Practice of conducting foreign trade negotiations in foreign countries
In the sphere of economic relations, the parties are negotiating to create more favorable terms of the deal, which is certainly much more productive than simply accepting or rejecting mutual offers. Business negotiations are a voluntary process, i.e. the parties may at any time withdraw from it. Thus, negotiations can be defined as a voluntary process of mutual concessions, as a result of which the parties modify their proposals and requirements in such a way as to approximate the proposals and requirements of each other.
In some foreign sources, when talking about negotiations, they indicate terms such as "distributing negotiations", or "zero-sum negotiations" (distributive bargaining ), and Integrative Negotiations & quot ;, or cooperative-based negotiations ( integrative bargaining). With distributing bargains , each of the parties seeks to maximize its own benefit, which inevitably occurs at the expense of the partner. This is a typical example of negotiations on the principle of "winner-loser", when the parties try to divide a kind of resources among themselves, and the receipt of additional benefits of one side will inevitably lead to a reduction in the benefits owed to the other party. In such circumstances, the negotiators are not partners, but opportunistic competitors. They do not share information, if they do not have to do this, while wanting to get maximum information about each other. Without a doubt, this is an outdated approach to the negotiation process, although it is still used in some situations, for example, in labor negotiations.
On the other hand, integrative negotiations correspond to the situation of "winner-winner". In other words, these are negotiations, during which the parties seek a solution in which each of the parties could obtain additional benefits without prejudice to the other party. This is a peculiar approach, in which both sides see the negotiations as a solution to the general problem of the problem. However, in the event of improperly conducting integrative negotiations, the parties can also come to mutually unfavorable terms of the transaction. Be that as it may, all negotiators can achieve their goals, and the winnings of one side are often not directly related to the concessions of the other. Many authors view business negotiations as integrative ones.
The main characteristics of integrative negotiations:
- an open exchange of information between the parties. In this situation, the parties openly declare their goals, and also listen attentively to the partner's goals in order to discover the points of their contact;
- search for a solution that satisfies the interests of both parties;
- the parties fully understand that they have partially conflicting interests, and therefore realize that it is necessary to find, if possible, common, mutually complementary goals acceptable to both sides;
- to achieve the above, both sides sincerely try to understand the partner's point of view.
The national factor, the development of the negotiation process, as well as the mutual perception of the parties are of paramount importance. Negotiations, as a rule, are always influenced by various factors that are not related to their subject matter. At the national level, these are cultural contradictions, on the organizational level, differences in the structure of organizations. Undoubtedly, it is necessary to take into account the possible interpersonal contradictions of the negotiators themselves, which differ from each other in education and professional activities (for example, negotiations of marketers and engineers). Of course, cultural differences are a kind of challenge for negotiators and require understanding and flexibility in behavior. Ability to overcome these contradictions is simply necessary for successful international negotiations. Finally, it is necessary to avenge such a concept as the atmosphere of negotiations. The atmosphere reflects not only how the parties perceive each other, but also the progress of the negotiating process itself. The positive atmosphere of the negotiations is determined by the fact that the parties understand and accept each other and, accordingly, are more willing to compromise in order to achieve the overall benefit.
The structure of international business negotiations. The structure of international business negotiations includes three groups of variables:
- Preliminary factors;
- procedural factors;
- the atmosphere of negotiations.
In view of the fact that negotiations are a dynamic process, changes in one of the groups of factors most often have an effect on other variables and, as a consequence, on the mutual perception of the parties.
1. Preliminary factors. Preliminary factors have a direct impact on the subsequent process and the structure of the negotiations. The degree of influence of various variables in this group varies depending on the stage of the negotiation process, having not only a positive but also a negative character. In the case of positive influence, the negotiations are swift and smooth. At negative, on the contrary, are accompanied by delays and contradictions.
Preliminary factors include: the parties' goals, the negotiating environment, the positions of participants in the market, the influence of third parties, and the personality of the negotiators.
Goals should be defined as the final results that the parties would like to achieve after the talks. They are often divided into general, contradictory and complementary. For example, the conclusion of a successful and profitable transaction is a common goal. However, in this situation, their interests can be in contradiction, since the profit of one participant can mean losses for another. Concerning mutually complementary goals, the following example can be cited. A buyer in a foreign trade transaction is interested in acquiring a certain technology for the construction of an infrastructure facility. At the same time, the seller would like to enter the corresponding national market with the subsequent expansion of the scope of activity to the neighboring countries of the region. Common and complementary goals have a directly positive impact on the negotiation process, contrary to the goal - negative. It in turn affects the atmosphere of negotiations. The likelihood of reaching a mutually beneficial agreement falls, however, as the number of conflicting goals increases, and increases if general and complementary dominance prevails.
The negotiation environment includes such elements as political, social and structural factors relating to both sides. Differences between the parties regarding the environment, especially in international negotiations, often hamper the process. Naturally, in the case of negotiations between the parties, who are little acquainted with each other and having different cultural and professional roots, the probability of contradictions is very high. Some of the characteristics of the environment affect the negotiation process (political and social aspects); others - on the atmosphere (market structure).
