1. International Business Negotiation
Professor Kuochung Chang
Department of International Business
1

2. CHAPTER ONE
The Nature of Negotiation

3. Negotiations
Negotiations occur for several reasons:
• To agree on how to share or divide a limited
resource
• To create something new that neither party
could attain on his or her own
• To resolve a problem or dispute between the
parties
1-3

4. Characteristics of a Negotiation Situation
• There are two or more parties
• There is a conflict of needs and desires between
two or more parties
• Parties negotiate because they think they can
get a better deal than by simply accepting what
the other side offers them
• Parties expect a “give-and-take” process
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5. Negotiation is something that
everyone does, almost daily
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6. Relationship Types
When the parties depend on each other to
achieve their own preferred outcome they are
interdependent; they are characterized by
interlocking goals.
• Independent parties are able to meet their own
needs without the help and assistance of others.
• Dependent parties must rely on others for what
they need; the dependent party must accept and
accommodate to that provider’s whims and
idiosyncrasies.

7. Interdependence
In negotiation, parties need each other to achieve their
preferred outcomes or objectives
• This mutual dependency is called
interdependence
• Interdependent goals are an important aspect of
negotiation
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8. Interdependence
• Interdependent parties are characterized by
interlocking goals
• Having interdependent goals does not mean that
everyone wants or needs exactly the same thing
• A mix of convergent and conflicting goals
characterizes many interdependent relationships
1-8

9. Alternatives Shape Interdependence
• Evaluating interdependence depends heavily on the
alternatives to working together
• The desirability to work together is better for outcomes
• Best available alternative: BATNA
( Best Alternative to a Negotiated Agreement)
1-9

10. Mutual Adjustment
• Continues throughout the negotiation as both
parties act to influence the other
• The effective negotiator needs to understand how
people will adjust and readjust and how the
negotiations might twist and turn, based on one’s
own moves and the other’s responses
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11. Concession Making
• When one party agrees to make a change in
his/her position, a concession has been made
• Concessions restrict the range of options
• When a concession is made, the bargaining range
is further constrained
1-11

12. Two Dilemmas in Mutual Adjustment
• Dilemma of honesty
– Concern about how much of the truth to tell the other
party
• Dilemma of trust
– Concern about how much should negotiators believe
what the other party tells them
1-12

13. Game theory
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14. GAMBLING
Four students gamble with professor in the negotiation
class. Students are asked to puts their money into an
envelope. Professor Chang claims if the total amount is
grater than or equal to 500 NT$ dollars, then everyone
can get 150 back, otherwise the money will belong to
Professor.
• How much money will you put into?
• Everyone does own decision, communication is not
allowed.
14

15. Value Claiming and Value Creation
• Opportunities to “win” or share resources
– Claiming value: result of zero-sum or distributive
situations where the object is to gain largest piece
of resource
– Creating value: result of non-zero-sum or
integrative situation where the object is to have
both parties do well
– Most actual negotiations are a combination of
claiming and creating value processes
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16. Conflict
"sharp disagreement or opposition" and includes
"the perceived divergence of interest, or a belief
that the parties' current aspirations cannot be
achieved simultaneously"
1-16

17. Levels of Conflict
• Intrapersonal or intrapsychic conflict
– Conflict that occurs within an individual
• We want an ice cream cone badly, but we know that ice
cream is very fattening
• Interpersonal conflict
– Conflict is between individuals
• Conflict between bosses and subordinates, spouses,
siblings, roommates, etc.
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18. Levels of Conflict
• Intragroup Conflict
– Conflict is within a group
• Among team and committee members, within families,
classes etc.
• Intergroup Conflict
– Conflict can occur between organizations, warring nations,
feuding families, or within splintered, fragmented communities
– These negotiations are the most complex
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19. Dysfunctions of Conflict
1. Competitive, win-lose goals
2. Misperception and bias
3. Emotionality
4. Decreased communication
5. Blurred issues
6. Rigid commitments
7. Magnified differences, minimized similarities
8. Escalation of conflict
1-19

20. Functions of Conflict
1. Makes organizational members more aware and able to
cope with problems through discussion.
2. Promises organizational change and adaptation.
3. Strengthens relationships and heightens morale.
4. Promotes awareness of self and others.
5. Enhances personal development.
6. Encourages psychological development—it helps people
become more accurate and realistic in their self-appraisals.
7. Can be stimulating and fun.
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21. The Dual Concerns Model
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22. CHAPTER TWO
Strategy and Tactics of
Distributive Bargaining

