Effective Business Negotiations

Make it an Effective Tool
for Everyday Business
Osvaladas Čiukšys
23 March, 2016
BMI 1

Osvaldas Čiukšys
More than 20 years of negotiating experience:
1991 – 1993 Head of Trade division in Ministries of International Economic Relations
and Foreign Affairs: negotiations on Free trade, Investment protection,
Economic cooperation agreements
1993 – 2000 Head of Foreign trade division of Ogmios group and General Director of
Ogmios Laikas Ltd.: negotiations on distributorship and long term
commercial contracts with leading world companies (electronics,
household appliances, luxury goods: Swiss watches, jewelry )
2000 – 2001 Vice-minister of Economy: negotiations on LT accession to EU,
3 negotiation chapters: Free movement of goods, SME and Industrial policy
2002 – 2009 Deputy head of LT diplomatic mission in Poland, Ambassador of Lithuania to
Latvia and the Czech Republic: member of various state negotiations teams
2009 – 2011 Expert of Ignalina NPP decommissioning, General Director and Corporate
Affairs Director of Ignalina Nuclear Power Plant: negotiations with main
projects contractors, EBRD and EU Commission on NFP 2014-2020
From 2013 Deputy Director General and Director General of Lithuanian
Confederation of Industrialists, Chairman of Lithuania – China Business
Council, Consultancy on international business negotiations
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Main stages of negotiation
Preparation
Exchange of
Information
Bargaining
Closure and
Commitment
Business Negotiations, Osvaldas Čiukšys©
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80%
20%

Preparation
• Identify the main goal of negotiation: yours and opponents
• Make necessary economic and financial calculations
• Prepare technical and other documentation
• Design your negotiating team and
get the mandate to negotiate
• Prepare your position and best alternative (BATNA)
• Set the agenda for negotiations
• Gather and analyze information about your opponents
4

Preparation: practical aspects
• Inform your team about your goals, strategy and
agenda. Discuss their roles in negotiation process
• Offer opponents to negotiate at your territory
• Propose to write down minutes of negotiations
• Propose and be the first to send draft agenda
• Meet former employees, business partners or
clients of your opponents
• Invite your opponents to meet informally:
dinner or lunch, beer or coffee prior to negotiations
• Be the first to send them drafts of documents:
contract, technical specification, samples etc.
• Offer your help to the other side: interpreter,
driver, office, hotel reservation etc.
• Take time to relax and be ready to make decisions
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Ask yourself : are we ready?
Do we really have enough information
or
just see what we want to see and make wrong perceptions?

Exchange of information
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Main rule:
only the required minimum of valuable
information provided to the other side

How to control negotiations
1. Controlling the environment
arrangements, drafts, seating
2. Setting the agenda and the course
imposing agenda that you prefer, taking the initiative and
making the first proposal
3. Controlling the course of negotiation
using questions and expressing emotions , making concessions
in the right way
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Negotiation team
Chief
negotiator
Good guy Bad guy Hard liner Sweeper
©Business Negotiations, Osvaldas Čiukšys

Team formation (1)
Members Roles Functions
Chief
negotiator
Leader of the team, experienced ,
not necessarily the oldest
Makes decisions,
gives instructions
Good guy Everybody likes him
Agrees with opponents, makes a
good impression, creates comfort
in negotiations
Bad guy
Opposite to Good Guy, it’s much easier
to reach an agreement without him
Stops negotiations when
necessary, reduces value of
opponents’ proposals, points out
weaknesses of the other side
Hard liner
Serious, knowledgeable, makes the life
of opponents difficult, his opinion is
respected by everybody
Writes down the minutes, delays
negotiations when needed, helps
to take proposals back, strictly
follows the agenda, observes
Sweeper
Accumulates all proposals, suggests
overarching solutions
Does not allow the others to lose
the track and forget the main
goals, suggests the ways out
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Team formation (2)
• Small and flexible
• Knowledgeable and well informed
• United: team spirit
• Resourceful and creative
• All necessary areas well represented
• Team members know their roles and functions
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Seating (1)
window
You
Opponents
window
BG GG Ch N HL Sw
Sw HL Ch N GG BG
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window
You
Opponents
window
You
BG
+
HL
GG Ch N Sw
Ch N Sw ?GG?
13
Seating (2)

window
You
Opponents
window
GG + Sw + Ch N
Ch N
BG +HL
?
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Seating (3)

