Strategy by liaoqinmei


									    CHAPTER 4

Strategy and Planning
Questions to ponder

 A journey of a thousand miles begins with a
 single step. [Confucius]

 Beforehand preparation leads to success;
 unpreparedness results in failure.

Comment on the above observations.
  Learning objectives

1. Appreciate effective Strategy and Planning as the
   prime indicator of achieving negotiation objectives
   or Goals, and the relationship btwn the key steps in
   the planning process.
2. Understand the Stages/Phases-based Negotiation
   Process, typical of a Western marketing negotiation.
3. Grasp and apply Planning Guide for better IB
   Negotiation performance.

1. Intro: Value of Planning
2. Key steps in the planning process and their
3. The flow of negotiation: stages and phases
4. Planning Guide
5. Assignment
      1 Intro: importance and necessity of planning

• Planning is critically important (in negotiation)
  Your argument?
• Negotiators frequently fail to plan for a variety of
  Pls name some reasons?
• Effective planning allows negotiators to design a road
  map that will guide them to agreement.
  Departure place? Where to go?... blueprint the
2 Key steps in the planning process and their relationship
                         (20/80 rule)

• Figure 4.1 Relationship between key steps in the
  planning process

            Goals         Strategy       Planning
2.1 Goals: The Focus That Drives a Negotiation Strategy

  Effective preparation requires a thorough, thoughtful
  approach to multi-goals.
 2.1.1 Direct Effects of Goals on Choice of Strategy
    Four aspects of how goals affect choice of strategy
 2.1.2 Indirect Effects of Goals on Choice of Strategy
  e.g. Long-term vs short-term orientation
  (cf. Geely&Volvo, relational goals tend to support
  the choice of a collaborative or integrative strategy)
     Classroom Activity: See the dramatic effect?

Suppose that you were the voice mail receiver, what
 would you respond to the sender, one of your customers.
 It’s Tuesday afternoon, you just got back from lunch,
 and you find you have a voice mail message from one of
 your customers. You closed a deal with them about six
 months ago---agreeing on price, terms, service, volume,
 and length of contract---and the deal’s due to be
 renegotiated six months from now. But in his message
 the customer says that he’s being pushed hard by
 management to reduce costs and he wants an additional
 5% off the price. He also says that he needs an answer
 from you for a three o’clock meeting with his boss,
 which means you’ve got two hours to blueprint this
2.2 Strategy: The Overall Plan to Achieve One’s Goals

2.2.1 Strategy vs Tactics
2.2.2 Uni-lateral vs Bi-lateral to Strategy
2.2.3 The Dual Concern Model (Mode of Strategies)
2.2.1 Strategy: as compared to tactics
        2.2.2 Uni-lateral vs Bi-lateral to Strategy

• Which is more appropriate for IB negotiation?
  Box 4.1 Donald Trump’s Advice to negotiators: Be
  Strategically Dramatic (p. 106)
  And highly recommended TV series: The Apprentice
  (13 Episodes)
         TV series: The Apprentice (13 Episodes)
“Negotiation is a very delicate art. Sometimes you have
 to be tough; sometimes you have to be sweet as pie—it
 depends upon who you are dealing with” (Episode 3).
“In negotiations, try and figure out your opponent”
  (Episode 6). Negotiating skill is a communication
  competency involving elements of interpersonal
  communication, audience analysis, and persuasive
  message design.
“Never beg when trying to sell” (Episode 8). Effective
 persuasive communication appeals to the interests of
 the target and does not project an air of desperation.
2.2.3 The Model as a vehicle for describing negotiation

Figure 4.2 The Dual Concerns Model (p.106)
                  Substantive outcome important?
                          Yes              No

    Relational     Yes CollaborationAccommodation

                    No   Competition   Avoidance
          2.2.3 The Dual Concerns Model

• Alternative Situational Strategies
• The Non-engagement Strategy: Avoidance
• Active-engagement Strategies: Competition,
  Collaboration, and Accommodation
      2.2.3 ---Alternative Situational Strategies

Key Words: Alternative Situational
Q: Why is the model here again?
  (cf. Figure 1.3)
A: to illustrate the relationship btwn the choice of
  strategies and implications for planning and
  preparation. The Planning Process aims at
  implementing the strategy for the established goal.
           2.2.3 ---Non-engagement Strategy

1. The Non-engagement Strategy: Avoidance
    Why and When? Ref. Box 1.1 (p.8)
   The decision to negotiate is closely related to the
   desirability of available alternatives, (e.g. CNA,
   BATNA), with exceptions (e.g. in an ongoing
   negotiation, for a weak BATNA party to do nothing
   but accept a poor outcome, and as Bill Gates’ story in
   Box 4.2 illustrated, avoiding negotiation may get you
   what you want, but at a high cost)
         2.2.3 ---Active-engagement Strategy

