CLOSING THE DEAL
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Avoiding Being Victimized by “Practice Negotiations” The desire to enter the exciting and profitable world of international business can often lead to becoming a victim of someone else’s learning curve. Some companies like to use what appear to be formal negotiation sessions as a way of practicing for upcoming discussions with another company. This subterfuge is most often practiced by host companies new to the international marketplace, and they will most likely cast their net from developing economies. They’re hobbled either by a lack of research materials in their home country or by budgetary restrictions that prevent them from the foreign travel necessary to securing “on the ground” information about potential counterparts. Discussions may be conducted in a conventional, even friendly, manner with no indication that they’re heading nowhere. Victims may be given every indication that their proposals are sound and acceptable, or they may be fought on every point, regardless of importance. In either scenario, the side with the information deficit is simply testing its strategies and tactics against an opponent similar to its future opposition. The victims of this simulation may have been chosen for their national, cultural, racial, technological, industrial, or economic characteristics. Negotiators must use their own discretion when they suspect that counterparts or potential counterparts are none too serious about the outcome of discussions. Here are some basic ways to determine the seriousness of counterparts before entering into expensive and time-consuming negotiations. ■
Ask counterparts during the early contact phase why they’ve chosen your company specifically for these talks. If their answers are vague, pursue the next topic.
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If this is their first foray into a technological or industrial sector and you’re not a leader in that sector, ask what other competitor companies they’ve contacted. If they say “none,” ask why and proceed with caution. If they refuse to say specifically what companies were contacted don’t bother with follow up. If they do indicate contact with competitors, ask if actual negotiations took place and the reasons for their results.
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Ask counterparts to give a clear indication of their time line for the project. If they are sellers, ask what quantities can be shipped and when. If they’re seeking investment, ask how much of the control of the company they’re willing to relinquish. If they’re buyers, ask if they’ve already secured their lines of credit and what quantities will be required for shipment. If they’re investors and their inquiries were unsolicited, ask for reference letters. Some of these questions may appear to be somewhat blunt; the exact wording is left to the discretion of the negotiator. However, getting answers to these questions early on can save a lot of time and expense that would otherwise be wasted on research, travel, and negotiations.
