A Life of Negotiation
Chapter 4: Preparing for a Negotiation
There are simple one-on-one negotiations,
like when you buy a neighbor’s used car,
or buy a house in the newspaper’s classifieds.
“Simple” here does not mean a small item,
but because the things to discuss to come to an agreement
between the seller
and the buyer are very few.
Buying an old motorbike,
“I sell it at that price,
if I buy it,
I’ll buy it,
I’ll lower the price for a bit
and then I won’t go down any more…”.
nothing more to talk about.
If the buyer has any questions,
they will also ask a few more details
such as how to use the car since new,
how much gas the car drinks,
has it ever had a problem
but in the end,
they have to decide to buy or not to buy,
though the information is sketchy.
The same goes for buying a house,
although the price can be up to many billion dong,
but “grandparents come to visit,
they like to buy,
the papers are full and valid …”,
Negotiating to buy a house is sometimes
even simpler than buying a motorbike,
because the landlord rarely lowers the price.
No need for many words.
The cases of home
or car bids are really too simple,
almost no preparation,
and the only problem is to check
that the item is of the quality
that the seller promises or not.
Often other negotiations
such as selecting a contractor
or selling a project are more complicated than that.
When entering the technology field,
buying and selling power plants,
water purification plants,
medium or high-speed railway systems,
in general all major infrastructure
or superstructure projects
The negotiation requires a lot of time,
gathers many actors,
and discusses many aspects.
In these projects,
only one funding issue is enough to negotiate monthly:
what is the interest rate,
the repayment period…;
not to mention the technology options of the project,
the components in the project are scattered
over hundreds of acres of premises.
Going up a step further,
when many international companies are involved,
the negotiation will have to be divided partly
for the number of domestic companies
and the other for the number of foreign companies,
not to mention each domestic
or foreign company will bring their subcontractors,
with new complications about technology,
So a negotiation can group up to a dozen companies
with dozens of nationalities,
all kinds of reasoning,
with very different project benefits and calculations.
Making everyone happy
with the outcome of a real negotiation is not something
that can be achieved in an instant.
I do not want to complicate things further
when I say that the companies
that are collaborating
or competing on the project
today also have a history of communicating
and collaborating with each other yesterday,
sometimes fighting “bloodshed”. ”,
sometimes actively promoting the work side
by side in previous projects.
All the animosity,
suspicion of each other is still there,
has an implicit influence on today’s work.
Then there are other cases that are even more difficult,
such as companies that come to negotiate
with a spirit of survival,
because they have not won a contract for a long time,
so there is a lack of work for employees,
and lack of results for shareholders.
For these companies,
it is easier to force them to lower prices
due to the pressure inside their companies,
and of course
the project implementation conditions are also negotiated more sensitively,
faster, and easier
I always avoid cases where the company is in danger of dissolution,
because even their presence in the project
It is already a big risk).
If you want to describe the whole picture,
sophisticated projects also gather more people from many horizons,
from many other specialties,
such as scientific consulting,
Just one aspect of the law can cause a lot of controversy,
because even with the same project,
the same contract,
many laws from many different countries can be applied
and of course there is no shortage of laws conflicts arise.
So we see very confusing situations,
a Korean company
that has a joint venture with Germany against a French company
that has a joint venture with Japan,
using English as the official language,
using Swiss law to distinguish between them ,
using World Bank money to finance.
Just like that,
the total number of senior personnel
to encourage multi-party negotiations sometimes reaches 50,
and company leaders.
That number is an average,
and the largest case I have ever encountered was
when I myself led a delegation of 200 experts of all sizes
to negotiate a mega-project in an Asian country.
That is only for our group.
Not to mention,
just organizing for so many people
with good working conditions is enough of a headache,
let alone the content of the negotiation.
When gathering so many people,
it is difficult to unite the opinions of each member,
even though they are in the same company.
Inviting them to participate is to make sure
every aspect of the project is handled properly.
Each conflict is the result of optimal choices
from different perspectives,
not necessarily a conflict of interests.
negotiation is a consideration
with the collective and with oneself.
As much as there are contradictions,
there are also internal negotiations to find a consensus.
For every sacrifice,
there must be compensation.
Whenever there is profit,
there must be an equal distribution.
In such a heterogeneous 200-person delegation,
the democratic method cannot be applied,
nor can the authoritarian method!
