Stages of Negotiation

Opening statement

Welcome to … We would like to reach agreement on … I’d like to begin with a few words about our general expectations… May I outline our principal aims and objectives today … We have to clarify our positions … There are three specific areas we would like to discuss. These are … I’d like to end there and give you the opportunity to respond to this. I’d like to hand you over to my colleague …

Exercise 7 Most formal negotiations begin with an opening statement from each side. What do you think an opening statement should include?

a) Read a part of a meeting between a small Singaporean software company called LP Associates and a possible partner, Kee Ltd., in a joint venture. This is part of an opening statement from Stella Wang, the Production Manager at LP Associates. Check (۷) four of the eight statements below which best represent what she says.

Well, thank you for coming here today. As you know, we have a busy agenda. May I begin by outlining some basic thoughts that we have on this meeting? First of all, we see it very much as a first meeting, a preliminary negotiation to identify areas in which we can perhaps work together on certain products - prototype products - that we have developed. There are two, possibly three, ways in which we might go forward. I’d like to summarise these under three headings. First, development projects, second, license agreements. The third is the possibility of some kind of consultancy relationship. Is everyone happy if I say a few words about these to begin with? Right, well, first of all, joint development projects. This is ...

LP Associates wants to reach a final agreement in this negotiation. □

These are preliminary talks. □

The two parties want to resolve a conflict. □

They want to agree on a name for the joint venture. □

LP Associates would like to consider joint product development. □

They would also consider license agreements. □

LP Associates wants to agree to a complete sale of their ideas. □

They want to consider working on a consultancy basis. □

b) Read again. Complete the following phrases from Stella’s opening statement.

a). Well, thank you ______ ______ ______ ______ .

b). May I begin by _______ ______ ______ ______ …

c). First of all, we see it very much as a first meeting, a ______ ______to

______ ______ in which we can perhaps ...

d). There are two, possibly three, ways in which we ______ ______ ______ .

e). I’d like to ______ these under three headings.

Exercise 8 Suggest phrases for each of the following at the beginning of a negotiation. Try to bring all the phrases together in a single opening statement.

a) Welcome the other side.

b) Develop small talk (trip, weather).

c) Mention plans for lunch – make your visitors feel welcome (see city centre / local restaurant).

d) Suggest you start talking about the main subject of your meeting.

e) Introduce a colleague (Luke Fox, Marketing Department).

f) Explain general aim or purpose of the meeting. (Establish beginnings of a partnership / learn about supply systems / price variations and supply costs.)

Bargaining / Making concessions / Agreement / Rejecting

We can agree to that if … (on condition that…/as long as…) That’s not acceptable unless … (without…) If you could … we could consider … As long as … we could agree to … On condition that we agree on … then we could … That seems acceptable. Before agreeing to that we would need … I don’t think it would be sensible for use to …

Exercise 9 Read the following dialogue concerning bargaining stage of negotiations. This is a part of a negotiation between Arco, a German-owned manufacturing company in Ireland, and an Irish research company called Central Auto Systems, CAS.

Twelve months ago Arco and CAS agreed a joint development programme to manufacture an engine designed by CAS. However, Arco has recently carried out a major restructuring of its activities. The company has decided not to proceed with the joint venture for the new engine.

The negotiation is about ending the joint venture and agreeing compensation for CAS. In the extract, you will read the conversation between Dietmar Topfer and Erich Rinalder of Arco talking to Celia Spencer of CAS. Read once and mark the following as true (T) or false (F):

a) The reversal of rights is linked to the compensation agreement.

b) Dietmar Topfer thinks Arco’s work on the fuel system must be considered.

c) It will be difficult for CAS to find a new partner.

celia: One consideration is the question of compensation to CAS, another is the reversal of all rights presently held by Arco. Now, clearly the question of rights is very important to us.

dietmar: Yes, yes, we understand that. But, we have to think about the joint development aspects. The fuel injection system has been developed using Arco technical expertise. In fact, we are happy that you have all the rights, we accept that the engine is basically your design. On the other hand, since we have contributed to the engine, we hope that the compensation we agree to pay ... we want compensation to take our work into account.

