Global negotiator NEGOTIATION MODELS DAM PHAN TRONG KINH DOANH

NEGOTIATION MODELS Negotiation is basically a process of communication by which two or more persons seek to advance their individual interests through joint action. The parties to a negotiation are sitting at the bargaining table because at least one side has decided that it can improve its situation in some way if both sides agree on a specific joint act, such as establishing a strategic alliance to produce cell phones, making a sales agreement to buy computer components, or transferring for a fee one party’s communication technology to the other. Obviously, the other side is sitting at the same table because it too thinks that it has a chance to improve its own situation if it strikes a deal under the right conditions

THE GLOBAL NEGOTIATOR Making, Managing, and Mending Deals Around the World in the Twenty-First Century Jeswald W Salacuse THE GLOBAL NEGOTIATOR A L S O B Y J E S WA L D W S A L A C U S E The Wise Advisor: What Every Professional Should Know About Consulting and Counseling Making Global Deals: Negotiating in the International Marketplace The Art of Advice: How to Give It and How to Take It International Business Planning: Law and Taxation (with W P Streng, six volumes) Social Legislation in the Contemporary Middle East (co-editor with L Michalak) An Introduction to Law in French-Speaking Africa: North Africa An Introduction to Law in French-Speaking Africa: Africa South of the Sahara Nigerian Family Law (with A B Kasunmu) THE GLOBAL NEGOTIATOR Making, Managing, and Mending Deals Around the World in the Twenty-First Centur y JESWALD W SALACUSE THE GLOBAL NEGOTIATOR Copyright © Jeswald W Salacuse, 2003 All rights reserved No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews First published 2003 by PALGRAVE MACMILLAN™ 175 Fifth Avenue, New York, N.Y 10010 and Houndmills, Basingstoke, Hampshire, England RG21 6XS Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St Martin’s Press, LLC and of Palgrave Macmillan Ltd Macmillan® is a registered trademark in the United States, United Kingdom and other countries Palgrave is a registered trademark in the European Union and other countries ISBN 0-312-29339-9 hardback Library of Congress Cataloging-in-Publication Data Salacuse, Jeswald W The global negotiator : making, managing and mending deals around the world in the Twenty-first Century / by Jeswald W Salacuse p cm Includes bibliographical references ISBN 0–312–29339–9 Negotiation in business—Handbooks, manuals, ets I Title HD58.6S246 2003 658.4’052—dc21 2002193099 A catalogue record for this book is available from the British Library Design by Letra Libre, Inc First edition: July 2003 10 Printed in the United States of America In memory of Anne CONTENTS viii Preface The Global Negotiator Part I Global Deal Making Negotiating Deals, Contracts, and Relationships Seven Steps to Prepare for Global Deal Making 29 Seven Principles for Global Deal Making 43 Seven Special Barriers to Global Deal Making 73 Special Barrier No 1: The Negotiating Environment 77 Special Barrier No 2: Culture 89 Special Barrier No 3: Ideology 117 Special Barrier No 4: Foreign Organizations and Bureaucracies 127 10 Special Barrier No 5: Foreign Governments and Laws 145 11 Special Barrier No.6: Moving Money 165 12 Special Barrier No 7: Instability and Sudden Change 179 Part II Global Deal Managing 13 After the Contract, What? The Challenges of Deal Management 193 14 Power Tools for Global Deals 205 Part III Global Deal Mending 15 Deal Stress 223 16 Renegotiating Existing Transactions 229 17 Deal-Mending Mediation 257 18 The Art of Deal Diplomacy 267 Appendix A: The Global Negotiator’s Checklist Appendix B: A Primer on International Business Transactions Appendix C: Suggestions for Further Reading Notes Index 273 277 291 299 307 P R E FA C E The globalization of economic and business activity now more than ever before requires executives, lawyers, entrepreneurs, and officials to make deals with companies and organizations around the world, work productively with foreign partners and associates, and effectively handle disputes that inevitably arise with affiliates and governments in other countries The basic tool for accomplishing each of these tasks is negotiation Negotiation is the means to make deals, to manage them, and ultimately to mend them when conflicts arise From this perspective, economic life in the twenty-first century demands that all of us become global negotiators The aim of this book is to provide guidance in the complex process of making, managing, and mending international