23. The Distributive Bargaining Situation
• Goals of one party are in fundamental, direct conflict to
another party
• Resources are fixed and limited
• Maximizing one’s own share of resources is the goal for
both parties
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24. The Distributive Bargaining Situation
Preparation—set a
• Target point, aspiration point
• Walkaway, resistance point
• Asking price, initial offer
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25. The Distributive Bargaining
Situation
Party B - Buyer
Party A - Seller
Walkaway Point Target Point Asking Price
Initial Offer Target Point Walkaway Point
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26. Role of Alternatives to a Negotiated
Agreement
• Alternatives give the negotiator power to walk away from
the negotiation
– If alternatives are attractive, negotiators can:
• Set their goals higher
• Make fewer concessions
– If there are no attractive alternatives:
• Negotiators have much less bargaining power
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27. The Distributive Bargaining
Situation
Alternative
Party B - Buyer
Party A - Seller
Walk away Point Target Point Asking Price
Alternative
Initial Offer Target Point Walk away Point
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28. Fundamental Strategies
• Push for settlement near opponent’s resistance
point
• Get the other party to change their resistance
point
• Convince the other party that the settlement is
the best possible
• If settlement range is negative, either:
– Get the other side to change their resistance point
– Modify your own resistance point
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29. Keys to the Strategies
The keys to implementing any of the four
strategies are:
• Discovering the other party’s
resistance point
• Influencing the other party’s resistance
point
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30. Review & Question
• Describe the what kinds of strategies which
sales used in the film?
• How do you define the relationship types with
your course instructors? And your classmates?

31. Positions Taken During Negotiations
• Opening offer can anchor a negotiation
– Where will you start?
• Opening stance--- is the attitude the negotiator will
adopt during a negotiation
– What is your attitude?
• Competitive? Moderate?
• Initial concessions
– Should any be made? If so, how large?
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32. Positions Taken During Negotiations
• The role of concessions
– Without them, there is either capitulation or deadlock
• Patterns of concession making
– The pattern contains valuable information
• Final offers (making a commitment)---there is no
further room for movement.
– “This is all I can do”
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33. Ways to Create a Commitment
• Public pronouncement
• Linking with an outside base
• Increase the prominence of demands
• Reinforce the threat or promise
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34. Closing the Deal
• Provide alternatives (2 or 3 packages)
• Assume the close
• Split the difference--- used when an agreement is close,
suggesting that the parties split the difference.
• Exploding offers--- An offer that contains an extremely tight
deadline in order to pressure the other party to agree quickly.
• Deal sweeteners
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35. Typical Hardball Tactics
• Good Cop/Bad Cop
• Lowball/Highball
• Bogey
Negotiators use this tactic to pretend that an issue is of little or no
importance to them, when it actually is quite important.
The Nibble (asking for a number of small
concessions to)
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36. Typical Hardball Tactics
• Chicken---using threat
• Intimidation---An attempt to force the other party to agree by
means of an emotional ploy.
• Aggressive Behavior---asking other party to justify
• Snow Job (overwhelm the other party with
information) that he/she has trouble determining which facts are
real or important, and which are distractions
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37. Summary
Negotiators need to:
• Set a clear target and resistance points
• Understand and work to improve their BATNA
• Start with good opening offer
• Make appropriate concessions
• Manage the commitment process
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38. • The film is a dramatization of the true story of Erin
Brockovich, played by Julia Roberts, who fought against
the US West Coast energy corporation Pacific Gas and
Electric Company (PG&E). It turned into a massive box
office hit, and critical reviews are highly positive.

39. Question
What kind of negotiation tactics or skills have bee used in
both parties? And do you think it is helpful to achieve
goals?