Only one method works:
Everyone has to negotiate with everyone on every detail.
When the internal negotiations
for each side are completed,
the buyer and the seller can sit together.
you should not be surprised
that each negotiation drags on for months or years,
with equally long interruptions
due to the need for internal adjustment!
* * *
All of the things
I have just told have been my daily routine for many years.
and getting used to the job,
and teammates also understand each other through eyes,
even though there was a part of the work
that had been rehearsed many times in previous negotiations,
the preparation was still very heavy
because on all points the consensus among companies in the same group was reached
must be perfect before the team goes to negotiate with the investor.
Needless to say,
the investor side is the same.
They also carefully prepared the negotiation.
Ministries and sectors must agree on the requirements,
the highest acceptable price,
the technologies to be met,
the minimum construction period…
so that the bridge is about to be built,
the factory is about to be operated,
and the tools are about to be used. … are negotiated
to suit urgent needs.
In principle, everything that applies to complex
and large-scale negotiations can also be applied to lighter
and less crowded negotiations.
But don’t be because it’s lighter or simpler
that you lack the basic preparations.
The main things to prepare carefully
Find out about the person you’re about to meet.
This is basic number 1.
Usually I will ask who is going to sit in front of me,
across the conference table.
I find out about their family background,
try to find out with whom they have negotiated in recent years,
on what projects.
The purpose is not to bribe
but to learn the personality of the individuals you are about to meet,
what to avoid in order to find a way to work
that is comfortable for both parties
and to build some credibility. .
Every negotiation is stuck at times,
when it’s really too late to be sympathetic.
When encountering that situation,
if there has been a previous acquaintance,
if one can guess each other’s intentions,
if both sides feel the sincerity of wanting
to achieve a good outcome
for both sides,
the negotiation will easily go out of the way more mysterious.
I would like to emphasize
that you should not have negative thoughts
before entering the conference.
There are many cases
where the delegation went to negotiate
and considered the delegation in front of them as an enemy,
even an enemy.
That mindset inevitably leads to failure.
Even if you meet an unjust person,
a healthy and sincere presentation will
still put the negotiating boat on the right track.
If you do not have the opportunity to prepare in advance,
you can still wait until a few days
before the conference to invite the participating delegations
to eat and go out before going to work.
People are still human,
whenever they have the opportunity
to get to know each other to have sympathy,
sooner or later they will have more sympathy for each other.
That will be the buoy that keeps the negotiation from sinking,
and it will come in handy
when it’s time to explain the difficulty
or explain why the other side has confusing demands.
The question to be prepared immediately is:
“What are the two sides (or the multi-party) waiting
for the outcome of the negotiations?”.
Many agencies came to the conference
with no idea of the results of the negotiations.
These cases are not worth mentioning.
For the rest of the cases,
trying to predict the other side’s
thoughts isn’t that difficult.
In negotiations with highly professional companies,
it is easier to guess their intentions,
because putting yourself in their situation
and finding the optimal solutions is clear to their heart.
Only when meeting companies
that lack preparation
and scientific working methods,
it is difficult to negotiate with them.
Negotiating with them is sometimes pointless,
and when they are near the end
they may change their minds
and make unreasonable demands.
In these cases, we have to be even more prepared,
anticipating surprises and risks.
Among the main outcomes of a commercial negotiation is the price
of the item on the conference table.
When both sides want to succeed,
partners from both sides will have to know the situation
and have a similar idea of the price of the project.
when it comes to selling or buying prices,
only a fraction of the actual price is mentioned.
There are many factors
that help make the price look cheaper
or more expensive.
the payment condition “buying company is allowed
to pay for goods within 3 months after delivery” is an advantage
for the buyer,
a disadvantage for the seller.
This condition will make the price of the item look cheaper!
Another example is a project funded with ODA.
With this privilege,
the “soft” repayment conditions are likely to make the price
of the project “soft” as well.
There are many other cases
that can change the real face of the price,
such as when the silver depreciates,
when inflation is high,
when the weather is not favorable
(for example, the tsunami in Japan),
when there is a long-term strike. …
All of these facts have an effect on rates.
Who knows in advance how the contract will play out in the future,
so the well-prepared side will be more comfortable when negotiating,
because it is known in advance how external factors affect the progress
of the project judgment.
the negotiating team must be informed internally
by the company about the price elasticity of the tariff,
which price is the final price.
