AUTONOMOUS GROUP LEARNING
(AGL)
AGL 21–NEGOTIATION (EUROPE)
DRAFT FOR TESTINGWITH ADAPTED CASES 12.12.12
DAILY WORK PACK - PART II
(Not retained)
UNIT III OF IV
Copyright:RGAB 2012/1
No copies of without written permission.
PROGRAM - PART II
2-day course 3-day course
Assign. ActivityGroup Day II Day II
1.Review & QuizSG (new)08.00 - 08.4511.30 - 12.00
2.StudyIND08.45 - 10.0012.00 - 13.00
Communication.
Lunch
3.Lecture:MG10.00 - 10.3014.00 - 14.30
SG
Coffee
4.Case:IND10.45 - 11.4514.30 - 15.30
Rumania LicensingSG
CSG
5.Lecture:LCMG11.45 - 12.1515.30 - 16.00
CSG
6.CaseIND12.15 - 12.3016.00 - 16.15
Bill BrownSG
LunchTea
Case:
Bill BrownSG13.30 - 13.4516.30 - 16.45
7.StudyIND13.45 - 14.1516.45 - 17.15
StrategySG (new)
8.Lecture:MG14.15 - 14.4517.15 - 17.30
.SG
Day III
9.Case:IND14.45 - 15.3010.00 - 10.30
Suisse Computer SG
CSG15.30 - 16.0010.30 - 11.00
TeaCoffee
10.Lecture:SCMG16.15 - 16.4511.10 - 11.45
CSG
11.QuizIND16.45 - 17.3011.45 - 12.30
12.Summary LectureMG17.30 - 18.0012.30 - 13.00
& Feedback Report
ASSIGNMENT 1.0 REVIEW AND SHORT QUIZ
(45 MINUTES)
1.1INSTRUCTIONS
(a)Assemble in new SG
(b)Discuss outstanding questions from Part I
(c)Answer questions 40-50 in the Guide
(d)Then do the special speed communication test (Exhibit A).
(e)Then quickly resolve the cases (Exhibit B) on the flip chart.
(e)Reassemble in MG when the bell rings
EXHIBIT A
Assignment 1. 1
SPECIAL SPEED COMMUNICATION TEST
Take a clean sheet of paper. You must complete this test in less than TWO MINUTES. Now begin the test
Instructions:
1.Read everything carefully before doing anything.
2.Put your full name on the upper left hand corner of the paper.
3.Write in the name of your organization and you title.
4.Draw a square in the middle of the paper.
5.Write in the square the number of years of serviced in your organization.
6.Draw a rectangle on the right hand side of the paper.
7.On the back of the paper add numbers 164, 206 and 47 and whisper the answer.
8.Quietly call out your full name when you get this far.
9.If you think you have followed the instructions exactly then say" I have carefully followed every instruction".
10.In your normal speaking voice, count from 1 to 10 backwards.
11.Punch three small holes in the top of the paper
12.If you are doing this with your partner and are the first to arrive at this point say: "I am the first person to reach this point. I can receive communication effectively".,
13.Now that you have finished reading everything carefully, do only instructions one and two ...
ECHIBI B : CASES TO BE QUICKLY RESOLVED
1. CROSS BORDER MEETING
UNAIDS representative called a meeting of HIV committee members from three adjoining countries (A,B & C) to discuss urgent border migration control to reduce the critical epidemic of HIV infection. Meeting was formal and cordial but refused to discuss specific measures to be taken until higher authority could be agreed. After the meeting one representative quietly informed the UNAIDS staff member that future meetings would be more effective on a bilateral basis only, as country A & B could never publicly be seen to cooperate with country C, which was a "traditional enemy"! Question: How to improve communication?
- CASE - THE SUPPLIER
The contract for delivery of the equipment was formally signed by the supplier with full delivery agreed within two weeks. Supplier promised faithfully to deliver on time! Six weeks later the equipment was delivered without comment or apology. An invoice was attached requiring payment within a month. Three months later the invoice had not been paid. The supplier made no complaint. Question: Is this a communication problem?
- CASE - ASIA
In a remote area, an international UN team worked on refugee problems for over a year using local staff as interpreters. Although the team had a lot of free time in the evenings they were not encouraged to learn the local language and dialect. Team members found work on each refugee case, more efficient and effective by speaking English to each other and to the interpreters. Question: Any communication problem here? Who might be responsible?