40. CHAPTER THREE
Strategy and Tactics of
Integrative Negotiation

41. What Makes Integrative Negotiation Different?
negotiators must practice these requisite behaviors and
perspectives
• Focus on commonalties rather than differences
• Address needs and interests, not positions
• Commit to meeting the needs of all involved parties
• Exchange information and ideas
• Invent options for mutual gain
• Use objective criteria to set standards
3-41

42. Integrative Negotiation Process
• Create a free flow of information ----to reveal their true
objectives and to listen to each other carefully.
• Attempt to understand the other negotiator’s real needs
and objectives
• Emphasize the commonalties between the parties and
minimize the differences
• Search for solutions that meet the goals and objectives
of both sides
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43. Key Steps in the Integrative Negotiation
Process
• Identify and define the problem
• Understand the problem fully
– identify interests and needs on both sides
• Generate alternative solutions
• Evaluate and select among alternatives
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44. Identify and Define the Problem
• Define the problem in a way that is mutually acceptable
to both sides
• State the problem with an eye toward practicality and
comprehensiveness
• State the problem as a goal and identify the obstacles
in attaining this goal
• Depersonalize the problem
• Separate the problem definition from the search for
solutions
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45. Understand the Problem Fully—
Identify Interests and Needs
• Interests: the underlying concerns, needs, desires, or
fears that motivate a negotiator
– Substantive interests relate to key issues in the
negotiation--- economic and financial issues.
– Process interests are related to the way the dispute is
settled intrinsic or instrumenta ?
– Relationship interests indicate that one or both parties
value their relationship
3-45

46. Observations on Interests
• There is almost always more than one type of interest
underlying a negotiation
• Parties can have different interests at stake
• Often stem from deeply rooted human needs or values
• Interests can change
• Surfacing interests
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47. Generate Alternative Solutions
• Invent options by redefining the problem set:
– Expand or modify the pie--- add resources
– Use nonspecific compensation – allow one person to obtain his
objectives and pay off the other person for accommodating his
interests.
– Cut the costs for compliance – one party achieves her objectives
and the other’s costs are minimized if he agrees to go along.
– Find a bridge solution --- invent new options by reformulating
of the problem so that the parties are not discussing their
positions but disclosing information that will satisfy needs.
3-47

48. Generate options to the problem
• Brainstorming
generating as many solutions to the problem as possible
• Surveys
asking a large number of people to list all possible
solutions they can imagine.

49. Evaluate and Select Alternatives
• Narrow the range of solution options– focus on those
that one or more negotiators strongly support.
• Agree to evaluation criteria in advance
• Be willing to justify personal preferences
• Take time to “cool off”
• Keep decisions tentative and conditional until a
final proposal is complete
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50. Factors That Facilitate Successful Integrative
Negotiation
• Some common objective or goal— to reach common goal or
shared goal?
• Faith in one’s own problem-solving ability----parties who believe
they can work together are more likely to do so
• A belief in the validity of one’s own position and the other’s
perspective-- to accept both their own and the other’s attitudes, interests,
and desires as valid.
• The motivation and commitment to work together ---the parties
must be motivated to collaborate rather than compete.
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51. Factors That Facilitate Successful Integrative
Negotiation
• Trust---each negotiator must believe that both he/she and the other party
choose to behave in a cooperative manner.
• Clear and accurate communication --negotiators must be willing
to share information about themselves, for example, revealing what they
want and why.
• An understanding of the dynamics of integrative
negotiation ---training in integrative negotiation enhances the ability
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52. Why Integrative Negotiation is
Difficult to Achieve
• The history of the relationship between the two
parties
• A belief that an issue can only be resolved
distributively
• The mixed-motive nature of most negotiation
situations

53. CHAPTER FOUR
Negotiation Strategy
and Planning

54. Goals – The Focus That Drives Negotiation
Strategy
• Determining goals is the first step in the negotiation
process
• Negotiators should specify goals and objectives clearly
The criteria used to determine goals depend on your specific objectives and
your priorities among multiple objectives
• The goals set have direct and indirect effects on the
negotiator’s strategy
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55. Goals, Strategy and Planning
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56. Direct and Indirect Effects of Goals on Strategy
• Direct effects
– Wishes are not goals
– Goals are often linked to the other party’s goals
– There are limits to what goals can be
– Effective goals must be concrete/specific
• Indirect effects
– Short-term thinking affects our choice of strategy
4-56