2. Active-engagement Strategies: Competition,
   Collaboration, and Accommodation (p.107)
  Different Formula and Different Image
  Competition: win-lose (chpt 2) “I win, you lose”
  Collaboration: win-win (chpt 3) “you win, I win”
  Accommodation: lose-win “you win, I lose”
   (ref. Figure 4.2, Geely&Volvo A&M, for a reference
    project, etc.). Reciprocity rule works!
                     2.2.3 A summary

• Table 4.1 Characteristics of Different Engagement
  A comparative view of THREE strategies along 13
  dimensions for their positive characteristics (p.109)
  But watch out for their potential drawbacks (e.g. the
  negative effect of a dominantly competitive DB
  enterprise on your mind and attitude, etc)
  Remember: The dynamics (interaction) matters most
  (see the author’s disclaimer, p.110) For more
  information, ses 2.2.3 Mechanism: Determinants of the
  choice of strategy, TBCed)
2.2.3 Mechanism: Determinants of the choice of strategy
2.2.3 Mechanism: Outcome stakes (1)

 •   Impact on corporate strategy
 •   Financial condition
 •   Sunk costs
 •   Precedents
 •   Accountability
 •   Urgency
 •   options
        2.2.3 Mechanism: Power position(2)

• Size                    • Experience handling
• Financial base            conflict
• Additional manpower     • Commitment
• Expertise               • Legitimacy
• Leadership              • Risk-taking ability
• Prestige                • Potential coalition
• Communication/pers      • Alternative options
  -uasion                 • Capability to reward
• Access to media         • Capability to coerce
• Cohesiveness of
2.2.3 Mechanism: Common interests (3)

   • Goal Compatibility
   • Approach Compatibility
   • Resource interdependency
2.2.3 Mechanism: Quality of relationship (4)

 • Quality of past relationship
 • Mutual understanding
 • Mutual willingness to help
 • Quality of communication
 • Value orientation
  2.2.3 A summary of Mechanism: Choice of Strategy

Q: Which position/strategy should we adopt in a given
A: The choice depends on the type of task at hand, the
 situation, and the personality of the negotiator
 (Personal disposition) (ref. Dupont 1982)
 Supporting evidence: e.g. The strategic position of IBM
 in India (TBCed) and the case of Geely & Volvo Merger
                3. Understanding the Flow of Negotiation
 • Figure 4.3 Phases of Negotiation and Table 4.2 Phase
   models of negotiation: Labels and Descriptions (p.111)

 Phase 1        Phase 2       Phase 3       Phase 4      Phase 5    Phase 6     Phase 7

              Relationship   Information   Information             Closing    Implementing
Preparation   building       gathering     using         Bidding   the deal   The agreement

 • However, people frequently deviate from this model and
   that one can track differences in their practice according
   to his or her national culture (Greenhalgh 2001, p.112)
   (e.g. two IB Negotiation frameworks for your reference,
   TBCed, also see chpt 10).
3.1 Process of IB Neg--- Framework
3.2 Ping-Pong Model--Framework
3. A Summary: key determinant
        4. Getting Ready to Implement the Strategy: The
                     Planning Process-1
•   Defining the Issues (issues to be negotiated; How)
•   Assembling the Issues and Defining the Bargaining
•   Defining Interests
•   Knowing Limits and Alternatives
•   Setting Targets and Openings
•   Assessing Constituents and the Social Context of the
•   Analyzing the Other Party
•   Presenting Issues to the Other Party
•   What protocol needs to Be Followed in The
                 4. The Planning Process-2

Four things to note (p.113) :
1. A single planning process can be followed for both an
   distributive and an integrative process.
2. Several “structural” factors surrounding a negotiation
   may also affect the strategizing and planning process.
3. Negotiations will be conducted primarily one to one
   (Dyadic negotiation).
4. Complete and up-to-date planning will require a
   certain degree of shuttling back and forth between
                  4.1 Defining the Issues-1

• Figure 4.4 How Issues Affect the Choice between
  Distributive and Integrative Strategy (p.116)

Value to
Buyer        ·A               Claiming Value

                  Creating Value          Value to
                                   ·B     Seller
                 4.1 Defining the Issues-2