- CASE - INDONESIA
The WHO research project continued for several years with a major research institution. However the work was continually behind and reports to Geneva many months overdue. At various international conferences the Indonesian chief of the research institute was particularly kind to the Geneva WHO staff member (a woman doctor - responsible for the research management) and promised to remedy the situation on his return home. However nothing happened and faxes to Indonesia were ignored. No reasons for delays were ever given. Eventually the research was completed and the report delivered a year late. Question: What was being communicated?
ASSIGNMENT 2.0 STUDY - COMMUNICATION (75 MINUTES)
2.1 INSTRUCTIONS
(a)Re-assemble in new SG
(b)Study the lecture and discuss in SG.
(c)Record significant points on the flip chart.
(d)Review the glossary for any difficulties with new words
(e)Record significant points in your notebook
(f)Reassemble in MG when the bell rings
ASSIGNMENT 3.0 - LECTURE - COMMUNICATION (30 MINUTES)
3.1 SKILLS
To negotiate we must communicate at both a rational and an emotional level. This is very complex when the parties belong to different cultures, even when speaking in “the same” language …which is never the same!
Cross cultural communication leads to abnormal perceptual bias e.g. attaching various meanings to the same message, due to irrational commitment, faulty standards and even assuming zero-sum game.
Overcome such problems by: listening, questioning, delay, reversing roles, and thus insuring a clearer … not perfect understanding.
Use both passive listening (acknowledging the sender) and also active listening (asking relevant questions, to get valuable information). Questions may be open-ended or probing conditional questions, depending on theneed.
“Reversing party roles” is a useful technique for critically examining key aspects of the negotiation, and better understanding the other party. The keys are: restating, rephrasing, reframing and summarizing.
Nonverbal communication is critically important. Even when not speaking we communicate with facial expression, use of time and space, touching objects, artifacts etc.
Thus we are continually sending messages to the other party. Need to control our own body language to send the right messages!!
Finally at a verbal level with different languages, perhaps better need to communicate with qualified interpreters e.g. Shell case of English negotiation in Algeria, where the Algerians chatted informally in Arabic without realizing that the Shell European passively understood everything He later became chairman of Shell International!
3.2 POWER IN COMMUNICATION
Think of power in terms of: personal power, negotiating power and using power
effectively. Power comes from preparing well, negotiation know-how, with ever improvingcommunication skills and above all … learning from past mistakes.
After each negotiation ask:
Outcome OK? No? Why?
Preparation OK?
Understanding needs of other party?
Who talked the most?
Who asked the most questions?
Explored new options and expanded range of issues?
Made too many concessions?
Time well managed?
Too emotional?
What to do differently next time?
Communication with confidence from good preparation can achieve superior outcomes, because it provides power for negotiation leverage. Better be over than under-prepared.
Need to apply a variety of strategies and tactics while the parties are still very sensitive in making decisions. Variety gives power leverage.
Successful power management with communicating, human,and decision making skills, can achieve long lasting outcomes. The target is Win- win for mutual benefit.
3.3COMMUNICATION AND THE GENDER DIVIDE – WSM?
Do men get a better deal from negotiation than women? It all depends? Chance
favours the prepared mind. Perhaps women prepare better? WSM?
In 2012 men negotiators must be increasingly interactive with women in more senior positions. Overcoming the gender divide is a mutual problem.
Women may do as well as men or even better, with their natural ability to listen,
read non verbal signs, consult others and adopt cooperative moves.
Women overcome misunderstanding by discovering personal underlying interests to establish trust credibility and social harmony.
Perhaps WSM – women are superior to men ... but in some cultures they are
not yet accepted for negotiation. Not yet… but in the future … with internet and the web?
3.4COMMUNICATION BETWEEN SMALL WITH LARGE
ENTERPRISES
Being big is no good if the big foundation is weak. Hence in 2012 large firms form alliances with so many smaller outside suppliers to get with more favourable agreements.
Small companies benefit from the relationship opportunities of subcontracting and even outsourcing with major enterprises. Thus links with international companies give prestige and a trust symbol for new international trade opportunities, especially with the internet.