57. Strategy versus Tactics
• Strategy: The overall plan to achieve one’s goals in a
negotiation
• Tactics: Short-term, adaptive moves designed to enact
or pursue broad strategies
– Tactics are subordinate to strategy
– Tactics are driven by strategy
• Planning: The “action” component of the strategy
process; i.e. how will I implement the strategy?
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58. Strategic Options
• Per the Dual Concerns Model, choice of strategy is
reflected in the answers to two questions:
– How much concern do I have in achieving my desired
outcomes at stake in the negotiation?
– How much concern do I have for the current and future
quality of the relationship with the other party?
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59. The Dual Concerns Model
Avoidance: Don’t negotiate
Competition: I gain, ignore relationship
Collaboration: I gain, you gain, enhance relationship
Accommodation: I let you win, enhance relationship
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60. The Nonengagement Strategy: Avoidance
• If one is able to meet one’s needs without
negotiating at all, it may make sense to use an
avoidance strategy
• It simply may not be worth the time and effort to
negotiate
• The decision to negotiate is closely related to
the desirability of available alternatives
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61. Active-Engagement Strategies
• Competition – distributive, win-lose bargaining
• Collaboration – integrative, win-win negotiation
• Accommodation – involves an imbalance of outcomes (“I
lose, you win”)
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62. The Flow of Negotiations: Stages and
Phases
Negotiation proceeds through distinct phases or stages
• Beginning phase (initiation)
• Middle phase (problem solving)
• Ending phase (resolution)
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63. Key Steps to an Ideal Negotiation Process
• Preparation
– What are the goals?
– How will I work with the other party?
• Relationship building
– Understanding differences and similarities
– Building commitment toward a mutually beneficial set of
outcomes
• Information gathering
– Learn what you need to know about the issues
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64. Key Steps to an Ideal Negotiation Process
• Information using
– Assemble your case
Determine which issues are most important and which are less
important and determine whether the issues are linked together or are
separate.
• Bidding
– Each party states their “opening offer”
– Each party engages in “give and take”
• Closing the deal
– Build commitment
• Implementing the agreement
4-64

65. Key Steps to an
Ideal Negotiation Process
4-65

66. planning is the most critically important
activity in negotiation.
4-66

67. Getting Ready to Implement the Strategy: The
Planning Process
• Define the issues:
-- begins with an analysis of what is to be discussed in the
negotiation
• Assemble the issues and define the bargaining mix
– The bargaining mix is the combined list of issues
• Define your interests
– Why you want what you want
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68. The Planning Process
• Know your limits and alternatives
• Set your objectives (targets) and opening bids
– Target is the outcome realistically expected
– Opening is the best that can be achieved
• Assess constituents and the social context of the
negotiation
constituents who will evaluate and critique them.
social system of laws, customs, common business practices,
cultural norms, and political cross-pressures
4-68

69. The Planning Process
• Analyze the other party
– Why do they want what they want?
– How can I present my case clearly and refute the other party’s
arguments?
• Present the issues to the other party
What facts support my point of view?
Whom may I consult or talk with to help me elaborate or clarify
the facts?
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70. Information Needed to Prepare Effectively
• Resources, issues, and bargaining mix
• Interests and needs
• Walkaway point and alternative(s),Targets and opening
bids
• Reputation and negotiation style
• Likely strategy and tactics
• Define the protocol to be followed in the negotiation
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71. What protocol needs to be followed in this
negotiation?
• The agenda
• The location of negotiation
• The time period of negotiation
• Other parties who might be involved in the negotiation
• What might be done if negotiation fails?
• How will we keep track of what is agreed to?
• How do we know whether we have a good agreement?