Seating (4)
window
You
Opponents
window
HL+BG Ch N+GG+Swnp
Sw HL Ch N GG BG
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window
You
Opponents
window
You
You
Opponents
Separate room for
negotiating team
Ch N
Ch N
BG
+
HL
GG Sw
+
GGBG
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Seating (5)

Informal meeting
You
Opponents
Ch NCh N
Sw GG
Sw HL
BG
HL GG
BG
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Seating (6)

1. Propose and agree the goal of the meeting
2. Announce (correct) the agenda and issues to be
discussed
3. Shortly summarize (make comments and
corrections) the situation and already agreed
issues
4. Invite your opponents for comments, correct them
Negotiations: opening
Take the initiative:
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Possible agendas (1)
1. Push: start with important issues
2. Procrastinate: you begin with less important issues
3. Assemble: put together groups of issues both
parties are likely to agree, forming packages for
agreement
4. Classify: classify issues like financial on one side, and
all other issues on the other
5. Sort: review all issues to be negotiated and decide if
there are any that can be settled quickly
119

Possible agendas (2)
6. Select: you suggest the order of issues to be
discusses. Never agree to this formula: who picks up
an issue to be discussed gets strategic advantage
7. Consult: you agree agenda prior to it and then revise
the schedule and announce it
8. Concede: put some issues on the table for
discussion you willing to concede. Because of your
concessions you can require and anticipate
concessions in return
9. Soften: make concessions not important for you on
the first stage . When the opponents are comforted
negotiated the real deal
10. Appetizers: start with easy issues to agree on.” If
we did it so easy, lets do this one as well “
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Negotiations: a good start
1. Pay attention to trivial information
“I hope things go well this time”, “We reserved the hotel for two
days”, “We’ve been having a good year, but stock has increased since…”
2. Create a diversion
Make some jokes. Build self confidence, test the atmosphere. If they
feel nervous or want to start immediately, expect hard negotiation…
3. Be diplomatic
Introduce the issues in relaxed manner, even if you intent to attack and
play tough later on. Do not provoke immediate back fire
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Making the First Offer
• Making the offer first you do the anchoring
• Setting the rules – taking the initiative
• Your figures and arguments are first to be discussed
• It puts the opponent into “must react” position
Explain:
why you making this offer
but not
what you are offering or proposing