business transactions It draws on more than ten years of research conducted in a variety of settings in North America, Europe, Latin America, the Middle East, North Africa, and parts of Asia The work was particularly informed by the twice-yearly, twoday executive seminar that Antonia Chayes, the late Abram Chayes, and I led under the auspices of the Program on Negotiation at Harvard Law School During the decade of that seminar’s existence, more than 1,200 senior international managers, lawyers, and officials shared their experiences and insights into the challenges of creating and managing international business relationships throughout the globe in many industries It proved to be a rich source of information and ideas, a source that has informed this book from start to finish In particular, many of the examples and anecdotes in the book came from participants in the seminar I am also grateful to my colleagues at the Program on Negotiation and at the Fletcher School of Law and Diplomacy for their thoughts on negotiation and international relations generally I especially want to thank Joel Trachtman and Brian Ganson of the Fletcher School of Law and Diplomacy for reading and commenting on individual chapters, Lindsay Workman for helping to develop the bibliography, Josh Robbins for tracking down documentary sources, and my assistant, Lupita Ervin, for helping to prepare the index and final manuscript T H E G L O B A L N E G O T I AT O R Why all the tough problems seem to land on your desk? Your company’s product development division in Houston, Texas, has located a small manufacturer in Hungary that claims it can supply components at 35 percent less than what you are now paying your Dallas supplier, with whom you have had a relationship for over ten years Your boss is pushing you to fly to Budapest to negotiate a long-term supply contract with the Hungarians You don’t know anything about Hungary and are worried about how to handle the Dallas supplier when you get back Or, your company and a Chinese enterprise have established a joint venture to manufacture and sell high-grade machine tools in China and Southeast Asia The venture has clear mutual benefits, but you both have become cautious about sharing information Your Chinese partner is withholding information about customer problems with products and requests for new product features In response, your engineers have slowed the transfer of technology badly needed by the enterprise Both of you are also fighting about advertising expenses Your company wants to spend heavily on advertising, but the Chinese oppose additional advertising as unnecessary On top of that, during your last visit to China, you met the new provincial governor, who took you aside at a cocktail party and suggested that the joint venture would have an easier time with provincial authorities if you sold a portion of your interest to one of his cronies Or, your company has begun construction on a resort hotel in Egypt near the pyramids after securing the necessary land from the government Your company is financing the deal with a combination of its own money and loans from two London banks So far the project has spent $15 million in 298  THE GLOBAL NEGOTIATOR  United Kingdom Millington, A I., and B T Bayliss “Instability of Market Penetration Joint Ventures: A Study of UK Joint Ventures in the European Union” in International Business Review 6, no (February 1997): 1–17 United States Campbell, Nigel C G., John L Graham, Alain Jolibert, and Hans Gunther Meissner “Marketing Negotiations in France, Germany, the United Kingdom and the United States” in Journal of Marketing 52, no (April 1988): 49–62 Volkema, Roger J “Ethicality in Negotiations: An Analysis of Perceptual Similarities and Differences Between Brazil and the United States” in Journal of Business Research 45, no.1 (May 1999): 59–67 Wever, Kirsten S Negotiating Competitiveness: Employment Relations and Organizational Innovation in Germany and the United States Cambridge, MA: Harvard Business School Press, 1995 Notes CHAPTER Author’s interview with “Janet,” January 25, 1998, New York City Terrence P Hoppmann, “Two Paradigms of Negotiation: Bargaining and Problem Solving,” ANNALS, AAPSS 542 (1995): 24–47 See Abba Kolo and Thomas W Walde, “Renegotiation and Contract Adaptation in International Investment Projects,” Journal of World Investment (2000): 5, for an excellent summary of major renegotiation cases in the petroleum and minerals industry Jeswald W Salacuse, “Ten Ways that Culture Affects Negotiating Style: Some Survey Results,” Negotiation Journal 14 (1998): 