Need for a key strategy to avoid pitfalls and negotiate more effectively with a large enterprise. Best achieved when we get to know well the specific managersin the major enterprise, who have the power and authority to decide..
3.5 OVERALL
Communication must follow a structure (Exhibit A) with verbal, body and emotional techniques. Watch the other party … and watch yourself too!
Communication on price may be the most challenging (Exhibit B)
The key negotiation objective is to achieve goals with a win-win decision, which creates trust for both short term and long term cooperative relationships.
EXHIBIT A - COMMUNICATION - IN THE STAGES OF NEGOTIATION
- Opening phase:
Make first offer, offer rejected, what problems?
- Exchange of information:
Some information given, more provided, negotiation, to confirm understanding,
confirmation received
- Concessions:
Counter offer on new information, concessions, offer partly accepted, more concessions,
new offer, acceptance received , final agreement proposed.
Note: Never skip the first key exchange session!
EXHIBIT B - COMMUNICATION - PRICE ALTERNATTIVES
To meet price objections, some suppliers artificially inflate other price quotations, to enable them to appear to give price concessions in the opening of the negotiation without taking any financial risk.
The danger is that it immediately directs the discussion to pricing issues at the expense of other important components of the marketing mix. Tangible and intangible factors may be more important than price.
Generally, such initial price concessions are followed by more demands from the buyer that can further reduce the profitability of the transaction.
Buyer may press for concessions on:
• Quantity discounts
• Discounts for repeat orders
• Improved packaging and labelling (for the same price)
• Tighter delivery deadlines, to increase production and transportation costs
• Free training of staff on the import regulations.
• Free after-sales servicing
• Supply of free parts to replace those damaged from normal wear and tear
• Free training of staff on maintenance and use of equipment
• Market exclusivity Higher commission rates
Better credit and payment terms
• A long-term agency agreement
3.6LEARNING PATTERNS - REVIEW
Communication
Rational Emotional
Verbal Body
Subconcious
Skills Power
Mis-communication
WSM?
3.7 INSTRUCTIONS (10 MINUTES)
(a)Reassemble in SG
(b)Study the lecture carefully and record key points in your notebook
(c)Discuss outstanding questions
(d)When the bell rings continue with the case study which follows.
ASSIGNMENT 4.0 CASE - LICENCING CASE(90PLUS MINUTES)
4.1INSTRUCTIONS
- CSG - Study the story of the case. (Exhibit S) Discuss and record answer to the
questions (Exhibit B) on the flip chart. Get a picture of what has happened.
Don't miss the obviousthings. Determine the key issues.(10 minutes)
- SG - Choose Sam or Carlos
- SG - Preparationof the same role (10 minutes)
- Pairs - Negotiation1:1(30 minutes)
- CSG - De-briefing discussion (15 minutes)
- MG – Lecture discussion with the Guide. (20) minutes)
- Listing of 10 learning points on the flip chart. (5 minutes)
EXHIBITA
Assignment 4.1
CASE - RUMANIA LICENSING CASE
(briefly adapted for Europe from another case study)
This negotiation case provides face-to-face negotiations involving licensing issues, between a French Company in Lyon and a Rumanian Company in Budapest.
While the goal of the exercise is to reach an agreement, the option of non-agreement may be an acceptable outcome so long as the negotiators put in sufficient time and effort to fairly explore the issues and make maximum efforts toward reaching a potential agreement.
In 2012 George owns and operates the largest wholesale paint business in Lyon. He sells a variety of house-paints and is best known for his quick-drying paint, a process he developed and patented in France and Europe ten years ago. Both patents expire in five years.
George sells the quick-drying paint to his customers directly, and has license agreements with retail hardware stores more than fifty miles from his business headquarters in Lyon.
Although interested in entering into a license agreement in Rumania, George 59 years old reluctant to be involved in unfamiliar with the business environments, where patents may not be well protected.
But on the approach of Indrei in Rumania, via a personal friend, George decided to investigate possible licensee in Rumania. He checked with the French Consulate in Budapest, to get data on paint producers and hardware stores in Budapest. He wrote to three of the larges (including Indrei) explaining his interest in entering into a license agreement for his quick-drying paint in Rumania. Thus he got financial reports and character reference about Indrei, and is convinced that he meets all of the requirements for a licensee.
