Negotiation with German Business Partners

1. Negotiation with German Business Partners

2. Agenda • What is a negotiation? • Preparation of a negotiation • Modern negotiation management: The Harvard Concept • Communication and relationship management • Strategies and tactics • Closing and review of a negotation • Group work

3. Schedule

4. Please show us a recent negotiation situation from your private or professional life that you kept in your mind. Please draw on a flip-chart (no words):- How did you approach the situation? What type of negotiator are you? Strengths, weaknesses?- Looking back, how would you like to approach the situation now?- What skills, information, resources do you need to reach this goal? Training need: Am I a good negotiator?Interactive

5. Please think of different negotiation situations from your private and/or professional life. What are the differences? What do they have in common? What is a negotiation?Interactive

6. What is a negotiation?Classification vs. other forms of dialogues ... e.g. lawyer and client ... the consultant gives information to the client, but can also influence his/her decisions ... deal with a topic or person … not necessary target-oriented ... consists of proposition and counterclaim and their confrontation Consulting Information Discussion ... a disputation between two or more parties ...every party tries to win vs. the other ... accommodation is not the intention of a debate (that would be a discussion) ... targeted communication between two or more parties; each party wants to reach a certain goal; the final deal is a balance of interests … the parties do not depend on the other … all parties have the interest to reach a conclusion Negotiation Debate ... are necessary if one or more persons need to be instructed or criticised by another person Instruction Review

7. Preparation of a negotiation • Any negotiation has to be prepared very thoroughly, because: • you have to be totally aware of your targets • you have to know your options and room for manoeuvre • you have to know your negotiating partner • you have to give a competent impression towards your negotiating partner • you have to keep the negotiation as efficient as possible

8. Preparation of a negotiation Checklist • Define your targets and options (need to be realistic, compatible with the targets of your negotiating partner, well-defined, measurable) • Understand your negotiating partner (what kind or person is he/she, what are his/her targets and options, what are his/her personal needs) • Define a strategy for the negotiation (how do you want to start, next steps, reaction/response to possible proposals from the other side) • Prepare the negotiation itself (participants, location/environment, agenda, invitation)

9. Preparation of a negotiation Group work Please prepare one of the following negotiation situations with all important aspects and information needed:Group A: You are a component supplier in the motor industry and need to negotiate the terms with a longtime customer Group B: You want to convince your wife to buy a sports car instead of a safe family vanGroup C:You are a labour union leader and want to achieve a wage increase for your workers Group D: You want to convince your boss to launch a new product that you inventedPlease present your results on a flipchart.

10. Modern negotiation management:Classical negotiation styles Interest Power Climate Flexibility soft hard submissive dominant personal formal explorative repetitive Hard negotiation style Cooperative negotiation style

11. Modern negotiation management:The Harvard concept • ... is neither the hard nor the soft style • ... evaluates controversal subjects only on facts • ... is tough with facts but soft towards persons • ... does not exert pressure on the negotiation partner • ... encourages fair behaviour and protects from those that want to take advantage of unfair behaviour • ... is appropriate to any negotiation situation

12. Modern negotation management:The Harvard concept • Main principles: • Seperate the people from the problem • Focus on interests and not on positions • Work together to create options that will satisfy both parties (develop alternative solutions) • Always rely on objective criteria

13. The Harvard concept1. Separate the people from the problem • The problem: • Personal relationships and facts are mixed Consequence: Conflict about personal things, standstill in the negotiation matter

14. The Harvard concept1. Separate the people from the problem • Solution: Deal separately with personal problems and disputes on facts Negotiation topic Persons • Know the targets and needs • Clear communication • Build relationship • Build agreeement  Focus on conclusion of the contract

15. The Harvard concept 2. Focus on interests and not on positions • Expamle: Position: „open the window“ Position: „close the window“ Interest: „fresh air“ Interest: „no infiltrationwith cold air“ • Solution: Open a window in the next room •  Target: Find a solution via shared interests

16. Interactive The Harvard concept 2. Focus on interests and not on positions • What could the interests behind the following positions be?Is there room for a solution via shared interests? • Son: „I desperately need a new bicycle.“ • Buyer: „I cannot accept the proposed price increase.“ • Car driver: „This is my parking place. I was here first.“ • Worker union: „We insist on 5% wage increase.“ • Think of examples from your own negotiation experience?