221 Akilagpa Sawyer, “Redoing An Old Deal: Case Study of the Renegotiation of the Valco Agreement,” (unpublished paper, 1991) See also Fui S Tsikata, ed., Essays from the Ghana-Valco Renegotiations: 1982–85 (Accra: Ghana Publishing, 1986) For a discussion of this tripartite analysis within the context of diplomatic negotiations, see I William Zartman and Maureen R Berman, The Practical Negotiator (New Haven, CT: Yale University Press, 1982) D M Kolb and G G Coolidge, “Her Place at the Table: A Consideration of Gender Issues in Negotiation,” in Negotiation Theory and Practice, ed J W Breslin and J Z Rubin (Cambridge, MA: PON Books, 1991) “Enron’s Rebecca Mark: ‘You Have To Be Pushy and Aggressive,’” Business Week, February 24, 1997, at http://businessweek.com/1997/08/b351586.htm Jeswald W Salacuse, “Renegotiating International Project Agreements,” Fordham International Law Journal 24 (2001): 1319 10 C Buhring-Uhle, Arbitration and Mediation in International Business (New York: Kluwer, 1996), 318–319 11 Nael G Bunni, “Major Project Dispute Review Board,” In-House Counsel International (June-July 1997):13 CHAPTER Author’s interview with Frank, December 24, 2000, Concord, MA Robert H Mnookin and Lawrence E Susskind, eds., Negotiating on Behalf of Others: Advice to Lawyers, Business Executives, Sports Agents, Diplomats, Politicians and Everybody Else (Thousand Oaks, CA: Sage Publications, 1999) 300  THE GLOBAL NEGOTIATOR  For a discussion of the process of giving advice, see Jeswald W Salacuse, The Wise Advisor: What Every Professional Should Know About Consulting and Counseling (Westport, CT: Praeger, 2000) Roger W Fisher, William Ury, and Bruce Patton, Getting to YES: Negotiating Agreement Without Giving In (New York: Penguin, 2nd ed., 1991) See Bill Vlasic and Bradley A Stertz, Taken for a Ride: How Daimler-Benz Drove Off with Chrysler (New York: W Morrow, 2000) Edmund L Andrews, “AOL-Time Warner Merger is Cleared by the Europeans,” New York Times, October 12, 2000, p C4 Kenneth J Vandevelde, “The Bilateral Investment Treaty Program of the United States,” Cornell International Law Journal 21 (1988): 201, 203–6, Jeswald W Salacuse, “BIT by BIT: The Growth of Bilateral Investment Treaties and Their Impact on Foreign Investment in Developing Countries,” The International Lawyer 24 (1990): 655 W Pengilley, “International Franchising Arrangements and Problems in Their Negotiation,” Northwestern Journal of International Law and Business (1985): 185 CHAPTER See Robert Mnookin et al., Beyond Winning: Negotiating to Create Value in Deals and Disputes (Cambridge, MA: Harvard University Press, 2000) 11–43 See also David A Lax and James K Sebenius, The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain (New York: The Free Press, 1986) 29–45 See Kathleen Valley and Michael Wheeler, “Luna Pen,” Harvard Business School Case no 9–396–156 (rev May 8, 2000) Jeswald W Salacuse, “Implications for Practitioners,” in Culture and Negotiation, ed G O Faure and J Z Rubin (Newbury Park, CA: Sage Publications, 1993) 206 For a detailed description of a joint venture that adopted similar techniques in order to assure both parties sufficient control over the enterprise, see David Goldsweig and Mark Sandstrom (eds.), International Joint Ventures (Chicago: American Bar Association, 1990) 3–106 Jeswald W Salacuse, “Renegotiating International Project Agreements,” Fordham International Law Journal 24 (2001): 1319 Author’s interview with Abdullah al-Omran, Legal Advisor, Counsel of Ministers, Saudi Arabia, November 6, 1983 C Buci, “The World of Business—Leap of Faith,” New Yorker, September 9, 1991, 38–74 C Buhring-Uhle, Arbitration and Mediation in International Business (New York: Kluwer, 1996) 318–319 Author’s interview with a Reebok executive, November 25, 2000, Canton, Massachusetts 10 Lance N Antrim and James K Sebenius, “Formal Individual Mediation and the Negotiator’s Dilemma: Tommy Koh at the Law of the Sea Conference,” in Mediation in International Relations, eds J Bercovitch and J Rubin (New York: St Martin’s Press, 1992), 97 11 Nael C Bunni, “ Major Project Dispute Review Boards,” In-House Counsel International, (June-July 1997): 13  NOTES  301 CHAPTER See Adrian Furham and Stephen Bochner, Culture Shock: Psychological Reactions to Unfamiliar Environments (New York: Methuen, 1986) Ibid Ann Williams, “Mobil Oil Corporation and Petro Zaire: Post Nationalization Negotiations in Zaire” (unpublished manuscript, 1988) See Diana B Henriques, “New Take on Perpetual Calendar: If This is Taipei in 2002, Are Businesses Open on Friday?” New York Times, August 24, 