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3.5 Negotiation

Negotiation is required in a business context in order to reach agreements, to agree on a division of resources or to reach an agreement on what parties will undertake to further their aims or goals.

There are various models of business negotiation, such as the distributive model which is based on the idea that there are winners and losers in negotiations. Imagine a pie. Using the distributive model, we could theorise that the process evolves to ensure one party get a bigger piece of pie than the other party.

A more positive model of negotiation might endeavour to reach a win/win solution where there is scope for each party to benefit from an agreement or arrangement equally, to their mutual benefit. Of course, in terms of international business development, the negotiating situation is further complicated by possibly negotiating in a different culture with a differing range of values, attitudes, customs and behaviours.

The importance of negotiation skills

Negotiation skills are important in evolving your business and internationalising your reach, as you will be reliant on influencing others at a distance as you have no formal power or hierarchical authority over people to persuade them to take action on your behalf. You will be reliant on building long-distance relationships to ensure that actions are carried out to further your business goals.

Negotiation skills are important to enable business owners to gain leverage to:

As with most businesses, no process is perfect. We need to take into account the morals and ethics of others; it’s also necessary to consider how likely someone is to adhere to specified protocol. Being observant and aware of the intentions of others is key to successfully negotiating and trading internationally. Ask yourself:

Lastly, you should make sure that the person you are talking to has the authority to negotiate. Are they the key decision-maker for the particular company or organisation?

Negotiating in an international setting

Before you consider what you personally require from the negotiation process, consider the social context. Research is required. Try to identify if there are any issues which could influence your actions and find out about the country, recent events and the political and legal context. Below is a simple PESTEL model[1] to reflect on:

Political

Stability of the area

Government requirements-import, export

Changes that could impact upon your business such as rules and regulations

Economic

Economic situation, pros and cons, likely changes impacting on trade arrangements

Social

Social attitudes and perceptions and market trends.

If travelling, role of women, views on women risks, safety

Government websites about demographics, population, disposable income, information that could establish if there is a market for your product

Technological

Expectations about technology, use of technology and trends

Potential for innovation

Environmental

Any laws, trends, local, regional, national guidance affecting environmental issues that could impact on your product/service?

Standards, quality issues, ingredients.

Legal

What is the legal framework and context in which you will be operating? High regulation? Any restrictions to your actions or plans?

References

https://www.unicef.org/knowledgeexchange/files/SWOT_and_PESTEL_production.pdf

[1]https://www.unicef.org/knowledgeexchange/files/SWOT_and_PESTEL_production.pdf

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