国际商务谈判简明教程A Concise Course on International Business Negotiation

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Chapter Five Closing the Negotiation

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Learning GoalsLearning Goals

Upon completion of this chapter, you will learn:

• Who makes the decision to close

• When it is time to close

• Tactics towards agreement

• Tips on contract signing

• Summary of the negotiation

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I. Closing the Deal

II. Tactics Towards Agreement

III. Summary of the Negotiation

CONTENTS

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I. Closing the Deal

The difference between a successful and an unsuccessful negotiator is the ability to close a deal when it has reached its maximum level of distributing “enough” among all participants. The deal is best closed when the agenda has been exhausted. Buyers usually have the say as to when a deal will be closed, but they can beencouraged to do so by savvy sellers. This is why every sales force in the world has its “closing specialist” whose job is to convince the buyer that “enough” has been had and it’s time to transact the deal. International negotiations differ only in the fact that the buyer/investor is usually much better informed than a standard customer. Both buyer and seller have an equal chance to close the deal, and the more proactive the decision maker is, the greater chance of controlling the process he’ll have.

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1. Who Makes the Decision?

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2. What Is It the Time to Close?

To determine if it’s time for closure, here are some questions to ask either directly or indirectly: (1) Have all points of the agenda been discussed? (2) Have the technical aspects of the deal been reviewed? (3) Have the local and international laws applicable to the deal been researched? (4) Are all the active parties to the deal logistically capable of performing their functions? (5) Is the time line set for the deal realistic? (6) Do all parties recognize the short and long-term consequences of the deal? (7) Are all parties in agreement as to the language and terms of the deal?

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(8) Do all the parties to the deal trust each other? (9) Do all potential signatories have the requisite authority to act on their company’s behalf? Sometimes the appropriate response to an offer laid on the negotiating table is “no”. Declining a deal, and doing so in the proper manner, is sometimes the ‘silver medal of international business, not ideal, but respectable. Declining the deal must be done with the greatest diplomacy because this potential for future dealings is very important. You may have no intentions of ever dealing with these particular counterparts in the future, but maintaining your reputation within the international business community for levelheaded dealings is important.

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2. What Is It the Time to Close?

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II. Tactics Towards Agreement

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1. Recessing

By recessing we mean taking a short break during which each party moves out of the negotiation forum to reconsider the progress of the negotiation, and reconsider its own position; or breaking off until a later session. Recessing is such an important device that the method of using it deserves to be examined. When do we use it? How do we arrange it? How do we restart? At what times should we use our recess? (1) At the end of a phase in the negotiations. That is: a. when exploration is completed, before the start of the bidding; b. after bids have tabled, before getting down to bargaining; c. if possible at the time when the shape of settlement becomes clear. (2) Before issue identification. It is strongly advocated to open negotiations in a manner designed to breed co-operation to mutual advantage. But this strategy

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1. Recessing

needs to be checked before becoming too deeply embroiled. If in doubt, take a recess.(3) When nearing an impasse. As long as we aim towards agreement, such a recess can be used to look for means together to tackle the problem that is facing the parties in their negotiation.(4) Team maintenance needs. When the members of the party need to review their effectiveness as a team(5) Breaking a trough. When concentration has lapsed and needs regenerating. After the recess, the meeting is re-opened with a miniature version of the steps that are taken to open a negotiation.(1) A few moments of ice-breaking, as we again attune our wavelengths.(2) Re-state the progress made on agreed plan.(3) Confirm rest of agreed plan or suggest/agree changes to it.(4) Re-opening statements, defining positions and interests as they are now perceived and paving the way to further creative development.

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颜色创造环境

2. Full Disclosure

Literally, this means complete readiness to give to the other party all one’s information. In practice, there will always be some elements people are unwilling to disclose and some other elements they are unable to disclose. We therefore have to interpret “full disclosure” as meaning the disclosure of 90 percent of what we perceive. There are some negotiators whose character is strongly inclined towards openness and frankness. This pattern of behavior can be highly productive, inducing the other party to respond and to co-operate. “Full disclosure” then becomes an advantage, providing that it is used in conjunction with all the skills of negotiation towards agreement. It is, of course, a fatal disadvantage when “full disclosure” is offered to others whose sole interest lies in their own advantage. The straightforward statement that one cannot offer the full price asked, or cannot afford to wait the full delivery time, if true, is constructive. It is an element of full disclosure and it enables the parties together to concentrate on the problem and to search for solutions. The same tactic, “All I’ve got is 60 percent…” can of course be differently usedby one party to get independent advantage.