1999, p C1 CHAPTER Edward T Hall, The Silent Language (Garden City, NY: Doubleday, 1959) William C Frederick, Values, Nature and Culture in the American Corporation (New York: Oxford University Press, 1995) 88 Charles Hampden-Turner and Alfons Trompenaars, The Seven Cultures of Capitalism: Value Systems for Creating Wealth in the United States, Japan, Germany, France, Britain, Sweden and the Netherlands (New York: Doubleday, 1993) S E Weiss, “Negotiating With the Romans,” Sloan Management Review 35 (1994): 51, 85 See, for example, Hans Binnendijk (ed.), National Negotiating Styles (Washington, D.C.: U.S Department of State, 1987); N C G Campbell et al., “Marketing Negotiations in France, Germany, the United Kingdom and the United States,” Journal of Marketing 52 (1993): 49–62; and J L Graham et al., “BuyerSeller Negotiations Around the Pacific Rim: Differences in Fundamental Exchange Processes,” Journal of Consumer Research 15 (1988): 48–54 Author’s interview with Cordell Hull, Executive Vice President, Bechtel Group Inc., March 3, 1990, San Francisco, California Edward T Hall and M Reed Hall, Understanding Cultural Differences (Yarmouth, ME: Intercultural Press, 1990) 48 “Enron’s Rebecca Mark: ‘You Have to be Pushy and Aggressive’” Business Week, February 24, 1997, at http://www.businessweek.com/1997/08/b351586 htm The students in the survey were graduate students, primarily in law and business, with considerably less work experience than the other professional groups surveyed The student responses may be treated as representing persons without significant occupational experience 10 Hall and Hall, Understanding Cultural Differences, 152 11 Geert Hofstede, Culture’s Consequences: International Differences in Work-related Values (Newbury Park, CA: Sage Publications, 1980), 152 12 George Shultz, Turmoil and Triumph: My Years as Secretary of State (New York: Charles Scribner’s Sons, 1993), 763 CHAPTER Philippe Hasplespleigh, Tomo Nada, and Fares Boulos, “Managing For Value: It’s Not Just About Numbers,” Harvard Business Review (July-August 2001), 65, 67–68 302  THE GLOBAL NEGOTIATOR  Author’s Interview with Ara Oztemel, chairman, the Satra Group, August 1, 1990, Medford, Massachusetts CHAPTER 10 Author’s interview with Charles Francis Adams, former chairman of Raytheon, April 6, 1993, Lexington, Massachusetts Jack Welch and John A Byrne, Jack: Straight From the Gut, (New York: Warner Books, 2001) 366 David Lax and James K Sebenius, The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain (New York: Free Press, 1986) 354–55 See E Alan Farnsworth, “Precontractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations,” Columbia Law Review 87(1987): 217, 221–22 “When Political Masters Fall Out, Whom Does Business Obey?” The Economist (July 10, 1982): 63 CHAPTER 11 Consolidated Power Purchase Agreement between the Dabhol Power Company and the Maharashtra State Electricity Board, as amended as of December 1998 (unpublished documents) Laurent Jacque, Management and Control of Foreign Exchange Risk (Boston: Kluwer Academic, 1996) 237–52 Laurent Jacque and Gabriel Hawamini, “Myths and Realities of the Global Capital Market: Lessons for Financial Managers,” Journal of Applied Corporate Finance (Fall 1993) 81, 89–90 United States International Trade Commission, Assessment of the Effects of Barter and Countertrade Transactions on U.S Industries (Washington, D.C.: USITC, 1985) 137 CHAPTER 12 Raymond Vernon, Sovereignty at Bay: The International Spread of U.S Enterprises, (New York: Basic Books, 1971) 46 Award in the Arbitration of S.P.P (Middle East), Limited, Southern Pacific Properties Limited, and the Arab Republic of Egypt, International Legal Materials 22 (1983): 752 J W Carter, “The Renegotiation of Contracts,” Journal of Contract Law 13 (1999) 185, 189 The noted American legal scholar Karl Llewellyn underscored this point more than seventy years ago: “ the major importance of a legal contract is to provide a frame-work for well-nigh every type of group organization and for well-nigh every type of passing or permanent relation between individuals and groups, up to and including states—a frame-work highly adjustable, a frame-work which almost never accurately indicates real working relations, but which affords a rough indication around which such relations vary, an occasional guide in cases of doubt, and a norm of final appeal when the relations cease in fact to work.” Karl Llewellyn, “What  NOTES  303 Price Contract? An Essay in Perspective,” Yale Law Journal 40: (1931) 704, 736–37 Wintershall, A G., et al v Government of Qatar, International