Shaping up a proposal
Separate THE EXPLANATION phase and THE JUSTIFICATION phase
If you can meet the following conditions 1…,
2…, 3…, n…, we will be prepared to consider
offering the following: 1…, 2…, 3…, n….. Our
reason for doing so are a…, b…, c…, …z...
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Prepare the order of your arguments
Finally, come with your “sledgehammer” arguments which will
have the strongest impact on the solidity of their position
Secondly, present the weaker arguments. They are weaker but it
doesn’t mean that they are not justifiable. Make as much of
them as you can. Let them be tired to work on it
First come strong arguments. These put the others side on the
defensive. You show your seriousness
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Make your arguments stronger
• Use comparisons
• Refer to best practices
• Use expert opinion
• Use presentations, statistics , reports, studies etc.
• Visualize your argumentation: presentations,
charts, samples etc.
People believe what they see…
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Making concessions (1)
Concessions
10 2 2 2 2 2
10 1 2 3 4
10 4 3 2 1
• Start from small, not important concession and finish with bigger one
• Trade your concession for a bigger one from your opponents
• Package: “ we are ready to give up on issue A if you agree
to give us B and C”
Negotiation rounds
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Making concessions (2)
1. Make your possible concessions list (invent and create
as more as possible)
2. Group them to minor, less and really valuable to you
and your opponents
3. Make the list of possible concessions you want to
receive from your opponents and group them
4. Shape up your proposals in packages and make a
trade-offs: exchange the package made of lower value
concessions to one of real importance
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Types of questions in negotiations
1. Open questions: designed to get more
information and require explicit answers
2. Probing questions: more specific sort of open
questions which require detailed explanation
3. Closed questions: requires short answers of
“yes” or “no” type
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Open questions and phrases (1)
Most important and effective tool to control negotiation (their
subject and time frame) are open questions (or phrases):
“What do you think about the possibility to change your
delivery terms ?”
“Can you change your delivery terms?”
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Examples:
• What do you think about our proposal?
• Please tell us more about the strong sides of your proposed payment
terms
• Could you elaborate a bit more on the delivery terms?
• Would you be so kind to explain your idea about the solution to this
problem?
• Correct me if I’m wrong
• The most important thing for me that everything is done correctly and
fairly
• We would like to settle it in accordance with best common practice and
experience
• Can I ask a few questions to see if my understanding and information are
correct?
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“Let the doors stay open” examples:
• Let us say that we agree with that proposal, what would be your
suggested way to proceed?
• Is there any other information you feel I should have at this time?
• Whys is that so important to you?
• Let me get back to you on this later
• Please help me understand the purpose of your request/offer
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• When you say “approximately”, what do you
mean by that?
• What else would that entail?
• How specifically would that work?
• If we meet your requirements what exactly would be
your offer to us?
• If speaking more specifically, what do you mean
by saying…?
• You said that your offer is… It seems that your
current positions is…
Probing questions
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• Do you agree?
• Are you saying we could by-pass that?
• Is that always the case?
• Am I correct?
• Do you want me to close the issue?
• Are you happy with this?
• Should we proceed further?
Closed questions
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Expressing and sharing emotions (1)
Speak about your emotions during negotiation process.
Use it to create constructive and controllable
environment
Examples:
• We had a good start. That makes me optimistic!
• We are doing not very well this time. Are your of the same
opinion? What are the reasons your think?
• I feel exhausted by this issue. Should we change for something
better?
• I am so happy we agreed on this. It makes me think we will
move easier now. Don’t you think so?
• Should we break for a coffee? I think we deserved it both! Lets
discuss it informally…
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Expressing and sharing emotions (2)
React immediately to what is unacceptable or undesirable for
you: take the control back
Examples:
• Sorry to interrupt you, but I can’t understand the reasoning behind it
• I feel uncomfortable: I can’t see enough logic behind these
arguments
• I am an open person and I should tell you my opinion about what I
just heard
• This made us a bit nervous. Could we go back and look to the
situation from a different perspective
• It makes me feel bad if we can’t agree on it. Let us try to focus on it
later and finish our agenda
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Controlling the course of negotiation
 Right questions help you control the overall
situation of negotiation
 Quick reaction and responsiveness enables you
to take over the control of situation
Business Negotiations, Osvaldas Čiukšys
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Specifics of International
Negotiations
In international negotiations your skills to identify and understand
cultural differences are essential for choosing the right strategy
There are more then 200 different national cultures in the world
Richard D.Lewis separated them into 3 main cultural types:
- Multi active
- Linear active
- Reactive
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Cultural types (1)
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Cultural types (2)
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Multi active Linear Reactive
Family Speaks all the
time
Facts Speaks to the
point
Intuition Polite
Hierarchy Many jobs at
once
Planning Focused to one
task
Honor Avoids straight
contact
Human
relations
Not planning Results Consistent and
planning
Relations Listens all the
time
Emotions Permanently
shows emotions
Punctuality Straight but
polite
Duty and
responsibility
Hides emotions
Rhetoric Has many
excuses
Keeping a
word
Sometimes
emotional
Harmony Not confronting
Loyalty Frequently
interrupts or
stops discussion
Trust in
institutions
Does not like to
loose a face
Reputation Diplomacy
dominates the
truth
Emotions
dominate facts
Trust in Law Tries not to
interrupt when
listening
Can not loose
the face
Flexible truth Main thing is
truth
Never
interrupts
Brazil, Chile, Argentina ,
Mexico
Germany, Switzerland,
Luxembourg, Great Britain
Japan, China
Vietnam, South Korea
Cultural types (3)
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Language
Behaviour
Values
Mentality
Decision making process
In International Negotiations very
important to understand the other side:
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Barry Tomalin, Mike Nicks “The World’s Business Cultures. How to Unlock Them”
CULTURAL PROFILE
1. COMMUNICATION STYLE
Direct In direct
2. WORK STYLE
Formal Informal
3. DISCUSSION STYLE
Quick Slow
4. BUSINESS ATTITUDE
Progressive Traditional
5. MANAGEMENT STYLE
Horizontal Vertical
6. BUSINESS RELATIONS
Human relations Work
7. DECISSION MAKING
Individual Collective
8. BASIS FOR DECISSION MAKING
Facts Instincts
9. TIME ATTITUDE
Planned Flexible
10. WORK/LIFE BALANCE
Living to work Working to live