celia: So you’re prepared to give up all rights, basically the whole product reverts to CAS?

dietmar: Yes, we can agree to that ... so long as we can accept your compensation demands. So, we need to link the question of rights to compensation.

celia: Well, as you know, we’ve been thinking about compensation based on two years’ earnings from the product.

dietmar: Right, I think Erich has some comments on the two years’ proposal.

erich: Yes, we feel that two years is a little too long, especially if we revert all rights to CAS. The problem is that if we revert all rights, we have to keep the compensation within acceptable limits. Two years is a lot. We believe this, particularly because you will find a new partner. And this is important: the time spent this year has included useful advances, good progress, in the design. So we need you to reduce your compensation demands a bit.

Exercise 10 Make conditional sentences which include concessions based on the prompts below. The first is done for you as an example.

1. a better warranty / quicker payment terms

We could offer a better warranty if you would agree to quicker payment terms.

2. free delivery / larger order

3. free on-site training / small increase in price

4. 5% discount / payment on delivery

5. extra £50,000 compensation / agreement not to go to law

6. promise to improve safety for staff / agreement on new contracts

7. better working conditions / shorter breaks

Exercise 11 Which of the following words indicate rejection is coming? Mark them with an R (rejection). Mark the others with an A (agreement).

1. Unfortunately … _________7. It’s a pity, but … _________

2. Sadly …________________8. We don’t think …_________

3. We regret that …_________9. We cannot possibly …_____

4. I’m pleased to say …______10. I’m sorry, but …_________

5. Fortunately …____________11. It’s possible that …_______

6. I’m afraid …_____________12. Happily … ___________

Dealing with conflict

We should focus on positive aspects… We should look at the benefits for both sides … We hope you can see our point of view … Could you tell us why you feel like this? I think we need to consider some fresh ideas …

Exercise 12 Read the text below. How many ways are suggested to reduce conflict in a negotiation? Suggest your own ways to avoid conflict. Entitle the text.

Conflict may sometimes be an unavoidable step on the road towards agreement. However, in some cases conflict leads to the breakdown of negotiations as one or both sides realize that agreement is not possible. In many cased this is better than agreeing to something which would be against the interests of the people concerned.

When conflict arises, there are several possible actions which may help to resolve conflict in a negotiation:

• leave the problem, go on to a different topic and return later to the point at issue

• summarize progress and areas of agreement

• emphasize the benefits available to both sides

• emphasize the loss to both sides of not reaching agreement

• restate the issue and wait for a response

• change the package

• invent the options for mutual gain

• offer conditional concessions

• adjourn to think and reflect

• set up an off-the-record meeting

• change location

• change negotiator (personal chemistry?)

• bring in a third party (mediator?)

• consider walking away.

Exercise 13 Read five different statements. All of these are ways of dealing with conflict. Match each statement with one of the following strategies.

1) Adjourn to think and reflect.

2) Summarise progress and areas of agreement.

3) Leave the problem, discuss something else, come back later to the problem.

4) Emphasise the loss to both sides of not reaching agreement.

5) Offer a conditional concession.

Extract 1

I think we’re not really making much progress. Perhaps it would be better to leave this point for a while and come back to it later. Could we talk about a different aspect to the deal, perhaps the question of delivery?

Extract 2

I think it is important to think about what could happen if we do not reach agreement. The most obvious consequence will be that we will both lose market share. The only winners will be our competitors. It could be serious for both of us.

Extract 3

There seem to be a number of problems, but I’d like to summarise the positive elements - issues where we have made progress. First, we agree that we have to settle the dispute between us, we understand how important this is. Second, we agree that the terms of our original agreement need to be changed. Third, we also agree that the change will depend on the different market conditions which affect our products ... These are important points of progress.

Extract 4

Can I suggest we take a short break here? I think it will help if we look at some of the issues that are dividing us. Perhaps we will see areas where we can make a fresh offer.

Extract 5

The point at issue, Mr Cinis, is quite simple. We can offer you an extra 5% discount, but only if the order is increased by 20% over the next three years.