72. CHAPTER FIVE
Communication

73. Communication in Negotiation
Communication processes, both verbal and
nonverbal, are critical to achieving negotiation
goals and to resolving conflicts.
• Negotiation is a process of interaction
• Negotiation is a context for communication
subtleties that influence processes and
outcomes
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75. Basic Models of Communication
Communication is an activity that occurs
between two people:
a sender and a receiver
• A sender has a meaning in mind and
encodes this meaning into a message that is
transmitted to a receiver
• A receiver provides information about how
the message was received and by becoming
a sender and responding to, building on, or
rebutting the original message (feedback)
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76. Distortion in Communication
1. Senders and receivers (individual communicators)
– The more diverse their goals, the greater the likelihood
that distortions and errors in communication will occur
2. Messages
– The symbolic forms by which information is
communicated
– The more we use symbolic communication, the more
likely the symbols may not accurately communicate the
meaning we intend
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78. Distortion in Communication
3. Encoding
– The process by which messages are put into symbolic form
– Senders are likely to encode messages in a form which
receivers may not prefer
4. Channels and media
– The conduits by which messages are carried from one party to
another
– Messages are subject to distortion from channel noise or
various forms of interference
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79. Distortion in Communication
5. Reception
– The process of comprehension by receiving messages and decoding
them into an understandable form
– It might not be possible to capture fully the other’s meaning, tone or
words
6. Interpretation
– Process of ascertaining the meaning and significance of decoded
messages for the situation to go forward
– An important way to avoid problems is by giving the other party
feedback
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80. Distortion in Communication
7. Feedback
– The process by which the receiver reacts to the
sender’s message
– Can be used strategically to induce
concessions, changes in strategy, or alter
assessments of process and outcomes
– Absence of feedback can contribute to
significant distortions by influencing the offers
negotiators make
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81. 81

82. What is Communicated during Negotiation?
• Offers, counteroffers, and motives
• Information about alternatives
• Information about outcomes
• Communication about process
6-82

83. How People Communicate in
Negotiation
• Use of language
– Logical level (proposals, offers)
– Pragmatic level (semantics, syntax, style)
• Use of nonverbal communication
– Making eye contact
– Adjusting body position
– Nonverbally encouraging or discouraging what the
other says
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84. How People Communicate in
Negotiation
• Selection of a communication channel
– Communication is experienced differently when it
occurs through different channels
– People negotiate through a variety of communication
media – by phone, in writing and increasingly
through electronic channels or virtual negotiations
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85. Four Biases that Threaten E-mail
Negotiations
1. Temporal synchrony bias
– Tendency for negotiators to behave as if they are in a synchronous
situation when they are not
2. Burned bridge bias
– Tendency to do risky things during e-mail that would not be used in a
face-to-face encounter
3. Squeaky wheel bias
– Tendency to use a negative emotional style
4. Sinister attribution bias
– Overlooking the role of situational factors
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86. How to Improve
Communication in Negotiation
• Manageable questions
• cause attention or prepare the other person’s thinking for
further questions:
– “May I ask you a question?”
• getting information
– “How much will this cost?”
• generating thoughts
– “Do you have any suggestions for improving this?”
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87. How to Improve
Communication in Negotiation
• Unmanageable questions
• cause difficulty
– “Where did you get that dumb idea?”
• give information
– “Didn’t you know we couldn’t afford this?”
• bring the discussion to a false conclusion
– “Don’t you think we have talked about this
enough?”
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88. How to Improve
Communication in Negotiation
• Listening: three major forms
1. Passive listening: Receiving the message while providing no
feedback to the sender
2. Acknowledgment: Receivers nod their heads, maintain eye
contact, or interject responses
3. Active listening: Receivers restate or paraphrase the sender’s
message in their own language
• Role reversal
– Negotiators understand the other party’s positions by actively
arguing these positions until the other party is convinced that he
or she is understood
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90. Perceptual Distortion
• Four major perceptual errors:
– Stereotyping
– Halo effects
– Selective perception
– Projection
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91. Stereotyping and Halo Effects
• Stereotyping:
– Occurs when an individual assigns attributes to
another solely on the basis of the other’s
membership in a particular social or demographic
category
• Halo effects:
– Occur when an individual generalizes about a variety
of attributes based on the knowledge of one attribute
of an individual
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92. Selective Perception
and Projection
• Selective perception:
– The perceiver singles out information that supports a
prior belief but filters out contrary information
• Projection:
– People assign to others the characteristics or
feelings that they possess themselves
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94. Good Will Hunting is a 1997 drama film
directed by Gus Van Sant and starring
Matt Damon, Robin Williams, Ben Affleck,
Minnie Driver and Stellan Skarsgård.
Written by Affleck and Damon, and with
Damon in the title role, the film follows
20-year-old South Boston laborer Will
Hunting, a genius who is forced to see a
therapist (Williams) and study advanced
mathematics with a renowned professor
(Skarsgård) in order to avoid jail time.
Through his therapy sessions, Will re-evaluates
his relationships with his best
friend (Affleck) and his girlfriend (Driver)
while confronting his emotional issues and
making decisions about his future.