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The Negotiation Strategies In International Business Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 2452 words Published: 1st Jan 2015

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In business relationships, parties negotiate because they think they can influence the process in such a way that they can get a better deal than simply accepting or rejecting what the other party is offering. Ghauri (2003) says business negotiation is a voluntary process of give and take where both parties modify their offers and expectations in order to come closer to each other.

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In literature, sometimes “bargaining” and “negotiation” are used interchangeably. Negotiation, also called “integrative bargaining”, refers to win-win negotiation where both or all parties involved can end up with equally beneficial or attractive outcomes. In other words, everyone can win. It is more related to a problem-solving approach, where both parties involved perceive the process of negotiation as a process to find a solution to a common problem. In integrative bargaining however, if negotiations are not properly handled, both parties can end up with a jointly inferior deal. With negotiation, it is possible for both parties to achieve their objectives and one party’s gain is not dependent upon the other party’s concession. Business negotiation is considered by many authors as being this type of negotiation.

The power/dependence relation is another basic characteristic of all negotiation processes. It is closely related to the actual power relation, which is influenced by the value of the relationship to the parties and their available alternatives. Background factors for example the market position – can influence the power/dependence relation. The ability to control a relationship is related to the perceived power of two parties, their relative expertise and access to information. This power is a property of the relationship and not an attribute of the actor; in fact, it is closely related to dependence. Therefore, the power relationship is in balance if both parties perceive equal power. The power relationship is unbalanced if one of the parties perceives more power, or if one party is dependent on the other.

The dramatic growth of international trade over the last five decades has been not only in terms of volume but in complexity as well. International marketers are now more and more business negotiators, who constantly discuss deals across borders with a variety of people, ranging from consumers to intermediaries and even competitors. Technology often plays a major role in such deals and this could mislead people into believing that the whole negotiation process is principally an engineers’ discussion based on rational and scientific facts. In fact, technical complexity intermingles with human complexity to render such negotiation processes difficult to manage. A considerable amount of literature is available on negotiations, some of it also on business negotiations but the field of international business negotiations is quite neglected.

Strategic Negotiations. Richard Walton etal,1994 identify three primary negotiations strategies. These are “forcing,” “fostering,” and “escape.” Each represents an overarching pattern of interaction that characterizes the negotiations. A strategy does not emerge all at once, but over time as a result of consistent patterns of interaction. A forcing strategy generally involves taking a “distributive” or win/lose approach to the negotiations, combined with a “divide and conquer” approach to internal relations in the other side, and an attitudinal approach that emphasizes uncertainty and distrust. By contrast, a fostering strategy generally involves taking an “integrative” or win/win approach to the negotiations, combined with a “consensus” approach to internal relations in both sides, and an attitudinal approach that emphasizes openness and understanding. “Escape” is a non-negotiations strategy in which one or more parties seek to end or undercut the relationship. Dietmeyer and Kaplan (2004) use a research-based approach to negotiation that assists sales professionals in reaching their own business goals, while ensuring that their customers meet budget and professional objectives as well-going beyond win-win to achieve true, measurable business value for all parties at the negotiating table.

Power and Diplomacy

Power. Susan Strange (1998) brings out that power accrues to those who can offer or deny security; those who manage the creation of wealth by production; those who create credit to allow or deny other people to spend today and pay back tomorrow; those who (mis)manage the currency in which credit is denominated; those who have knowledge (advanced technology) which provides military superiority and dominance in other power structures. John De La Mothe (2002), argues that science, technology and innovation have long been key factors in the competitive advantage of nations. Today, however, the new international political economy is being increasingly driven by science and technology in new ways. Integration, globalization and internationalization have all become watchwords for a series of dynamic processes in which science and technology are deeply implicated. As a result, not only are the policies of “national” governments being exposed in terms of the limits of their sovereignty, but science and technology are being increasingly implicated in a wide array of public issues – ranging from security, privacy, development and economic growth to employment, environment, foreign policy and geopolitics. Clearly, in today’s emerging world, the ways in which governments organize their science and technology policy, their science and technology intelligence, and their research advisory structures and resources matter more today than ever before.

Diplomacy. James Rosenau was one of the first to suggest that the domestic and international are somehow ‘linked’ and elaborated upon what he termed ‘linkage politics’ (1969). Scholars focusing on the regional impact of domestic politics are Karl Deutsch (1957) and Ernst Haas (1958). Haas highlights two types of ‘spillover.’ The first type, functional spillover, occurs when cooperation in certain sectors of the economy (or society) creates technocratic pressure for cooperation in adjoining sectors, thereby propelling integration forward. The second type, political spillover, occurs when ongoing cooperation in certain areas empowers supranational officials to act as informal political entrepreneurs in other areas. In order to manage complex technocratic issues more effectively, rational governments must delegate discretion to experts, judges and bureaucrats, thereby creating powerful new supranational actors with an interest in cooperation. Graham Allison in Essence of Decision: Explaining the Cuban Missile Crisis (1971) too, speaks of an ‘overlap’ between international and domestic politics.

In State Power and the Structure of International Trade, Krasner argues that that openness in the world economy is most likely to occur “during periods when a hegemonic state is in its ascendancy”. As long as the state’s technological lead is increasing, its leadership will perceive economic advantages to openness, since openness will expand markets for the products of its technologically sophisticated industries. The hegemon will also gain politically, since the “opportunity costs of closure” will be low, relative to those facing smaller and poorer states. Conversely, when several large, unequally developed states coexist, Krasner predicts that the more backward states will find openness economically and politically costly and will therefore resist it. Greater trade closure will, therefore, result (Keohane 1997). Like Gilpin before him, Krasner too stresses on the influence of the’ strength’ of the state on international trade. The crucial point is the correlation between what occurs within a state is related to what occurs beyond state boundaries.