17. The Harvard concept 3. Create options that satisfy both parties • Work out a win-win situation that satisfies both parties. • Possible barriers:- you jump to conclusions too fast - you don‘t know the intentions/targets of the other party - you only look for „the one“ perfect solution- wrong assumption that „there is not enough for everyone“- wrong belief: Everyone is only competent for his own problems. • Strategy: First make the cake bigger, than share it.

18. The Harvard concept 3. Create options that satisfy both parties • Win-win-solutions = benefit for both sides • Find out and name common interests • What is the main target of the other party Find solutions that cost you a little but brings a lot for the negotiating partner • Try to merge different interests Strategy: Push your own benefits by paying attention to the interest of the other party

19. The Harvard concept 4. Always rely on objective criteria • Transform dispute into search for objective criteria • Be open for arguments, only use rational arguments • Don‘t concede in not objective pressure • If necessary: Ask a neutral 3rd party solve the dispute Strategy: The solution has to be build on objective criteria.

20. Repetition Modern negotiation management:The Harvard concept • Main principles: • Separate the people from the problem • Focus on interests and not on positions • Work together to create options that will satisfy both parties (develop alternative solutions) • Always rely on objective criteria

21. The DilemmaRoleplay • You are a worker in a big company. Together with a colleague you have the idea to ask your boss for a wage increase. The problem is that there is no time to discuss the matter with your colleague. If you decide to ask for a wage increase you will meet him directly in your boss‘s office… • If you both decide to ask for the wage increase every one of you will get a wage increase of EUR 200. If only one of you asks for the wage increase he will fire him and give the other one a wage increase of EUR 300 for his loyalty. If you both decide not to ask for the wage increase you will both get EUR 100 because your boss has planned to give you a small wage increase anyway.

22. The DilemmaRoleplay • This is the way the role play works: • form four groups • group 1 and 2 represent employee A and group 3 and 4 employee B • you get a card for „I go to the boss“ and „I don‘t go“ • decide in the group what you want to do, i.e. which card you want to play; do not talk with the other groups; write down your strategy for the roleplay in advance • show your groups card as soon as the trainer gives a sign • the wage increase for each group will be noted • after five rounds the groups are allowed to discuss with the other groups between the rounds • after 10 rounds the game is over • winning group is the group that gets the most wage increases.Winning team (group 1 and 3 or 2 and 4) are the two groups that have the most wage increases together.

23. The DilemmaRoleplay • Example: • group 1 and group 3 always go to the boss together: • group 1 (10 x 200 T =) 2000 Euro • group 3 (10 x 200 T =) 2000 Euro • group 1 + 3 (2 x 2000 =) 4000 Euro • group 1 and group 3 both never go to the boss: • group 1 (10 x 100 T =) 1000 Euro • group 3 (10 x 100 T =) 1000 Euro • group 1 + 3 (2 x 1000 =) 2000 Euro • group 1 always goes to the boss, group 3 never: • group 1 (10 x 300 T = ) 3000 Euro • group 3 (10 x 0 T = ) 0 Euro • group 1 + 3 (3000 + 0 =) 3000 Euro

24. Communication and relationship management The art of listening • If you don‘t listen thoroughly you will miss many important information! • Active Listening means to concentrate on the words of the other and to ask questions if you don‘t understand something: • Ask questions to make sure that you have understood the other one right („Does that mean that…?“) • Recapitulate what the other one has said • Relate to what the previous speaker has said • Use eye-contact – read in the face of the other one • do not interrupt someone else • If you have to make notes, try to keep eye-contact with your negotiation partner anyway

25. Communication and relationship management The art of speaking • Use the right words to avoid misunderstandings and not to offend your negotiation partner • If you speak too much and don‘t listen there is a lot room for mistakes from your side. Don‘t speak too long – ask your negotiation partner for a reply. • Use the same language as your negotiation partner, so that he can understand you: Not too many technical terms – not too much slang. • Don‘t go on to argue if the other one has already said „Yes“

26. Communication and relationship management The art of asking • Ask many open questions  Your negotiation partner will have to answer and will offer you a lot of information about him  Asking is not a sign of weakness – it shows interest • Ask general questions about the broad context („What are your plans?“) • Ask for your negotiation partners interests and problems • Use closed questions only if you need an accurate answer („Are you able to deliver tomorrow?“)  During the whole negotiation: Try to gather as many information about your negotiation partner as possible.

