US-Korea-Mexico Nego

1. US-Korea-Mexico Nego US Electronic Parts&Comp. Union NAFTA Nego US DOC Korea Gov. Circumband Dumping TV Alliance Nego push Mexican Gov. Export push Samsung Electronics S.S. Mexico FDI

2. Four stages of negotiation- R. Shell - • Hyundai Heavy Co.: Forklift • Indonesian Construction Co. “A” -100units, Price-negotiable -Payment term : a lot of credit • First time • official price : 12,000 $/unit • -last week: 8,000$

3. Four stages of negotiation- R. Shell - 1. Assess the situation& Preparing your strategy 2. Exchanging information 3. Opening & making concessions 4. Closing & gaining commitment

4. Q4. You want to sell your yacht for $50,000. You were thinking about placing an ad in the paper when a yachting-enthusiast named Garrett, whom you don't know, approaches you and offers $65,000 in cash for the yacht. What would you do?

5. a) Accept his offer without hesitation b) Tell him to wait until the ad is running c) Haggle with the person to get a better deal (-10) (-10) (+15)

6. Q5. You want to sell your yacht for $50,000. You were thinking about placing an ad in the paper when your close friend, Kim, approaches you and offers $65,000 in cash for the yacht. What would you do?

7. (+5) a) Accept his offer without hesitation b) Tell him to wait until the ad is running c) Haggle with your friend to get a better offer d) Tell him that you'll sell it to him for $60,000 (-15) (-20) (+15)

8. 1 High Lose to win Win-win Accommodating Collaborative 4 Perceived Importance of Relationship Split the difference Compromise 3 5 Win to lose Lose-lose Competitive 2 Avoiding Low Low High Importance of Outcome

9. R. Shell’s Nego Situation High Relationship Situation Balanced concerns Accommodting Collaborative Importance of Relationship Compromise Transactional Situation Tacit coordination Competitive Avoiding Low Low High Importance of Outcome

10. The priority of these two negotiation concerns will direct the strategy you choose for a particular negotiation. ★ Buy an used car from - a dealer - your neighbor - your close friend - your director - strange on the street

11. High your director 3 your neighbor Accommodting Collaborative 4 Importance of Relationship your close friend Compromise 5 strange on the street a dealer Competitive 1 Avoiding 2 Low Low High Importance of Outcome

12. # Quiz Nt : Your director’s used automobile • Your director asks you if you have an intention/willingness to by his car. He wants to sell his car because he will be dispatched to oversea mission in next month. • What kind of negotiation strategy will you conduct in the context of the Lewicki-Hiam's Five Types of negotiation strategies? • And explain the reasons Why?

13. Q11. As the head of the negotiation team for a large conglomerate in Korea, I arrived in Beijing to negotiate a possible joint venture with the Chinese state-owned oil company. We had scheduled the trip for six days and arrived here on Monday, planning to wrap things up by Saturday. However, today is Thursday, which is four days into the negotiation, and so far the Chinese counterparts have not shown any real or serious intention of negotiating. All they've been doing was to invite us for drink every night since our arrival here on Monday. The Chinese have once again invited us for drink tonight. I should...

14. a) Flatly refuse their invitation b) Make a polite excuse (e.g. an important meeting with the Korean diplomats) and decline their invitation c) Accept to having dinner together but not drinks d) Accept their invitation wholeheartedly (-15) (+5) (-5) (+10)

15. Step2. Exchanging information 1. Build relationship Information exchange depends on effective interpersonal relationship How? 1. Entertainment 2. To find some common interest or background experience, unrelated to the negotiation

16. 3. Relationship-building moves * Armand Hammer, CEO of occidental petroleum • Tied with ribbons bearing the Libyan national colors, green and black * “Green Book” (Dea Woo)

17. 2. Build Credibility • To make your CP have a good perception/image of you.

18. Two kinds of Credibility ▷ Initial Credibility ·Your partners perception of you before you begin to communicate ·This credibility comes from the perception of "who you are“ decent-- "what you represent" bad company-- ▷ Acquired Credibility -created on the process of Nego.

19. A. U.S.: Hard-Positional Negotiation strategy * Korea unfairly limits US access to Korean auto market Market share of imported car → below than 1% Imbalance in US-Korea Automobile Trade * Intentional tax audits on foreign car owner * Consumer misperception on foreign cars • * police : traffic ticket (tinted window)

20. 3. Not “Blabber mouth” negotiator • First listening (listening skill) - let the opponent become talkative and disclose information first • And then ask questions • Finally, disclose my information

21. Communication research Talker Listener Speak at a rate Of 2 words per second Hear a rate of 8 words Per second Give plenty of time to a listener To think/investigate physical action Of others while “talkers” are Consumed by the act of speech

22. Asking questions 21.3% 9.6% Testing for understanding 9.7% 4.1% summarizing 7.5% 4.2% total 38.5% 17.9% Information-gathering behavior as a % of all behavior observed – Rackham & Carlsle Skilled negotiators average negotiators