Ending / Breaking off negotiations

I’d like to run through the main points that we’ve talked about. Can we summarize the proposals in a few words (the progress we’ve made / the important points of our/your offer)? We look forward to a successful partnership. I think we’ve gone as far as we can. I’m sorry, but I don’t think we’re going to agree to a deal. It’s a pity we couldn’t reach agreement this time. Unfortunately we appear unable to settle our differences. It would be better if we looked for some independent arbitrator.

Exercise 14 Emily Schmidt, a conference organizer, is coming to the end of her negotiation with a soft-drinks supplier. Read and decide if these statements are true or false.

1. Emily has ordered over 400 bottles of mineral water.

2. The supplier will deliver the order to the conference venue.

3. Emily will pay the supplier by the end of the month.

4. Emily and the supplier still need to discuss the details of the delivery.

Emily: So, can I just go over what we’ve agreed? You’re going to supply us with 100 bottles of still and 200 bottles of sparkling water, to be delivered directly to the Hotel Splendido in Milan on the 15th of March. The total cost to us will be €456, which we have agreed to pay in full within 25 working days of receiving the delivery. Have I missed anything out?

Supplier: No, I think that’s all. Emily ... oh, one final point we need to agree. I think, is a suitable delivery time.

E: Oh, yes, as I said before, the earlier the better! Shall we speak on the phone next week?

S: Good idea. Emily. I’ll ring you on Thursday.

E: OK. I look forward to speaking to you again then. By the way, good luck with your tennis match on Saturday!

S: Oh, thanks. I'd almost forgotten about that. Goodbye!

Exercise 15 Translate the following sentences.

1. Більшість формальних переговорів мають вступну промову. 2. Як ви знаєте, ми маємо дуже напружений порядок денний. 3. Чи можу я почати з того, щоб коротко викласти деякі основні думки, які ми обговорюватиме на цієї зустрічі. 4. Я би хотів закінчити та надати вам можливість відповісти. 5. Я впевнений, що нами буде досягнуто домовленість з ... 6. Я би хотів передати повноваження моєму колезі. 7. Ми хочемо, щоб відшкодування відобразило нашу роботу. 8. За умови, що ви надасте нам 5% знижку, ми погодимось сплатити за товар при доставці. 9. Це здається припустимим. 10. Ми повинні подивитися на вигоди, які отримають обидві сторони. 11. Здається, ми маємо перерватись на деякий час. 12. Я вважаю, що це у наших спільних інтересах прийняти рішення стосовно цієї проблеми. 13. Я вважаю, що більш важливим буде подумати над тим, що може трапитись, якщо ми не досягнемо домовленості/згоди. 14. Найбільш очевидним наслідком буде те, що обидві сторони втратять питому вагу на ринку даного товару. 15. Ціна, яку ви запросили вище, ніж ми очікували. 16. Отже, я підсумую важливі пункти нашої пропозиції. 17. Ми з нетерпінням очікуємо на успішне партнерство.

Exercise 16 Role play. Divide into two groups, A and B. Read the notes for A and B below. In groups prepare a negotiation position. Then choose a partner from the other group to negotiate with. Try to reach the best solution.

Group A

You are sales managers in a large automotive components manufacturer. You are having a meeting with a leader of your team of sales representatives to negotiate new contacts. Sales have not increased in the past year and so you do not want to increase the reps’ pay or their commissions.

Group B

You are the leader of a team of sales representatives. Your pay and commission have not increased for three years. You have a meeting with your sales manager to try to renegotiate your contacts.

When you have finished, report of your negotiation.

Exercise 17 Work with a partner. Choose an item that one of you owns and the other would like to buy, for example a house or a car. Work separately to prepare a negotiation based on the sale of the item you choose.

Decide on various bargaining points, including price, extra benefits, guarantees, payment terms, delivery time, part exchange of other item(s), etc.

After brief preparation, begin your negotiation, each making an opening statement before beginning bargaining over the details of the agreement.

Note: you must reach agreement