Legal Materials 28 (1989): 795, 814 CHAPTER 13 Benjamin Gomes-Casseres, “Joint Venture Instability: Is It a Problem?” Columbia Journal of World Business 22 (Summer 1987) 97 Another explanation is that joint ventures and alliances are inherently unstable because they are fundamentally temporary and evolving arrangements undertaken to achieve specific goals When they achieve their goals, they often terminate Thus, in many cases the instability of an alliance may be an indication of success rather than failure See Benjamin Gomes-Casseres, The Alliance Revolution: The New Shape of Industry Rivalry (Cambridge, MA: Harvard University Press, 1996) 213–214 Rosabeth Moss Kanter, “Collaborative Advantage: The Art of Alliances,” Harvard Business Review (July-August 1994) 96, 99 CHAPTER 14 Raymond Vernon, Sovereignty at Bay: The International Spread of U.S Enterprises (New York: Basic Books, 1971) 46 See I William Zartman and Jeffrey Z Rubin, Zartman, Power and Negotiation (Ann Arbor: University of Michigan Press, 2001) William Mark Habeeb, Power and Tactics in International Negotiation: How Weak Nations Negotiate with Strong Nations (Baltimore, MD: Johns Hopkins Press, 1988) 19–23 David C McClelland, Power: the Inner Experience (New York: Irvington Publishers, 1975) Benjamin C Esty, The Chad-Cameroon Petroleum Development and Pipeline Project (Harvard Business School case N9–202–010, January 17, 2002) Bill Vlasic and Bradley A Stertz, Taken for a Ride: How Daimler-Benz Drove Off with Chrysler (New York: W Morrow, 2000) 206 CHAPTER 15 Turriff Construction Co v Government of the Sudan, unpublished file no 862, Attorney General’s Chambers, Khartuom, Sudan CHAPTER 16 E A Farnsworth, “Precontractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiation,” Columbia Law Review 87 (1987): 217–94 J W Carter, “The Renegotiation of Contracts,” Journal of Contract Law 13 (1999): 185 For background, see Richard P Teisch and William A Stoever, “Enron in India: Lessons From a Renegotiation,” Mid-Atlantic Journal of Business 35 (1999): 51- 62; Harvard Business School, “Enron: Development Corporation: 304  THE GLOBAL NEGOTIATOR  The Dabhol Power Project in Maharashtra, India (A)” (HBS Case 9–596–099, March 25, 1997); Harvard Business School, “Enron Development Corporation: The Dabhol Power Project in Maharashtra, India (B)” (HBS Case 9–596–100, Dec 16, 1996); Harvard Business School, “Enron Development Corporation: The Dabhol Power Project in Maharashtra, India (C)” (HBS Case 9–596–101, Dec 16, 1996) John F Burns, “Indian Politics Derail a Big Power Project,” New York Times, July 5, 1995, D1 CHAPTER 17 E Schwartz, “International Conciliation and the ICC,” ICSID Review 10 (1995): 98 See C Buhring-Uhle, Arbitration and Mediation in International Business (London: Kluwer, 1996) Harvard Business School, “GE’s Early Dispute Resolution Initiative” (HBS Case N9–801–395, 2001) Jeanne Brett, Negotiating Globally: How To Negotiate Deals, Resolve Disputes and Make Decisions Across Cultures, (San Francisco: Jossey-Bass, 2001) 87–89, 128–29 L Nurick and S J Schnably, “The First ICSID Conciliation: Tesoro Petroleum v Trinidad and Tobago,” ICSID Review (1986): 340–53 ICSID, 1996 Annual Report (Washington, D.C.: International Centre for Settlement of Investment Disputes, 1996) ICSID, 2001 Annual Report (Washington, D.C.: International Centre for Settlement of Investment Disputes, 2001) Schwartz, 107–17 CHAPTER 18 Franỗois de Calliốres, De La Manière de négocier avec les souverains De l’utilité des négociations, du choix des ambassadeurs et des envoyés et des qualitiés nécessaires pour réussir dans ces emplois (Amsterdam: Pour la Compagnie, 1716.) The book has been published in many languages since it was written The most recent English language version is Francois de Callières, On the Manner of Negotiating With Princes, trans A F Whyte, with introduction by Charles Handy, (New York: Houghton Mifflin, 2000.) The quotations in this chapter are from this edition A recent French version with a useful bibliography is Francois de Callières, De La Manière de négocier avec les souverains, ed Alain Pekar Lempereur (Paris-Cergy: Essec Irene, 2001) On the Manner of Negotiating with Princes (New York: Houghton Mifflin, 2001): Ibid., p Ibid., p 91 Ibid., p 20 Ibid., p 12 Ibid., p 80 Ibid., p 25 Ibid., p 24  10 11 12 13 14 NOTES  305 Ibid., p.95 Ibid., p 82 Ibid., p 77 Ibid., p 46 Ibid., p 82 APPENDIX B UNIDROIT, Principles of International Commercial Contracts (Rome: International Institute for the Unification of Private Law, 1994), 94 International Chamber of Commerce, INCOTERMS (Paris: ICC, 2000) This page intentionally left blank Index Act of the prince doctrine, 57 Adjudication, 226 Administrative fees, 56 Africa, 151, 155 See also names of countries Agendas, negotiating, 40, organizational and personal, 38, 140–3 Agency, 283–4 Agents, 31, 38, 55,127, 283 Agreement, draft, 39, form of, 103–5, inductive or deductive method in achieving, 105 See also contract Akhromeyev, Marshal Sergei, 113–14, 217 Algeria, 130, 209 Alliances, 7, 20, 25, 26, 193 Analogical forecasting, 63–4 AOL - Time Warner, 39, 147 Arbitration, ad hoc and institutional, 69, international, 68–9, 160, 164, 258 Arbitrators, 68–9, 258–9; as mediators, 258–9 Argentina, 96–109, 261 Asia, 1, 17, 67, 86 See also names of countries Attitude, negotiating, 14–16, 97–8 See also Negotiating style Australia, 41, 95 Authority, 27, 32, 136 Automatic adjustment clauses, 187 Bad faith, 18 Bankruptcy laws, 159 Banks, as information sources, 111, 132, 157 Banque Paribas, 173 Bargaining position, in negotiations, 41 Barter, 174 See also Countertrade “Battle of the forms,” 279 Bechtel Group, Inc., 98, 241 Best Alternative to a Negotiated Agreement (BATNA), 36–7, 232 Bill of lading, 281 Body language, 84 Brazil, 95, 99, 101, 217, 219 Bribery, 141–2 Bureaucracies, 127–43 See also foreign bureaucracy(-ies) Buyback See Compensation Calvo doctrine, 120 Cameroon, 35, 79, 214 Canada, 118, 170, 215 Chad, 261 Changing Circumstances, 2–3, 24, 179 Checklist, The Global Negotiator’s, 273–6 Chile, 261 China, 1, 3, 18, 96–109, 118, 120,133, 149, 217 Choice of law, 160, 277–78 Chrysler Corporation, 36–7, 152, 214 C.I.F (cost, insurance and freight), 280 Clout, of other negotiating team, 136 See also Bargaining position Communication, 21, 31, 57–8, 134, 199–201; cultural differences in style, 96–110; direct or indirect methods, 100–1; ideology and, 119; nonverbal, 84 Compensation (or buyback), 175 “Compensation ratio,” 176 308  THE GLOBAL NEGOTIATOR  Compromise, negotiation as, 8–9, 11, 14 Conceptualization phase of negotiations, 18 Concessions, 8, 13 Conciliation, 24, 70, 250, 262–4 Confidentiality, 68, 125 See also Secrecy Confidentiality agreement, 17 Conflict, 68, 223 Conflict of interest, and local legal advisers, 157 Congo, 81 Conoco, 216, 219 Consensus, group, 105–7 Contract(s), 3, 20, 277–90; enforcement of, 183; form of, 103–5; instability of, 65–7; interpretation, 278; legal pluralism and, 160; as negotiating goal, 20–2; renegotiating, 229–55; sanctity of, 183; and state corporations, 149–50 See also Draft agreement Contract adaptation, 188 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 69 Copyright, 284–5 Corruption, 141–2 Counterpurchase, 174 Countertrade, types of, 174; negotiating, 175–7 Cultural differences, 21, 45, 48 59, 89–115, 203–4; bridging of, 112–15, 203; in communication style, 94–5; effect on negotiations, 94–115; rules for negotiating, 110–15 Culture, defined, 89–60; and values, 90–4 Culture, organizational, 27, 103, 132, 203–4 Culture shock, 77–81 Currency, 165–77; convertibility of, 171–2; and countertrade, 174–77; and foreign exchange risk, 166–71; immovable money, 171–3; movable money, 166 Deal, as continuing negotiation, 268; as contract or relationship, 20–2; as a partnership, 193–6 Deal diplomacy, 267–71 Deal management, 3, 22, 191–220 Deal mending, 3, 22176 De Calliốres, Franỗois, 26771 Details, working out, 18–20 Developing countries, in negotiation with multinational corporations, 15 Direct foreign investment, 287–9 Discrimination, against foreigners, 161–2 Dispute resolution, 25–6, 68–71 Dispute review board, 70 Distributive bargaining, 8, 11, 52 Distributorship(s), 261, 283–4 Documentation, of negotiation process, 19 Documents, 19, 39–42 See also Contract(s); Draft (or model) agreement Domination, negotiation as, 9, 14 Draft (or model) agreement, 39–42; purposes of, 39–40; risks of, 41 Dabhol Power Company, 168, 236–54 Daimler-Benz, 36–7, 214 Deadlines, 80 Failure, risk of, 76 F.A.S (free alongside ship), 280 First names, use of, 98–100 Eastern Europe, 118, 124, 201 Eaton, Robert, 36 Ecuador, 217, 219 Egypt, 13, 18, 37, 100, 118, 140, 181 Electronic negotiation, 83–5 E-mail, 83–5, 87 Embassies, as information sources, 35, 132 Emotionalism, degree of, 102–3, 270 Enron Corporation, 23, 55–6, 101, 168, 217–18, 236–54 Environment See Negotiating environment European Union, 39, 147, 159, 212 Exchange control systems, 117 Exchange rates, 166–7, 280 See also Currency Exposure netting, 170 External negotiations, 127–8  INDEX Flexibility, importance of, 269 F.O.B (free onboard), 74, 280 Foreign bureaucracy(-ies), 75; approaches to dealing with, 