• While the number of issues impact strategy, it does not
  preclude the possibility that single-issue negotiations
  can be made integrative, or that multiple-issue
  negotiations will remain distributive.
• Single-issue negotiations can often be made integrative
  by increasing the number of issues.
• Similarly, in multiple-issue negotiations, the opportunity
  to create value may be lost in competitive dynamics.
(Ref. A small ad hoc negotiation, Dietmeyer 2004)
 4.2 Assembling the Issues and Defining the Bargaining
• Large bargaining mixes allow many possible
  components and arrangements for settlement (options),
  thus increasing the likelihood that a particular package
  will meet both sides’ needs.
• After assembling issues, the negotiator next must
  prioritize them. Prioritization includes two steps:
 Determine which issues are most important and which
 are less/least important.
 Determine whether the issues are linked together or
                    4.3 Define Interests

• Although defining interests is more important to
  integrative negotiation than to distributive bargaining,
  even distributive discussions can benefit from one or
  both parties identifying the key interests.
• Asking “why” questions usually bring critical values,
  needs, or principles that we want to achieve in the
  negotiation to the surface.
• Interests may be Substantive, Process-based, or
           4.4 Knowing Limits and Alternatives

• Good preparation requires that you establish two clear
  points: your resistance point and your alternatives.
 A resistance point is the place where you decide that you
  should absolutely stop the negotiation rather than
  continue because any solution beyond this point is
  minimally acceptable.
 Alternatives define whether the current outcome is better
  than another possibility.
       4.5 Setting Targets and Openings

• Target Setting Requires Positive Thinking about
  One’s Own Objectives.
• Target Setting often Requires Considering How to
  Package Several Issues and Objectives.
• Target Setting Requires an Understanding of
  Trade-offs and Throw-aways.
4.6 Assessing Constituents and the Social Context of the

• When people negotiate in a professional context, there
  may be more than two parties.
• When one has a constituent or observers, other issues
  arise, such as who conduct the negotiation, who can
  participate in the negotiation, and who has the ultimate
  power to ratify negotiated agreements.
• One way to assess all the key parties in a negotiation is
  to complete a “field analysis”.
            4.7 Analyzing the Other Party

• The Other party’s Resource, Issues, and Bargaining
• The Other party’s Interests and Needs
• The Other party’s Targets and Openings
• The Other party’s Constituents, Authority, and
  Social Structure
• The Other party’s Reputation and Style
• The Other party’s Strategy and Tactics
            4.8 Presenting Issues to the Other Party

• to present a case clearly and to provide ample
  supporting facts and arguments; to refute the other
  party’s arguments with counter-arguments.
• Because of the breadth and diversity of issues that can
  be included in negotiations, it is not possible to specify
  all the procedures that can be used to assemble
  information. There are, however, some good general
  guides that can be used (Table 4.3 Negotiation Planning
  Guide, p. 114).
   4.9 What protocol needs to Be Followed in The

• A negotiator should consider a number of elements of
  protocol or process:
 What agenda should we follow?
 Where should we negotiate?
 What is the time period of negotiation?
 What might be done if negotiation fails?
 How will we keep track of what is agreed to ?
 How do we know whether we have a good agreement?
 (Box 4.3 Do you have a “good” agreement?, p. 129)
            Box 4.3 Do You Have A “Good” Agreement?

• Is there a preamble in which the intent of the agreement is spelled
  out clearly?
• Are all the issues of interests to all parties addressed?
• Are all the proposals workable?
• Have all parties affected by the agreement been consulted?
• For each point of agreement, is it crystal clear what you have
  agreed to, including what is to be done, by whom, by what time,
  and how?
• Does the agreement in total make sense?
• Is the agreement reasonable and equitable?
• Have you considered the major barriers to fulfilling the agreement?
• Do you have a vehicle for managing disagreements arising out of
  this agreement? Is it clear to all parties what this vehicle is and how
  to use it? (p. 129) Blair Sheppard (1993)
            4. A concluding remark

While this road map may frequently need to be
modified and updated as discussions with the other
side proceed, working from the map is far more
effective than attempting to work without it.
                      5. Assignment

1. Further readings: Rethinking about “preparation”
2. Case study: “A small ad hoc negotiation” (Dietmeyer,
    2004: 166-172), available at the course site.
3. Journal Entry Writing Task: “What I have learnt …”
   (about 300w) (submitted at the course site: Assignment)
   Topics: e.g. The apprentice (Episode 03/06)
           OR Box 4.1
    ALSO to be reported at next class (10m)

• Ghauri, Pervez and Fang, Tony, Negotiating
  with the Chinese: A Social-cultural Analysis,
  Journal of World Business, Fall 2001, v. 36,
  iss. 3, pp. 303-25

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