10 mistakes commonly made in international negotiations:

Filed under: Global Business — March 5, 2009 @ 5:05 pm

1.Lack of preparation.
The three P’s of negotiation are preparation, preparation, and preparation. Do you know about the people with whom you will negotiate? Do you understand anything about their history, culture, or needs? Have you researched the firm you are speaking with, and brought in a guide to coach you as to what to expect? Is your negotiation team prepared, with each member having assigned roles and responsibilities?

Has your team practiced speaking through an interpreter (if that will be necessary)? Are they carrying the correct audio visual aids, and translated materials?

2. Lack of control
It is essential to try to control the timing, pacing and venue of negotiations. Where will these negotiations take place? Under what circumstances, and naturally, what points will be covered? Has your team submitted and agenda, and had that agenda been agreed upon? Has the negotiating team received the correct buy-in and deal authority from headquarters?

Most importantly, it is necessary to control one’s own emotions and prejudices

3. Assuming the other party is “unethical.”
The US “cards on the table” approach is seldom used overseas. Many negotiators have additional points or concessions they wish to discuss after the large, basic framework has been agreed upon. Many negotiators may move from point to point without necessarily agreeing on previous points, whereas US negotiators like to finish points, sign off on them, and move on.

The Japanese non-confrontational style often involves changing a contract and submitting it their counterparts, without any verbal discussion. This behavior often infuriates Americans, who feel that altering the document implies subterfuge.

4. Assuming the negotiations has “rules.”
Many foreign negotiators will not necessarily abide by agreed upon agendas, timetables, or protocols. When we negotiate overseas, we need to remember that we are guests in their country. Americans often feel that negotiation takes place at set places and set times. Japanese, Chinese, or Greeks may prefer to continue informal talks over Sake, food, or Ouzo. Russians can shake hands in a meeting, and expect the other party to abide by what has been stated, well before anyone writes it down and puts the agreement in writing.

5. Perceiving that whoever has more money, will win the negotiation.
Certainly Americans must have heard of union negotiations in the USA. Labor negotiations overseas are even more difficult, and the almighty buck does not hold the same clout in most markets. Asian factories can be difficult to work with, as those factories require finessing and nurturing as well. The one liner: “you may have the money, but they have the market.”

6. Sending in the wrong negotiators
This error takes many forms. “Meyer the buyer” who has been making coffee mugs in Asia since 1975 is not the correct person to negotiate market access in China. A Spanish speaking engineer should not be chosen to spearhead an acquisition in Venezuela. The greatest Mergers and Acquisitions specialist who needs to speak entirely through an interpreter and can only look at the financials of a deal should not solely be representing a firm in Malaysia. Americans often send in three teams to enter a market; a research team, a negotiation team, and an implementation team. This approach is also confusing to many Asians and Eastern Europeans, who seek one “champion” of the project.

7. Not getting your counterparts to buy into the process
So rarely do we actually “frame” a negotiation; whereby we discuss how we would like to proceed, what obstacles may exist, what the likely outcomes may be, and what strategies we may employ to solve differences. For example, are we using market rate to determine the value of a piece of real estate, or the building costs? And if we use market value, how will that be determined?

8. Not establishing a personal relationship with your counterparts
Business isn’t business. Business is personal. Most cultures don’t look at the deal as the end result, but the relationship which will last for many deals. Americans often find questions about family, friends, experiences, and hobbies somewhat offensive. These probing questions are asked so that the other party can get to know the people involved, and personal questions are meant to bridge, not to pry.

9. Time
The biggest difference between cultures is the perception of time. American s refers to time as no other culture does (overtime, spend time, waste time, time is money). And if we are to build personal relationships and iron out differences, then we need to be prepared to spend a lot of time; dedicated, executive time, in working together. A quick rule of thumb…if one is going overseas to negotiate, never plan on going for less than a week, and be sure to leave dates of the next meetings confirmed.

10. Assuming the contract is “holy.”
Americans place undo importance on the written contract as the binding document. But even in America, contracts are constantly broken, and renegotiated. Many cultures refer to a contract as an “outline.” The one liner: “1st a contract, then a negotiation.”

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