128–31; identifying appropriate branch of, 130–1; multiplicity of, 28; and the other negotiating team, 133–40 Foreign Corrupt Practices Act, 141 Foreign government(s), 75, 145–64; as a “black box,” 146–7; challenges in dealing with, 146–52; and contracts, 163–4; as ghost negotiator, 161–2; and “hometown justice,” 161; and national priorities, 148; pervasiveness of, 163–4; role in negotiations, 161–2; and sovereign immunity, 150; and “the squeeze,” 146, 158–9 Foreign investment, 37–8, 55, 120, 123, 211, 237–8 Foreign laws, 145–64; bankruptcy, 159; challenges in dealing with, 152–6; and contracts, 277–8; and foreign legal advice, 156–8 Formality, degree of, and use of first name, 98–100 France, 22, 85, 91, 96–109, 118, 138 General Electric Corporation, 147, 152, 159, 241, 260 General Motors Corporation, 197, 206, 210 Germany, 96–109, 118, 212 Ghana, 18, 188–9 Global Negotiator, defined, Global Negotiator’s Checklist, 273–6 Goal(s), contract or relationship as, 20–2; of foreign governments, 147–8; negotiating, 31, 44, 46 Good faith in negotiations, 153, 231–2 Government corporations, 137, 139, 149, 161 See also Foreign government(s) Hedging currency risks, 169–70 “Home court” advantage, 78 “Hometown justice,” 161–4 Honeywell Corporation, 147, 152 Hospitality, 78, 82, 84 See also Socializing  309 Hungary, 1, 201 IBM, 76 Ideology, 74, 117–25; elements of, 117–18; gaps between reality and, 124; and making the deal, 119–21; personal, organizational, and national, 122–3; rules for dealing with, 121–3 INCOTERMS, 280 India, 23, 32–3, 38, 55–6, 101, 168, 209, 217–18, 236–54 Individual rights, 93–4, 120 Indonesia, 63 Inductive vs deductive methods, in negotiation, 105 Instability, causes of, 179–80; of negotiating team, 138–40; risk of, 181–6, 220 Instructions, 32 Integrative bargaining, 10, 252 Interest/finance charges, Muslim prohibition of, 56 Interests, determining, 10–12, 32, 37–8, 50; focusing on, 49; specifying, 26 Internal negotiations, 127–8, 132, 142–3 International business transactions, 277–90 International Centre for Settlement of Investment Disputes, 70, 257, 262–4 International Chamber of Commerce, 69, 70, 188, 257, 258, 262, 280 International franchising agreements, 286–7 International licensing agreements, 284–5 International management agreements, 285–6 International sale of goods, 279–81 Interpreter(s), using an, 35, 61; selecting, 35 Interruptions, cultural differences and, 94–5 Introductions, at negotiating table, 136 Islamic fundamentalism, 124 Islamic law, 56 Israel, 18, 100 Issues in negotiation, 38 Italy, 93, 113, 260–1 310  THE GLOBAL NEGOTIATOR Japan and the Japanese, 15, 54, 94, 100, 120, 138, 167, 180; communications style, 94; relationship as negotiating goal, 21; risk taking, 108–9 Johnson, Lyndon B., 219 Joint ventures, 1, 2, 43, 49–50, 287–9 Kennedy, John F., 207 Know-how, 284–5 Khrushschev, Nikita, 207 Korea, 91, 118, 129 Land rights, 155–6 Laos, 91, 97 Latin America, 95, 120, 261 See also names of countries Laws, foreign See Foreign laws Lawyers, foreign, 156–8; as negotiators, 32, 34 Lay, Kenneth, 218 Leadership, team, 34, 106–7 Learning another culture, importance of, 110–11, 268; resources for, 111 Legal issues, 152–64 See also Foreign laws Legal system, 152–56; foreign, 158–64; and foreign legal advice, 156–8 Letters of credit, 56, 173, 177, 184, 281–3 Letters of intent, 18, 153 Linkage, 173, 174, 184, 217–18 Location See Site selection; Setting Maharashtra State, India, 239–47 Malaysia, 12–13, 17, 37 Management and technical services agreements, 285–6 Matsushita Electric Industrial Company, 58–60, 266 McDonald’s, 76, 95 Mediation, 24, 57, 70, 254–5, 257–66 Mediators, 24, 57, 50; deal making, 57–61; deal mending, 257–66 Meir, Golda, 49 Mexicana de Cobre, S A (Mexcobre), 173 Mexico, 15–16, 99, 101, 102, 103, 104, 106, 107, 108, 173 Middle East, 85  MIT (Massachusetts Institute of Technology), 64 Monetary systems, 165; and countertrade, 174–7; and foreign exchange risk, 166–71 See also Currency Multinational corporations, 14, 15 Multiple money, 75–6, 165–71 NAFTA (North American Free Trade Agreement), 212, 214–15 Names, first, 99; and introductions, 136 Nasser, Gamal Abdel, 123 Nationalism, 117 Nationalization, 83, 163 Negotiating environment, 74, 77–87; site selection, 78–85; time factors, 85–7 Negotiating goal, 10, 96–7 Negotiating styles, 95–110 Negotiating team, 33–6, 62, 133–40; agenda of, 140–1; allocation on, 34–5; Checklist for, 273–76; and consensus, 105–7; foreign government’s role on, 148–52; introductions at negotiating table, 136; leadership of, 34, 137–8; preparation by, 33–6; size of, 34; spokesperson