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III. Summary of the Negotiation

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1. Value Evaluation Standard of Business Negotiation

The value evaluation standard can be summarized as the following: (1) Realization degree of the business negotiation objectives Before getting down to business negotiation, the objectives must be set so that the degree of the objective realization can be checked when the deal is closed. Objective realization is the first and foremost standard of a successful negotiation. However, it must be noted that different types of negotiation has different objectives. The realization of the objectives can only be highlight in a particular negotiation item. (2) Negotiating efficiency The so-called negotiating efficiency is the comparison relationship between benefits obtained from negotiating and its costs. Low costs and high benefits mean high efficiency negotiation. Business negotiation costs include the following three aspects:

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• The total amount of concessions made to reach an agreement.•The total amount of all kinds of resources spent on the negotiation includingmanpower, material resources, financial resources and time.• The opportunity cost. Some of the company manpower, material resources, financial resources and time are spent on this negotiation, so these resources lost the opportunities for other negotiations. (3) The personal relationship after negotiating To evaluate whether a negotiation is successful or not, the emphasis should not be on either side’s market share, bidding or profit distribution, but also their personal relationship after negotiating. The relationship will be maintained, promoted, strengthened or damaged. Good credit standing and friendly relationship are important factors for the enterprise to develop and it is a very important symbol of successful business negotiation. To sum up, a successful negotiation must be one in which both sides’ needs are met. This satisfying result is obtained with high efficiency and at the same time the friendly cooperative relationship of the two sides is built or further developed.

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1. Value Evaluation Standard of Business Negotiation

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2. Contents of Business Negotiation Summary

Among the far-ranging content of business negotiation summary, the followingare important.(1) Aspects that have direct relation with negotiating process• Preparation work;• Illustration of gains and losses based on our objective realization, negotiatingefficiency and results;• Evaluation of the advantages and disadvantages of the negotiating procedure,time and place;• The summary of the main experiences of the success of the negotiation and toanalyze the great lapsus.(2) Aspects concerning the opponent Evaluate the opponent including the impression, the working style, efficiency and the things that are liked or disliked. To those who are important or have long-term cooperative relations, establish files to put the negotiation experiences, style, tactics, skills as well as the disadvantages into written form to learn the merits and avoid the shortcomings for future negotiations.

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3. Steps of Business Negotiating Summary

Business negotiating summary is generally composed of the following steps. (1) Review the negotiating process and go over the minutes. (2) Analyze and evaluate the negotiating. Give an effective assessment based on the concrete case. Find out what is well done. And give praise and encouragement to those who succeeded in negotiating. (3) Give suggestions of improvement. The suggestions should be specific, scientific and persuasive. (4) Write the summary report. The summary report should be put into writtenmaterial. It should be short with a clear viewpoint to emphasize the important matters.

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Practical Activities

Task 1: Case Study

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A young American invited four couples to dinner—two American and two Japanese—who had previously invited him to dinner at their homes. Since he was a poor cook, he decided to entertain at a restaurant instead of at his house. He made it clear that the invitation was to compensate for his deficient cooking skills, but he did not explicitly mention his intention to pay for the restaurant meal, which he felt was implied by the invitation itself. When the waiter presented him with the bill, all the friends asked the amount of their shares. After a few rounds of insistence, the American friends conceded and thanked the young man for the meal. The Japanese friends, however, did not stop. They tried to press money upon the host, acted as if they did not understand, and protested that their wives would disapprove of them if they did not succeed in paying. The young man felt he could not accept their money, because it would embarrass the American friends who had let him pay. The Japanese friends were insistent, and began to talk together in Japanese, a rarity in front of non-speakers. The young man was very distressed, because the objective of the dinner was to thank his friends, not to upset them.Questions:1. What causes the embarrassing situation?2. What would you do about the bill for dinner? In other words, what would you havedone to extricate all parties from this discomfiting situation?

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Practical ActivitiesTask 2: Role-play

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(Mr. Kerker and Mr. Zheng are talking about modifying their shipping terms before closing the negotiation. Please role play the following dialogue.)Kerker: There is something urgent I have to discuss with you before I leave.Zheng: Go ahead, please.Kerker: Yesterday evening I received an email from my office. Here it is. You may read it.Zheng: (reading) PLEASE ASK THEM TO MODIFY THE SHIPPING TERMS INSTEAD OF TWO EQUAL SHIPMENTS MAY/JUNE OUR CUSTOMERS WHAT TO HAVE 80 PERCENT FOR THE FIRST SHIPMENT AND THE BALANCE FOR THE SECOND.Kerker: Can that be arranged?Zheng: Well, I’m not sure whether our factory can rearrange its production schedule.Kerker: It’s really troublesome, I know, especially when everything has been set according to the contract.Zheng: I’ll do my best. As soon as I get a reply from our factory, I’ll send you an email.Kerker: Good, thank you. By the way, is it possible to avoid transshipment for future deliveries?Zheng: That depends much on the shipping position.

