walk-away point, bottom line)20,000$18,000$17,000$16,500$16,300$+2,000$+1,000$+500$+200$What his resistance price? 16,000
3. Keep insisting on your price until you hear shopkeeper say no4. Politely but firmly head for the doorIf they stop youOtherwise Willingness to makeA future concession
Not so great concessionLast pricehis real resistance price (bottom line)
Step 4. Closing & Gaining CommitmentResearch shows concession rates skyrocket as the parties perceive that they are under a deadlineTomorrow noon is a deadline, after that time, we will sell to (buy from)the other who has expressed interest -Your counterpart--under pressure ** Yongsan
2. WalkoutHow to break the deadlock?take it or leave itultimatum get out of the tableLeverage equation : Bargaining Power >
When your-walkout tacticsWatch your partners personalityApologize or change your negotiation attitude toget negotiation back on track2. Competitive negotiator - Tactics1. Cooperative negotiator Real walkoutEvaluate the leverage equationIf you-more leverageIf you-less leverageHe-backTo get them back to nego
3. Nibbler- Last minute demands -Request small favor just before a deal closes - most negoti