Position of the parties in the market - an important factor in negotiating. The number of buyers and sellers present on the market determines the number of alternatives available to negotiators, which in turn changes the degree of pressure to which they can resort. The positions of the parties to the negotiations on an international transaction depend, for example, on whether one of them holds a monopoly position in its national market.
As a rule, international negotiations, in addition to the exporter and importer, include certain third parties. These can be trade agents, government, consultants, subcontractors. They can influence the negotiation process, since they have specific goals. In particular, if the government is involved, the government can set additional goals concerning infrastructure, employment, currency control, as well as the peculiarities of relations between the countries of the exporter and the importer themselves.
Directly negotiators, namely their personal qualities, professional experience and the art of negotiation, are very important. The negotiators act in the presence of certain restrictions. On the one hand, their actions are aimed at enhancing cooperation between the parties and achieving common goals, on the other - they are trying to come to an agreement that is most beneficial to their side. The personality of the negotiator is especially important in stressful conditions of lack of information that the parties have about a partner. A good negotiator must have a bright personality, the ability to clearly and clearly formulate the position of the party he represents, easily and confidently find a common language with new, unfamiliar people, respect the position of the opposite side. However, depending on the scope of activities, goals and motivation, the skills of the negotiator and his manner of activity may differ. For example, negotiators who have an engineering activity profile can focus on technical issues.
2. The atmosphere of negotiations. The development of relations between the parties is characterized by an atmosphere of negotiations and is of fundamental importance for the process as a whole. The atmosphere and the process of negotiations continuously influence each other. The atmosphere includes the atmosphere around the negotiations, the way the parties see and perceive each other's behavior, etc. It is important to take into account how participants see the process. In other words, in negotiations, the perception of reality is more important than reality in itself. Some elements of the atmosphere play a different role depending on the stage of the negotiations (conflict/cooperation, dependence/pressure, expectations).
The presence of both common points of view and contradictions - a fundamental characteristic of the negotiation process. On the one hand, both sides are interested in finding a mutually beneficial solution to the problem, on the other - a conflict of interests may arise. The degree of cooperation and conflicts depends on the parties' goals. Complementary goals, as a rule, are least predisposed to contradictions. In general, it should be noted that the level of consent and contradictions in the negotiating process directly depends on the issues being addressed, while the relevant characteristics of the atmosphere of negotiations are the result of how the parties cope with the problems that arise. At times, the parties can mistakenly perceive the situation as conflictual because of misunderstanding. The less participants in negotiations are familiar with each other, the more likely such imaginary conflicts emerge. Any stage of the negotiation process can be illustrated in the form of a definite correlation of concessions and contradictions.
As a rule, in the negotiations there are elements of dependence and pressure. They directly relate to how close the ties and relationships of the parties are, how valuable to them is this relationship and what is the range of alternatives. Preliminary factors, such as market position, can also affect the presence of elements of dependence and pressure. The ability to control relationships is related to how the parties see the power of their influence and the degree of their dependence on each other.
Finally, the last important aspect of the atmosphere of negotiations affects two types of expectations of the parties. Firstly, these are long-term expectations regarding the valuable perspectives that cooperation with a partner can provide in the future. The higher these expectations, the more likely that the parties will quickly come to an agreement on the current transaction. Short-term expectations relate directly to the current agreement. The consent of the parties to start negotiations and continue them from stage to stage implies expectation that the benefits of participation will exceed the benefits of refusing to cooperate. These expectations and stimulate the development of the negotiation process.
3. Negotiation process. International commercial negotiations take place in three main stages. Each stage is a special part of the negotiation process, during which the parties carry out certain actions and continue the exchange of information. At the end of the stage, the parties either stop negotiations or continue, switching to the next one. At the preliminary stage, the parties try to understand the needs and requirements of each other through information gathering and informal meetings.
Then there is the stage of direct negotiations (face-to-face talks) and the post-negotiation stage, where all the main issues of the transaction have already been settled and only technical issues remain, for example, language, format and signing of the contact.
In addition to the three stages, it is necessary to distinguish two dimensions of international commercial negotiations: cultural and strategic. They are presented at any stage, having a different degree of importance.
stage 1. Pre. beginning of the preliminary stage is a first contact side, wherein they are willing intention of cooperation. At this stage, some negotiations can be conducted and test proposals can be made. The dynamics of the process is increased as the parties are beginning to understand each other's needs, as well as possible benefits.
They collect all possible information about each other, including data on the operational environment, possible third parties, influencing factors, competitors and infrastructure. Each participant seeks to be prepared to change its position in connection with events such as the regrouping of competing forces or changes in interest rates. Returning to the concept of negotiations as a solution to the problem, it is worth noting that one of the main tasks at this stage is to identify a problem that needs to be addressed. The most favorable situation is when it is defined jointly and, therefore, reflects not only the individual expectations of participants, but also stimulates both sides. Therefore, they should sincerely and openly discuss each other's goals and expectations in order to achieve a position that is conducive to solving the problem.