of, 34; stability of, 138–9; task other side’s, 133–43 Negotiation, defined, Negotiation models, 8–16 Nepal, 209 New Zealand, 175 Nigeria, 86, 90, 96–109 Nonverbal communication, 84 Northwest Airlines, 203 Nuovo Pignone, 260–1 Objective standards, 30–1, 53–7 Offset, 174 Offsetting transactions, 170, 174 O’Neill, Thomas (“Tip”), 172 Opening moves in a negotiation, 31, 44–7 Open-term provisions, 187 Options in negotiation, 13, 36 Organizational factors, 23, 27, 90, 127–43 Ovitz, Michael, 58–60, 266  INDEX Pace of negotiations, 87, 249 Panama, 209 Patents, 285–6, 288–9 Payoffs, 141–2 Performance bond, 183–4 Performance letters of credit, 283 Performance requirements, 161 Personality factors, 14 Personal style, 98–100 See also Personality factors Phases of a negotiation, 17–20 Pluralism, legal and political, 145–64 Power, in negotiations, 9, 14, 104, 132, 133, 136, 205–19; of mediators, 266 Power tools, 205–19 Prenegotiation, 17–18, 23, 47 Preparation for negotiations, 29–42 Principals, 31 Principles, agreement on, 105; discussion of, 105 Priorities, national, 148 Private investment, 119–20 Privatization, 55, 139 Problem solving, negotiation as, 10–12 Products, adapting, 95 Professional culture, 103, 104, 114–15 Profits, 120 Property, conceptions of, 119, 154 Qatar, 188, 239 Question, as negotiating tool, 11, 51 Raytheon, 146–7 Reebok, 61, 213 Relationship(s), 2, 3, 20, 23–4, 47–9, 67, 248–50; as goal of deal, 20–1; importance of, 22; rules for negotiating, 22–7 Renegotiation, 14, 24, 40, 65, 185–8, 229–66; approaches to, 231–6; clauses, 186–8; contractual instability and, 65–7; preventing, 247–50; rejection and, 225; rules for conducting, 250–5; types of, 229–30 Reservation price, Resources, information, 35 Review clauses, 186–7 Risk(s), allocating, 167–71; of conflict, 223–4; of failure, 76; foreign  311 exchange, 166–71; of instability, 179–89; political, 163–4, 188–9 Risk taking, 108–9 Role playing, in preparation, 34 Royalty payments, 30, 161, 172 Sadat, Anwar, 113, 123 Saudi Arabia, 56, 139 Scenario building, 64–5 Secrecy, 68 See also Confidentiality Setting for negotiations, 78–85 See also Site selection Shultz, George, 113–14, 217 Silences, meaning of, 94 Simulated negotiations, 34 Simulation, 64 Site selection, 78–85; alternating sites, 82; neutral territory, 82–3; opponent’s territory, 80–2; own territory, 78–80; symbolic value of, 80–1 Socializing, 84 SOGEM, 173 South Africa, 217, 219 South Beach Beverage Company, 29–31 Sovereign immunity, 150 Soviet Union, 130–1, 158 Spain, 15, 22, 96–109 Spokesperson, on negotiating team, 34, 137 See also Team leader Stabilization agreement, 163 State Department, as information source, 35, 11 State-owned corporations, 137, 139, 149, 151, 161 Stereotypes, cultural, 111 Strauss, Robert, 59–60, 266 Style See Negotiating style Sudan, 130, 138, 156, 157, 224 Sweden, 195 Tactics, 209, 212–18 Taiwan, 45–6 Taxation, 158, 161 Team leader, 34, 105–7 Team, negotiating, 33–5, 62, 106–7 Technology, as aid to negotiation, 33, 83–5 Technology transfer, 285–6 Tesoro Petroleum Corporation, 263–4 312  THE GLOBAL NEGOTIATOR Thailand, 27, 95, 110 Third parties in negotiations, 23, 24, 26, 57–61, 212–14 Time, 23, 80, 86, 111; cultural differences in perception of, 80, 86, 101–2; sensitivity to, 80, 111; time differences, 86 Trade terms, 280 Trademark(s), 29, 31, 39, 45–6, 284–5, 287–9 Translator See Interpreter Trend projection, 63 Tribal law, 155 Trinidad and Tobago, 262–4 Trust, 20, 47 Turkey, 34 Ultimatums, 80, 269 United Kingdom, 96–109 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 69  Units of account, 171 Value creation, 52–3, 252–3 Values, and culture, 91–4 Video teleconferencing, 83–5 Vietnam, 54 Waiver, as renegotiation, 254 Walk-away point, 273 Welch, Jack, 152 Wilberforce, Lord, 263–4, 266 Win-win vs win-lose negotiating attitude, 11, 14–16 Worker participation in management, 118, 124 Working relationship, 23, 199–204 World Bank, 70, 213, 240, 245, 265 Yemen, 56 Yen, value of, 167 Zone of possible agreement, ... expanding world of global business requires you to be a global negotiator The word global, aside from referring to the world, has another meaning: comprehensive Being a global negotiator means... model of the negotiation process Any negotiation has both competitive and cooperative aspects Whereas 12  THE GLOBAL NEGOTIATOR  Models I and II emphasize the competitive aspects of negotiation, ... the appendices to this book offer the global negotiators two important supports for carrying out their work: “The Global Negotiator? ??s Checklist” guides the negotiation process and “A Primer on