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Practical ActivitiesTask 2: Role-play

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Kerker: I see.Zheng: Any other questions?Kerker: No, thanks. It’s very kind of you to come and see me off.Zheng: My pleasure. Bon voyage!

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Practical ActivitiesTask 3: Mini Negotiation

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(Mr. Kerker discusses a few points in the contract with Mr. Zheng)Kerker: I made a very close study of the draft contract last night.Zheng: Any questions?Kerker: Yes. There are a few points which I’d like to bring up. First, the packing. It’s stipulated in the contract that all the machine parts should be packed in wooden cases. This can be done with the machine parts, but it’s impossible to pack a truck base like that.Zheng: I see.Kerker: Second, about the terms of payment. Your draft contract says that paymentis to be made by D/P. This is not our practice. We prefer to have the payment made by L/C through a negotiating bank in Sweden.Zheng: And...Kerker: And the third point is about arbitration. It’s stipulated that arbitration should take place in China. In all our past contracts signed with you. It was stipulated that arbitration takes place in a third country.Zheng: Yes, that’s right.Kerker: But why is it that this time you wish to have it carried out in China?

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Practical Activities

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Task 3: Mini Negotiation

Zheng: Shall we take up the matter point by point?Kerker: That’s a good idea.Zheng: Now, the first point is about packing. We agree to a different packing for the truck.Kerker: This can easily be done.Zheng: Second, about terms of payment by L/C.Kerker: Thank you.Zheng: As for arbitration, in our dealings with many countries, arbitration is to be carried out in China. The Arbitration Commission of CCPIT enjoys a high prestige among friendly companies. Personally I hope you’ll accept this clause. Furthermore, the disputes that have arisen from our business transaction were all settled through friendly consultations. Very rarely was arbitration resorted to.Kerker: I see. OK. The new arbitration clause is acceptable. Is there anything else?Zheng: As far as the contract stipulations are concerned, there’s nothing more. But there are a few minor points on which I’d like to have your cooperation.Kerker: We’ll do our best.Zheng: As this is the first transaction of tunnel drillers which our corporation has concluded with your company, you’re requested to furnish us with two copies of some data. Firstly, a

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Practical Activities

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Task 3: Mini Negotiation

complete set of blueprints for installation purpose. Secondly, a complete set of diagrams ofelectric circuit, fuel circuit, compressed air circuit. Also, a full set of pamphlets dealing with installation, operation, maintenance and service. And finally, the catalogues of parts of the machine.Kerker: I think these documents can be furnished. When you’re filling in the contract, if you find anything that is not clear to you, don’t hesitate to write us directly. We’ll do all we can to assist you.Zheng: Thank you ever so much.Kerker: When should we sign the contract?Zheng: We’ll revise the contract this evening, and have it ready to be signed tomorrow morning at ten. How’s that?Kerker: Perfect.

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Practical Activities

Task 4: Student Assessment Record (SAR)

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Name: __________ Date: ____________Instructions to students:·Sign and date this assessment when you are able to achieve each objective reliably and consistently.·Please tick when competence criteria have been met and answer the questions accompanying each criterion.

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Competence Criteria

After studying this chapter, you are able to

1. understand and learn various skills for closing a negotiation.

Answer the following questions.

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1) When is the best time to close a business negotiation?2) List 5 questions that people ask to determine if it’s the time to close?3) What does “recessing” mean?4) How do negotiators understand “full disclosure”?5) What is regarded as a successful negotiation?6) What are the steps of business negotiating summary?

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Competence Criteria

After studying this chapter, you are able to

2. understand the closing phase.

Judge whether each statement is true or false.

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1) Once you have reached an agreement on price, you can close the deal. □2) There are several reasons for negotiators to take a recess. □3) Negotiators usually do not check the degree of objective realization when they close a deal. □4) Personal relationship is also a way to judge whether the negotiation is successful or not. □5) When making a summary on contents of negotiation, we usually pay attention totwo important aspects. □6) There are usually two steps to sum up a negotiation. □

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Competence Criteria

After studying this chapter, you are able to

3. improve your language skills.

Translate the following sentences into Chinese.

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1) Do all potential signatories have the requisite authority to act on their company’sbehalf?2) Recessing is such an important device that the method of using it deserves to beexamined.3) To sum up, a successful negotiation must be one in which both sides’ needs are met.4) There are some negotiators whose character is strongly inclined towards openness and frankness.5) To evaluate whether a negotiation is successful or not, the emphasis should not be on either side’s market share, bidding or profit distribution, but also their personalrelationship after negotiating.

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