Robert Putnam in Diplomacy and Domestic Politics: The Logic of Two Level Games (1988) argues that domestic structures and diplomacy are interminably entangled and says that the negotiator is under pressure to reconcile domestic and international conflicts. Putnam’s work challenges the ‘level of analysis’ approach to studying international relations which stresses the importance of classifying data under three clusters: the systemic, national and the individual (Singer 1961). Mayer (1991) develops a model to explore the implications of domestic political divisions for international strategic engagement in international trade. He explores the subject by treating international trade as a game and identifying the players and examining how they play. The observation that there are several overlapping games being played, a few of them being strategic and others not, is significant. Policies such as tariff, quotas, and export and production subsidies are the tools used by the players to gain an advantage in the international strategic trade game (Krugman 1986). Work on ‘strategic trade policy’ builds on game theoretical models which analyse how states use trade policies to leverage their economic performance.

India and Nanotechnology

(The literature survey included, amongst others, a perusal of annual reports of GOI MOD, DST, CSIR, TIFAC, CII; back issues (app 3years) of Business world, New Scientist, Hindu Businessline and Business Today. )

GOI initiatives include DST launched Nano Science and Technology Initiative (NSTI) with an allocation of Rs. 1000 crore, Government has spent approximately Rs. 250 crore, over the past five years to promote R&D in the area of nanotechnology. 100 research projects on the synthesis and assembly of ceramic nanoparticles, nano tubes, nano wires, nanoporous solids, and DNA chips have been supported by the Government. CII Initiatives have resulted in; India-UK Joint Economic and Trade Cooperation, Indo-US High Technology Cooperation Group (HTCG), Nanotechnology partnership with Taiwan, a number of Nanotechnology Conclaves, Nanotechnology Cluster-CMTI, Jharkhand Nanotechnology Initiative, West Bengal Nano Park etc.

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CII is working closely with the Government of India on US India High-Technology Cooperation Group (HTCG) formed on November 2002. The HTCG acts to facilitate and promote bilateral high-technology trade. The focus areas of the core group include Information Technology, Defense, Life Sciences and Nanotechnology. Realising the potential of nanotechnology, HTCG working group on Nanotechnology is formed to facilitate seamless flow of knowledge between both the countries and joint development projects involving industries. The Confederation of Indian Industry (CII) has put together a 10-point action plan to empower Indian industry to come out with commercial nanotechnology products, which it believes will drive the future of industry worldwide. The action plan includes awareness creation, training and skills development, technology facilitation and networking and facilitating collaborative projects.

The Nano Science and Technology Consortium works to create a platform conducive for the growth, promotion and partnering in the field of Nano Science and Technology taking together industries, academics and government through consultative, advisory and educative processes which will provide growth platform for organizations, academics and governments for harnessing the Nano potential at Global level.

Companies like Samsung have already entered the Indian market with a range of products using nanotechnology such as refrigerator, washing machine and air-cooler. Samsung uses nano-silver in various compositions in its product range. Further, companies like Tata Steel, Tata Chemicals, Mahindra & Mahindra, Nicholas Piramal and Intel have invested around $250 million in the domestic market towards this end. Yash Nanotech has inked agreements with IIT Mumbai, NCL Pune and the Jawaharlal Nehru Centre of Advanced Research, Bangalore, to undertake global contract research and set up nanotech manufacturing facilities.

Civil Applications. These can be grouped under four heads, namely, detection, including imaging, sensors and sensor networks for the detection of pathogens and chemicals; protection, including decontamination equipment and filters, and personal protection; identification, including anti-counterfeiting and authentication, forensics, quantum cryptography and the market for counterfeit and grey goods; societal impacts, including current regulatory and ethical frameworks, potential impacts on ethics and human rights, and public perception.

Application in the field of medicine is one of the most fascinating areas that include new cancer therapies, drug delivery systems, and biomaterials for implants or prosthesis or diagnostic tools, which are under development or already in market. An important area of application of nanotechnology includes novel drug delivery techniques, which are quicker & less risky, compared to the costs of developing new drugs.

Military Applications. These also flow out from civil applications in areas like; higher performance platforms (aircraft, ships, subs, boats and satellites), enhanced sensing through more sensitive and selective sensors, enhanced human performance, information dominance through enhanced information technology, improved battlefield casualty management, lower life cycle costs with improved materials, coatings, and condition-based maintenance etc.

Stake holders. The various stake holders include; governments, Industry, Entrepreneurs, R&D, Institutions, Academic Research Institutions, and Society.

Case Studies. These can be subdivided into those which pertain to PSUs, R&D establishments and Defense and the private sector enterprises. The private sector industries which can be studied for negotiations resulting in various types of partnerships/JVs/MOUs/TOTs etc. are listed below:-

Measuring devices & equipments: Bharat Heavy Electrical Ltd, Icon Analytical equipment. Ltd., Veeco .Health Care: Dabur Research Foundation, Bharat Biotech International Ltd., Ranbaxy Laboratories Ltd. Materials processing: Tata Chemicals, Pune. Reliance India Limited. Automobile: Mahindra & Mahindra, Tata Motors, United Nanotechnologies Pvt. Ltd. Electronics: Bharat Electronics Ltd, SemIndia Systems, Samtel India.


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