Chapter 16: CLOSING THE DEAL Who Makes the Decision?

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. ■ 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.

■ 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.

CHAPTER 17

Reporting Results

I S 99 P ERCENT E NOUGH ?

INTERNATIONAL NEGOTIATING isn’t only a business process, it’s a learning opportunity as well. Each session—large or small, productive or unproductive, heated or boring—can offer the participants the occasion to add to their own store of knowledge and skill. After strategies have been formulated, tactics deployed, decisions made, and contracts either signed or declined, detailed reports should be compiled and reviewed. This can aid greatly in several company processes and should be considered part of a company’s information database.

The Value of Record Keeping

1.It keeps other members of management informed of important dealings that are taking place far from their view or direct control. It bears repeating that negotiations are very expensive for host or visitor and that cost must be justified. This will be even more important when no contract is forthcoming from the negotiations. The introduction to this book remarked on the need for informed management, and the reader is reminded that such information flow is paramount. 2.Negotiators can review their own actions as well as those of counterparts once they’re distanced from the heat of discussions. It can be very surprising how transparent a tactic can be when viewed in retrospect. Just the process of organizing the reports and putting them on paper can lend insight in to what really happened. Negotiators may sometimes have to face up to what appears to be glaring mistakes on their own part. Painful as they may be, the lessons of twenty/ twenty hindsight tend to stick. 3.Consultant negotiators must make detailed reports if they plan to continue in that line of work. Simply returning from negotiations waving a contract, or worse nothing at all, isn’t going to win the favor of the client. While consultants may not wish to give their negotiating secrets away or expose every blunder, a reasonably straightforward report will, at the very least, let the client know what their money was spent on besides airline tickets and hotel rooms. 4.Perhaps the greatest value of a detailed report is its use as a teaching tool. Every negotiation opens new opportunities for a company to expand into the world’s markets. A small company may start with a solo negotiator, then proceed to using a small team and then several teams operating simultaneously. It will need records so that each negotiator or team can build upon the successes and avoid the mistakes of their predecessors. If these reports become lost in the myriad of company documents or they’re hoarded by upper management, a valuable companywide resource has been lost.

Guidelines for Post-Negotiation Reports

The following guidelines for writing post-negotiation reports will allow for their long-term use. 1.Compose the report as if the reader knows nothing of the companies or participants involved. The reports may still be in use long after the compiler has left the company or ceased to be employed as a negotiator. The report will have little use as a learning tool if major points have been treated as givens. 2.Treat the negotiations as a whole, from planning through completion. Personnel selection processes, planning sessions, travel arrangements, facility selection, and contract follow up should be included. Negotiations don’t take place in a vacuum, so there’s no reason to report them as such. 3.Be specific. Reports are filed so that both participants and nonparticipants will have a clear understanding of what went on during discussions. Details about anything and everything that affected negotiations should be included.

Generalizations such as “morning sessions went well . . .” or “our offer was not well received . . .” don’t address root causes. These types of reports are often referred to as “postmortems” and should have a detailed factual base to match the scientific, though unfortunate, nickname. 4.Give the bad news as well as the good. Few people like to admit their own mistakes, let alone commit them to paper. However, it must be understood that learning comes from mistakes as well as success. If the negotiations were ultimately successful, then the emphasis will be on the positive. If they were less than hoped for or a complete failure, attempts to whitewash them will be readily transparent. State the facts and let them speak for themselves. 5.Summaries should be prepared daily while negotiations are in process. Don’t wait for discussions to finish in order to try and remember what happened on day one.

Teams should have discreet notetakers at every session, and solo negotiators should commit their memories to paper (or pocket recorder) as soon after each session as possible. Talks may drag on for days, and the whirl of travel may turn a whole week into a blur. Accuracy counts. 6.Each daily summary should be followed by a brief analysis of the proceedings to that point. Tactical changes should be noted and their effect on strategy weighed. 7.Since the overall document is retrospective reporting, each daily summary and analysis should also be followed by recommendations for future discussions and advice on how to avoid pitfalls. These recommendations often turn out to be the most valuable part of the report-filing process. 8.Prepare an executive summary. If negotiations are lengthy and the reports contain the requisite detail, the account can run to hundreds of pages. The summary will allow those members of management interested in “the big picture” to get a handle on the process. The summary should contain a recapitulation of the entire negotiation, an analysis and an overall recommendation. Consultant negotiators should gain a clear level of understanding about how detail oriented their client company is prior to embarking on negotiations. Consultants should keep detailed records for themselves.