UNITED STATES - CULTURAL PROFILE
Direct In direct
2. WORK STYLE
Formal Informal
3. DISCUSSION STYLE
Quick Slow
Progressive Tradicional
5. MANAGEMENT STYLE
Horizontal Vertical
7. DECISSION MAKING
Facts Instincts
9. TIME ATTITUDE
Planned Flexible

BUSINESS IN USA
Ways to success Ways to failure
Positively and clearly explain who you are
and what you do
Speak in calm British manner and be
sarcastic
Communicate and be visible Make statements about gender, race or
religion
Implement any project in time and in line
with its budget
Tell that Americans lack a sense of humor
Use free and friendly way of
communication
Do not tell if there is a threat of the
project being late
Be interested, correct the proposals but
do not refuse them
Get out for a beer during lunch break
Icebreakers Icebergs
The glory of their country Start discussion on US foreign policy
Good willingness of Americans Criticise Vietnam war
The best American movies and television Jokes about sex

GERMANY - CULTURAL PROFILE
Direct In direct
2. WORK STYLE
Formal Informal
3. DISCUSSION STYLE
Quick Slow
5. MANAGEMENT STYLE
Horizontal Vertical
7. DECISSION MAKING
Facts Instincts
9. TIME ATTITUDE
Planned Flexible

BUSINESS IN GERMANY
Show productivity and punctuality Be disorganized and ignore existing rules
Be open and straight Promise and do not deliver
Do what you say Do everything without consulting
Learn the rules and follow them By pass your direct manager
Respect hierarchy Be too familiar in communication with your
colleagues
Be interested in German and European
issues
Too early talk about personal life
Spent your holidays abroad, preferably
with Germans
Germany’s role in World War II
Sport, especially football Remember that England outscored
Germany 5:1 in qualification of World Cup
2001

GREAT BRITAIN - CULTURAL PROFILE
Direct In direct
2. WORK STYLE
Formal Informal
3. DISCUSSION STYLE
Quick Slow
5. MANAGEMENT STYLE
Horizontal Vertical
7. DECISSION MAKING
Facts Instincts
9. TIME ATTITUDE
Planned Flexible

BUSINESS IN UK
Be with your work on time, do not
dramatize your achievements
Be proud on your achievements
Be on time to any meeting Speak an hour on your presentation
If problem arises – ask for advice, do not
risk to miss the deadline
Phone to people on business matters at
evenings or weekends
At the end of the meeting ask what are
the exact expectations from your work
Let somebody down when it is said that
you are a trustful person
Go for some bear or sports after office
hours
Behave patronisingly with women
British weather Religion, politics and migration
Real estate prices – but never ask how
much is worth a property of your
opponent
Salary and personal wealth
Complaints about traffic, parking and
public transportation
“Why Brits send their parents to nursing
houses?”

RUSSIA - CULTURAL PROFILE
Direct In direct
2. WORK STYLE
Formal Informal
3. DISCUSSION STYLE
Quick Slow
5. MANAGEMENT STYLE
Horizontal Vertical
7. DECISSION MAKING
Facts Instincts
9. TIME ATTITUDE
Planned Flexible

BUSINESS IN RUSSIA
Be patient Criticize Russia
Be open and hard during negotiations –
Russians respect power
Agree to proposed compromise very easy
Respect Russian calendar: your proposed
meeting time can differ from theirs
Show that your team is not united
Pay attention to hierarchy – it is
important to please higher authority
Refuse to analyse what is behind a nice
facade
Build relations: Russians build their
business on personal relations
Use permanent pressure tactics
Russian culture, literature and art Chechnya
Russian achievements Russian critics (even Russians are
criticizing their country)
Russian great role in World War II Communist period in their recent history

Respect to the culture of the opponent
is the key to success
51

Effective Business Negotiations

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