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Negotiations – an introduction
Author: Johan Larsson, Jönköping International Business School
Work-in-progress paper
To reference use: Larsson, J. (2020) “Negotiations – an introduction”, working paper,
Jönköping, Jönköping International Business School
Key words: keynote, intercultural, negotiations
1. Introduction
It is impossible to think about a world without negotiations, and in fact most of us
negotiate several times a day. But does that imply that all of us are skilled negotiators?
Probably not but negotiation skills can be trained and developed (e.g. Thompson, 2002).
Not all negotiations are hard but negotiations in business often entail complex situations
that involve people at different levels, from different companies’ etc. making
negotiations a complex activity (Raiffa, 2002).
The purpose of this short paper is to introduce the reader to the field of negotiations with
some examples also of intercultural negotiations. The paper also directs the reader to
valuable references for further studies. Parts of the paper is based upon a key-note speech
held by the author at the Nordic Intercultural Communication Conference 2015 (Larsson,
2015).
2. Negotiations
2.1 Two kinds of negotiations
If one wants to divide negotiations in different groups one way can be to distinguish
between distributive and integrative negotiations (Raiffa, 2002).
Distributive negotiations are also called win-lose negotiations (Raiffa, 2002; Thompson,
2012) and assumes that there is a fixed pie to be divided between the negotiating parties.
In such a case the negotiator tries to get a bigger piece of the pie than the counterpart. As
one can imagine this is not so fruitful in a situation where the parties strive for a long
term relationship and as consequence we most often associate that kind of negotiations to
short term relationships.
Integrative negotiations are also called win-win negotiations (Raiffa, 2002; Thompson,
2012). In integrative negotiations is assumed that there is no fixed pie to divide, i.e. the
negotiators try to expand the pie. This is a good strategy when you strive for a long term
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relationship. However, a bit surprisingly research shows that this scenario is less likely in
intercultural negotiations (Brett & Okumura, 1998)
3. The Negotiation Process
The negotiation process consists of seven phases, namely the:
1. Preparations phase
2. Greeting phase
3. Introduction phase
4. Argumentation phase
5. Compromise phase
6. Closure phase
7. Realization phase
In the preparation phase the negotiator gathers information. The more information the
better, knowledge is truly power in negotiations.
You should also set objectives and rank them. A good strategy can be to establish a
BATNA. The term BATNA is an abbreviation for “best alternative to a negotiated
agreement”. (Fisher & Ury, 1981) and is the point where it is better to leave the
negotiation without coming to an agreement.
Another useful strategy in preparation for negotiations is to set three objectives namely:
1. The worst acceptable outcome (c.f. BATNA)
2. A reasonable (fair) outcome
3. The best possible outcome
In the greeting phase the negotiator aims to get to know the counterpart and to create
trust. Try to be interested and do not underestimate this part. The length of the greeting
phase depends upon culture. In Sweden commonly a couple of minutes talking about the
weather.
The next phase is the introduction phase in which the host makes a summary of the
background and tries to establish a foundation for cooperation. The agenda is presented
and it is an advantage to control the agenda.
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Never start with controversial issues, rather try to start with a question that you all can
agree upon and thereby creating e a good atmosphere for the negotiation
If you want to get the negotiation process started, be quiet and see what happens…
After the introduction the argumentation phase stats. In this phase arguments to achieve a
better deal is presented. The negotiators should try to be balanced and have an open
discussion and showing respect for the counterpart
In the compromise phase concessions is often made. Advice here is to never accept
demands one by one. Only agree to a complete and final offer in the compromise phase.
Close the deal in a way that makes both party’s feel like winners. In the closure phase
you should also summarise the discussion and write down in a protocol what is agreed
upon.
The final phase is the realization phase. It is a very important phase and in complex
selling it is of the here the relationship building starts. A successful realisation lay the
foundation for the next negotiation.
4. General Advice in negotiations
To become a good negotiator takes a lot of practice. Prepare well for the negotiation and
practice with colleagues and friends. Some general advice to negotiators can be to:
• Listen
• Avoid ultimatums
• Try to keep calm
• Always try to have your counterpart give the first bid
• Never give more than you need to
• Present demands in writing
• Never lie
Hopefully this paper have given you some basic knowledge about negotiations and
triggered your interest for the same. In the globalized world often we negotiate with
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persons from other countries and cultures. That brings us to the final part of this paper,
namely intercultural negotiations.
5. Intercultural Negotiations
A further challenge in negotiations is presented when the counterparts not only represent
different companies but also different countries and cultures (Liu, Friedman, Barry,
Gelfand, Zhang, 2012; Francis, 1991) which highlights the importance of intercultural
negotiations.
In the table 1 below a short comparison between Swedish and Chinese Negotiation styles
is given:
Table 1 Negotiation styles comparing Sweden and China
Swedish Style
Chinese Style
Structured
Respect to elder, experience wisdom
Well prepared
Guanxi – relationships
Formal
Mianzi – face
Time is scarce (Time is money)
Bao – reciprocity
Focus on the contract, close the deal
Time is abundant
Sweden according to Hofstede (2001)
High individualism
Low power distance
Low masculinity
China according to Hofstede (2001)
High collectivism
High power distance
High masculinity
From table 1 above we understand that it is important to know about the culture that one
will negotiate with. One question that one can ask is how much one should adapt to
different cultures. When in Rome act as romans? Research here is inconclusive (Brett &
Okumura, 1998; Francis, 1991; Liu et al, 2012; Thompson, 2012). What research do
show us is that it is important to understand norms and different cultures. Be curious and
try to ask questions to ensure you understand the counterpart
Acknowledge and respect differences both on individual and societal level but be careful
to stereotype.
References
Brett, J.M. & Okumura, T. (1998), ”Inter- and intracultural negotiation: U.S. and
Japanese negotiatiators, Academy of Management Journal, 41(5), pp. 495-510
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Fisher, R. & Ury, W. (1981), Getting to Yes, Penguin Books
Francis, J. N. P. (1991), “When in Rome? The effects of cultural adaption on intercultural
business negotiations”, Journal of International Business Studies, Third quarter 1991, pp.
403-428
Hofstede, G. (2001), Culture's consequences : comparing values, behaviors, institutions,
and organizations across nations, Sage
Larsson, J. (2015) “Intercultural Negotiations”, key-note speech, Nordic Intercultural
Communication Conference 2015, Jönköping, Sweden
Liu, L A, Friedman, R, Barry, B, Gelfand M J, Zhang, Z. (2012), “The dynamics of
consensus building in intracultural and intercultural negotiations”, Administrative Science
Quarterly, No 57, pp. 269-304
Raiffa, H. (2002), Negotiation Analysis, Harvard University Press
Thompson, L. (2012), The Mind and Heart of the Negotiator, Pearson