Indrei and George agree to meet in Lyon, to: work out the terms of a license agreement between them.
In preparing for this negotiation, please refer to the terms of the form of License Agreement attached. The License Agreement may suggest additional areas for negotiation that are not
specifically mentioned above. Be aware that the average royalty rate for paint products varies from three to six present (3-6%).
Exhibit B - Copy of a typical licencing agreement.
EXHIBIT A
CASE - RUMANIA LICENCING CASE
QUESTIONS:
- What is the story of the case?
- What the real goals of the parties? Are they possible?
a.
b.
3. What are the BATNAs?
a.
b.
4. What are the cultures? Can they work together?
a.
b.
5. What are the powers? Who is dominant?
a.
b.
6. What is the critical issue? Relationships or cash or control?
a.
b.
7 . What are the alternatives? For each party?
a.
b.
NEW SG – SAME SIDES ONLY – Pre-negotiation (20 minutes) , Then 1: 1 negotiation, decision and justification (40 minutes)
RUMANIA LICENSING CASE
EXHBIT B–TYPICAL LICENCING AGREEMENT
An Agreement made this______day of______19___„ between
Quick Drying Paint , a French corporation having a place of business at Lyon in France, hereinafter called the Licensor, and Indrei Campania S.A., a Rumanian corporation, having a place of business at Budapest, Rumania hereinafter called the Licensee.
WITNESSETH; Preamble
Whereas Licensor has invented and developed a method (hereinafter called "the process") for the manufacture of a computer (hereinafter called "the product") and possesses valuable secret knowledge, formulae, information, data, and related skills useful in performing the process;
Whereas Licensor has applied for and obtained patents for both the process and the product, amongst others in the France and in Europer, as set forth in Annex A.
Whereas Licemorhas obtained trade marks for the product amongst others in the United States and in France, as set forth in Annex B, hereinafter called "the trade marks";
Whereas Licensee is an established manufacturer and trader in the electronics industry in Rumania and desires to obtain Licensor's know-how and the right to work Licensor's patents in Rumania, including the right to manufacture the product and sell it under Licensors trade mark in Rumania;
Now therefore in consideration of a down payment of Euros one thousand having been made by Licensee to Licensor and of the mutual promises, obligations an<d covenants set forth herein, the parties hereto agree as follows:
Definitions
As used in this agreement,
A. The term "patent" or "patents" shall mean any letters patent or patent applications filed by or issued to Licensor in Rumania covering the licensed process or product, as well as any letters patent which shall thereafter issue on such applications.
B. The term "net sales" shall mean the gross amount invoiced by Licensee on sales of the licensed product, less returns, rebates, trade discounts, cash discounts, sales taxes, and transportation charges allowed to purchaser on the purchase price.
C. The term "improvement" shall mean any modification in the manufacturing process licensed hereunder which does not affect the method covered by patents* as defined in Definition A above.
Operative Clauses
/. License Grant
Licensor hereby grants Licensee an exclusive, non-transferable, non-assignable, indivisible license and right to manufacture, use and sell the product in Rumania under the trademark, to practice the patent and know-how and to use any information and technical assistance respecting process and product which Licensor may give Licensee in future.
2. Disclosure of Information
Promptly after signature of this Agreement, Licensor shall furnish Licensee with all particulars, data, specifications, technological, scientific and marketing information, operational instructions relating to process and product, as far as not already in Licensee's possession.
3. Future Know-How
During the validity of this Agreement, Licensor shall, moreover, make available to Licensee any improvement, information and know-how related to process or product, whether acquired by Licensor as a result of his research and development or in any other lawful way and which he has the right to pass on to Licensee, and for which no additional royalty shall be payable.
4. Feed Back
Licensee shall promptly disclose to Licensor any improvement or invention pertaining to process or product. At Licensor's request, Licensee shall assign to Licensor the entire right, tide and interest to and in any such improvement or invention, as well as to file any patent applications therefor, including the right to sublicense, and without paying royalty.
5. Secrecy
Licensee shall treat as secret and confidential all know-how and information received under clauses 2 and 3 hereunder, except to the extent that they have come into the public domain. Licensee shall not disclose such know-how and information to any persons other than those employees requiring the know-how and information in the performance of their duties. The obligation to secrecy does not cease with expiry or termination of this Agreement.