27. Communication and relationship managementHow can I become a fascinating negotiation partner? • Dress adequately and neat • Be well-rested and fit; enough sleep, not too much eating and drinking; smoking only after asking • Show enthusiasm and motivation for the matter of the negotiation • Agree with the other one whenever possible • Not „No“ but, „Yes, but…“ • Use „we“ instead of „I“ • Don‘t offer all the knowledge you have – a rest miracle about you makes your negotiation partner curious • Always be well informed, competent and ready for a decision • Admit your own mistakes • Try to break hierarchies or position in society • Address the other one by his name; try to keep all names in mind (or use business cares placed on the table in front of you)

28. Communication and relationship management The right use of body language Interactive Always look after you body language - understand the body language of your negotiation partner. • Some examples: • hold head aside • crossed arms and legs • downcast head • Open palm; hands to thefront • clasp at arm-rest of chair • strong fists • hands in the hips  appraising, contemplative  blocking, defensive  bored, distance  positive, open, open minded  repressed feelings  hostile  predominant

29. Strategies and tacticsInteractive • To start with a high or low offer? • To act first or to react? • Work out the pros and cons for the following strategic/tactical alternatives:

30. Strategies and tacticsTo start with a high or low offer? • High offers allow you • to speed up negotiations • to put up competitors out of contention • but they minimize your own radius of operation and may lead to a quick refusion • Therefore low offers are often of advantage: • Set yourself a high target – sometimes you will not know how much your negotiation partner is prepared to give • Make a low offer and explain it thoroughly • Try to find out which parts of the offer are acceptable and which are not acceptable -> the initiative is down to you • Don‘t panic in case you negotiation partner gives you the feeling that he finds your offer ridiculous  make quick confessions which you explain accordingly; you worked out the scope before •  Break the negotiation, if positions differ too much

31. Strategies and tacticsTo act first or to react? • The person giving the first offer makes out the speed and seizes the initiative. • But • In the first offer take into account to leave a margin. • Don‘t submit the first offer, if you don‘t know the aims of your negotiation partner - In the first offer only signal readiness to negotiate if there is a margin

32. Strategies and tacticsThe most important tactical steps • React immediately on an offer of the negotiation partner  You hold the reins and avoid the fact that the offer will be stucked in the heads • Submit hypothetic offers You negotiation partner has to reply and to abandon some details without the need for you to commit yourself • Tie up package deals This may facilitate your negotiation partner to ignore negative aspects and may quicken the negotiation

33. Strategies and tacticsThe most important tactical steps • 4. Put aside unsolved problems and react at a future date  You avoid to get tied up over single points a you support the negotiation  This points finally may serve as exchange object

34. Closing and review of a negotation • Basic rule: • Conclude the negotiation immediately after you have achieved a result! •  The situation cannot get better. •  To continue could be disadvantageous for you.

35. Closing and review of a negotationRelationship management • Basic rule: • Make your negotiation partner feel comfortable, especially when he is in an inferior position • Always give him the possibility to save his face Stress the joint advantages and your concessions Don‘t be too delighted • Search for reconciliation  Demonstrate respect to your negotiation partner (e.g. by shake of hands, good wíshes)

36. Closing and review of a negotationWhy is a detailed finishing deal essential? Often the realisation of an agreement fails although both partners were of the opinion that they established a joint agreement. • Reasons are e.g.: • Not all details were sorted out – „The devil is in the details“ • Solutions were accepted to conclude a problem which did not solve the problem effectively • Agreements were not formulated clear and unmistakeable

37. Closing and review of a negotationWhat has to be done after negotiation? • Write down your agreements: who has to do what and when? • Inform all persons involved about the outcome of the negotiation. • In case you do not write the protocol yourself, check it and contradict immediately. • Settle your points quickly  you create facts and complicate a drawback by the other party

38. Negotiating with successGroup work • You are the general managers of three companies: Daimler Chrysler, VW and General Motors. • Two or all three of the companies want to merge. For this process a consultant is supporting them. • In case of a successful merger you as the general managers will get a big bonus. The total bonus can be split between the managers in any way. • Also the consultant gets a fee dependent on the outcome.

39. Negotiating with successGroup work • Each individual should try to earn as much money as possible. • Each group should try to finish with a result. • Procedure: • Form three groups with the three CEOs and a consultant in each group. • Prepare your negotiation strategy on a flipchart paper (target, options, strategy, reactions on possible behavior of others). The same functions (CEO or consultant) from the three groups can discuss together, but everyone should have his own strategy paper. • Negotiate in front of the other groups. Try to reach the best result possible. • Discuss your negotiation results. Did your strategies work? What were the problems? What could you improve?

40. I wish you a lot of success with your future negotiations!