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Chapter 5 Relationships in Negotiations - Coggle Diagram
Chapter 5 Relationships in Negotiations
Contract or Relationship?
In the “West” a contract is the goal.
In the “East” a business relationship is the goal.
A contract may describe the relationship; however, the essence of the deal between the parties is their relationship, not their contract.
In long term transactions the aim is a business relationship characterized by co-operation and a degree of trust.
Negotiator should establish:
how well the parties know each other?
personal chemistry between leaders?
to what extent do both sides respect each other’s cultures, expectations, and goals?
Establishing a Strong Foundation for a Relationship
Use Pre-negotiation fully and effectively.
Recognize a long-term business deal is a Continuing Negotiation
Consider a Role for Mediation in the deal.
Agree on Regular Meetings and contacts during the transaction
Be specific about your Interests both inside and outside the transaction and encourage the other side to do the same.
Each side should inform the other of its organization culture
Carefully define how the deal will be executed
Converting Contract into Relationship? (once deal is signed)
A signed contract does not mean that the “problems/challenges” have disappeared.
Persons who Negotiated the deal should be closely involved in its implementation
Find ways to maintain Leadership Involvement and Interest in the relationship
Action Plan to inform all employees of benefits deal brings to company
Meticulously Plan and oversee initial joint activities between the two sides
Parties must agree a schedule of regular meetings to review progress (not “from time to time” or “when the need arises”)
Careful selection of right persons to manage the relationship (diplomacy and technical expertise)
Critical Attributes for Building Relationships
Communication
Information to flow in both directions
Must set up modes of communication to be used after the contract is signed. E.g of failed American/Japanese JV
Different languages and different cultures – anticipate the problems
Means of communication can vary e.g. emails, telecons. But personal visit has benefit of;
Fostering relations
Demonstrates commitment to the relationship
May lead to brainstorming about new projects
Commitment
Will be judged by your behaviour not just what you say.
Can structure deal to involve increasing levels of effort, capital and co-operation to test each side’s degree of commitment e.g Swiss/American JV long term, short term.
Reliability
To act in expected ways – predictable behaviour
Leads to trust – implies honesty
Late to meetings and submitting reports leads to distrust
Set commitments/deadlines which you can realistically meet
If you expect not to meet a deadline renegotiate it before the time
Be frank about your difficulties – no false excuses
Respect
Respect one to the other
Principle of equality of partners – each is valuable and deserves to be heard – a two way process
Never say “let me do the thinking for both of us”
In many developing countries “face”, standing and status is important. Recognise their standing in appropriate ways
Understand symbols and formalities of status in that culture and use them e.g. “Mr. Chairman”. Note Americans see formalities as getting in the way of personal relationships and seek to do away with them BUT in other cultures formalities are a sign of respect –so do not do away with them. E.g. Northwest Airlines and KLM – “We used every symbol we could think of to recognize their sovereignty.”
Don’t stereotype -“you Japanese are all alike, you just can’t give a straight answer”
Resolve cultural differences with respect
You must understand their cultural values
Create mechanisms to explore the ways cultural differences may be affecting the relationship and find ways to bridge the gap