23. Rackham & Carlsle • Monitored the negotiation behavior of English negotiators in labor-management negotiation • Skilled negotiators spend 38.5% of their time arguing and clarifying information - 17.9% for average negotiators

24. Step 3. Concessions Making Process1,2th preparatory Q1. Should I be the first to open? • Shut your mouth, let the other make a first offer • “you first-No! No !you first” Two contrasting answers -anchoring effect 1. “Never Open Rule”

25. 2. “Anchoring Effect”ZOPA Theory • By making a first offer(price), you have a chance to set the Zone of Possible Agreement (ZOPA) • Social scientists have discovered - “A Human Tendency” to affected by “first impression” price offered by the other - Tend to unconsciously negotiate from that starting point (first offered price) - first offer : anchoring effect

26. Conclusion Information (1) If you are confident that your information Is better than your counterpart’s Feel free to offer first  Enjoy “anchoring effect”

27. (2) Unless  “Never open rule” • Try to let the other offer first • But, be careful for “the anchoring effect”

28. Q2. Should I open aggressively(High-Ball) or reasonably(Low-Ball) Reasonable opening (Low-Ball) 1. Relationship situation

29. 2. Transaction Situation(Bazaar, competitive) aggressively(High-Ball) • 34 case-study between 1960 and 1980 - aggressive offering is the best * carpet store - especially if direct communication between the parties is limited * home sale medicated by a agent (broker)

30. Why aggressive opening(High-Ball)? 1. Contrast principle Buyer’s WAP 60$ • Target price • Aggressive one 50$ 45$ Reasonable first opening 40$ Seller’s Walk-away price(wap) 30$ ? Outrageous one 10$

31. If I opened at 30$ - moved up 20$ (my concession) - stopped at 50$  the seller would feel both greater relief and satisfaction  more willing to say “yes” • If opened at 45$  only 5$ concession - seller would are really willing to say yes.

32. 2. Reciprocity principle • Person A – Aggressive • Person B – Rejects --repeat----- • Person A – moderates his demand by making a significant concession • Person B Feel pressure imposed by the Reciprocity principle to make A reasonable response (to say “yes”)

33. Does an Aggressive(High-ball) always work in a transaction? Exception1. You lack leverage and the other knows it Fish vendor on The street in the morning Aggressive - No leverage (no refrigerator) - People know it Fish vendor on The street in the evening

34. Exception 2. When the other won’t haggling • Roughly 15% of American hate bargaining (haggling) You : seller of neck-tie Young student Aggressive Fifty years – looking Wealthy gentleman Reasonable

35. From consumer’s standpoint, What negotiation strategy? 1. Resist at the initial offer(price)but, identify yourself as a serious buyer - show your cash or checkbook

36. 2. The declining “size of hagglers” (sellers’) concessions  sends a powerful signal that they are getting close to a resistance point (walk-away point, bottom line) 20,000$ +2,000$ 18,000$ +1,000$ 17,000$ +500$ 16,500$ What his resistance price? +200$ 16,300$ 16,000

37. 3. Keep insisting on your price until you hear shopkeeper say “no” 4. Politely but firmly head for the door If they stop you Otherwise Willingness to make A future concession Not so great concession • Last price • his real resistance • price (bottom line)

38. Step 4. Closing & Gaining Commitment 1. Deadline • Research shows “concession rates skyrocket as the parties perceive that they are under a deadline” • “Tomorrow noon is a deadline, after that time, we will sell to (buy from)the other who has expressed interest” -Your counterpart--under pressure ** Yongsan

39. 2. WalkoutHow to break the deadlock? • “take it or “leave it”ultimatum  get out of the table • Leverage equation : Bargaining Power > Buyer Seller

40. When your-walkout tacticsWatch your partner’s “personality” 1. Cooperative negotiator – Real walkout Apologize or change your negotiation attitude to get negotiation back on track 2. Competitive negotiator - Tactics Evaluate the leverage equation If you-more leverage He-back If you-less leverage To get them back to nego

41. 3. “Nibbler”- Last minute demands - • Request small favor just before a deal closes - most negotiators fear to spoil negotiation or relationship by reject such small items • Research - add as much as 3 to 5% in additional value to their deals

42. How react to ? Reciprocal concession -Nibbler : 5% DC -Seller : No delivery

43. 4. Shall we split the difference? • Research - the most likely settlement point is the mid-point between the two opening offers  so popular, Why? 1. Appeals to the Sense of Reciprocity -fifty-fifty 2. Simple to understand 3. Quick – in a hurry Compromise Strategy

44. Not split Seller’s Aggressive opening 38 million $ 35 million $ Buyer’s WA Price Buyer’s Reasonable Opening 30 million $ 20 million $ Seller’s WA Price Settled price : 34 million $ Who win? split Seller wins