Informal meetings take place so that the parties can clarify their positions. The decision on whether to move to the next stage depends on how participants see the level of agreement and contradictions, pressure, dependence and possible benefits from cooperation. Negotiations cease if the contradictions are seen as excessive or if the success of future cooperation seems dubious. The parties should clearly see how they are going to work together, whether the mutual achievement of the goals is realistic, what obstacles must be overcome for this.
In international commercial negotiations, the preliminary stage is often more important than direct negotiations. Interpersonal communication, sympathy and confidence achieved at this stage can become the key to future success. One way to achieve such connections is to invite one side of the other side to make an unofficial visit to her country with the purpose of acquaintance and developing trust relations. It also allows participants to understand the basic principles and priorities of each other's activities.
Parties are trying to reinsure themselves against unforeseen events. The possibility of changing tax legislation, customs duties, labor standards - this is just a short list of areas of risk that must be taken into account. Understanding the infrastructure of the country and the partner's company is also critical.
Participants in international commercial negotiations must develop a preliminary strategy, based on the information collected and their own expectations. It is necessary to provide the negotiators with a complete list of problematic issues, as well as options and decisions (on the principle: preferable - desirable - acceptable - unacceptable), based on possible own and counter offers.
Stage 2. Direct negotiations (face-to-face talks). One of the cornerstones at this stage is that the parties are confident of the possibility of cooperation on the way to solving the common Problems. They also realize that, probably, the partner sees the situation - the question under discussion - at a slightly different angle and has different expectations about the results. Therefore, at the beginning of direct negotiations, one should take an open position, having several alternative proposals ready at the same time. As the process develops, participants evaluate the presented alternatives, correlating them with their own expectations.
Experience shows that the party in charge of the agenda has the initiative in the negotiations, since it is able to build it so as to emphasize its strengths and focus on the weak sides of the enemy, as if immediately turning it into the position of the defending one. However, do not forget that the agenda may in advance unduly reveal the position of the responsible party, which will allow the enemy to prepare counter-arguments on problematic issues. Some negotiators prefer to start with the achievement of generalizing agreements. Potentially successful approach at the considered stage is also a step-by-step method of contract consideration, allowing simultaneously to consider both mutually acceptable options and contradictions. Discussion of the issues on which the points of contact were found at the very beginning can form a positive atmosphere of cooperation. The choice of strategy also depends on the client/supplier with whom negotiations are being conducted. It is undoubtedly useful to anticipate the strategy of the opposite side as early as possible in order to develop an appropriate or complementary negotiation plan.
The negotiators are advised not to agree to the first proposal, as during the negotiations it is possible to force the partner to make big concessions. In view of cultural differences, as well as diverse national business traditions, international commercial negotiations often include overcoming these difficulties. It is sometimes difficult for the parties to understand each other's culture and adjust to it, but in no case should it be ignored. In many emerging markets, the personal relationships of partners are more important than any economic data and technical specifications. Negotiators of such countries usually do not hurry, try to be very cautious, for fear of offending a partner, but expect the same behavior from him.
Adjusting the balance between hardness and trust is important in any negotiation. This is embodied in the ability to inform the partner of the unwillingness to make further concessions. Such information exchange is easy to implement in conditions when partners have a long history of cooperation, and it is much more difficult at the first meeting. Usually, phrases like: "We can not accept your offer in this form" are used for such purposes. or We value the quality of your hardware, and it suits us, but not at the asking price. "
It is also obvious that a party that believes itself capable of exerting pressure will make less concessions, while the weaker party is likely to be predisposed to compromise in order to create a better atmosphere for negotiations. At this stage, you need to remain flexible. As information is exchanged, the parties begin to understand the degree of concessions to which they are willing to go. For example, the price can be reduced if the best payment terms are offered. Some conditions that may be subject to bargaining are difficult to assess using traditional criteria. Let's say that the opportunity to enter a promising but deeply protected market is strategically much more valuable than a momentary profit.
Stage 3. Post-negotiation. At this stage, agreements on all major issues have already been reached. The contract is drawn up and ready for signing. Experience shows that the language of the contract can also become a subject of negotiations, because as a result of the transfer, the conditions may represent a completely different picture for one of the parties. This can even lead to a return to the face-to-face negotiations. In order to avoid such delays at the conclusion of the transaction, it is recommended to maintain a detailed protocol of negotiations. L following the results of the second stage, when all mutual concessions have already been committed, it is recommended that both sides consider them in detail. This will help to generalize the final understanding of the contract, as the parties could look at the issues discussed in different ways. This applies not only to the process of writing and signing a contract, but also to its subsequent application. Problems can arise later, in the implementation of the terms of the contract, if the parties, trying to conclude an agreement as soon as possible, did not pay due attention to the details. The best way to resolve the issue under discussion is to make sure before the parties leave the negotiating table, that they fully understand the content of the agreements reached. An experienced negotiator will sum up the simple question that checks the understanding, somehow: "Do we understand correctly that if you agree to the terms of payment offered by you in the event of a loan repayment within three years, the price is reduced by 7%?"< center>
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