The team leader must clearly know his authority in determining the price
to avoid having to call the boss when confused,
or every time there is a small change.
Here, I would like to emphasize
that a thorough discussion with the boss
before going to negotiate is a must.
If they can still meet each other face-to-face,
they can understand each other’s ideas deeply,
and the boss and the subordinate will have common analysis
and common reasoning.
By the time the negotiating team has left the company,
things will be much more complicated.
At the right “delicate turn” to call the boss at the company,
he/she can hardly make a decision right away,
because how quickly can accurately guess the scene of the conference
to consider and judge guess right!
Internal communication/communication within the delegation
and with the parent company is an equally important topic
Information includes many areas:
Information between the leaders of the negotiating team
and the leaders staying at the company.
This line is the “nerve” of the negotiation.
No matter how much you prepare,
there are still many surprises,
so company leaders need to keep an eye on the negotiations,
especially when the project is
so big that it could change the future of the whole company!
no matter how delegated to the head of the delegation to negotiate,
there are sudden decisions
that require the close participation of “at home” company leaders.
I have encountered a case
that even the Chairman of the Board of Directors
and the General Director
of the company also considered themselves not competent
to make decisions alone,
and had to ask to postpone the negotiation
to meet the Board of Directors.
That was the time the investor demanded a price reduction of US$90 million
in a super huge US$9 billion project,
which is only 1%,
but this 1% is too big.
No one in the company dares to think
that they have the authority
to allow a price drop of $90 million in one go!
In all cases,
all communication lines
with the parent company must be carefully secured.
or the enemy has pre-set a spy system
to listen to the telephone,
I once had to ask the French ambassador for permission
to use the special top secret French government telephone
to discuss with company leaders about upcoming developments.
Information between colleagues in the delegation to negotiate abroad.
Sometimes the host country investor divides our delegation into several teams,
each of which has to negotiate on different topics at a different location.
They split it up like that for their convenience,
but it also made it easier for us to communicate
with each other by means
they were easy to monitor and control.
Communication between team members
and their colleagues at the home company.
This array is very difficult to strictly manage
so that no information escapes the delegation.
Experts in electricity,
and infrastructure sometimes need to contact their direct boss.
Their company is not the main contractor
so they don’t work as carefully as the main contractor!
Letting them freely use all means
of telecommunications is a golden opportunity for the opponent
or the owner to hear
and learn the strategy of this group of parties.
One thing I always do
when I have to negotiate abroad is to prepare some names
and vocabulary to use over the phone,
to prevent the other party from decoding
if they happen to pick up the phone
or read our faxes.
I will name myself “the tiger”,
my boss is “black”,
the chairman is “white”.
If it’s too difficult,
say “crossing the sea”,
easier things are “through the Suez Canal”…
because this situation is like a James Bond spy story.
That way we didn’t expect to keep it a secret for long,
but it was enough to make time on our side,
allowing us to go faster than the opponent
or any other opponent.
After a few weeks we changed the password again,
changed the way of calling.
I often mix three
or four foreign languages in the same phone call
with the President of the company,
and still use slang and disguised names
to reduce the risk of information loss.
Some of you will think:
“What makes the imagination so rich?
How can you concentrate if you’re afraid
that someone will look at your confidential file when you work?”
In order to convince those of you who think so,
let me tell you the following story.
The story proves that
if you encounter a good “secret agent”,
no matter how defensive you are,
your confidential information can still be “extracted”.
I had to negotiate one-on-one
with the chairman of a power company in a country
located in the heart of the Americas.
This man went to France to meet me,
but also to meet our opponents in Europe.
The project is a 2 x 350 MW power plant.
At noon on the day of the meeting,
a secret agent I did not know
before asked to see me urgently,
saying that he had come across a technical data
that made him believe that
the project could not escape our company.
I met the above-mentioned spy immediately
before going on to the Chairman.
It was as if the data presented completely convinced me.
In an instant, my partner
and I had to completely change our negotiating strategy.
Instead of trying to convince the owner to buy from us
(now that’s for sure!),
we moved on to convince the owner
that it was a good price to buy!
And in the end we sold the goods at the price we wanted.
From the strategy of “persuading to sell”
we have moved to the strategy of “how to sell at a high price”!
It happened nearly 30 years ago,
let alone in today’s information technology context.
Saying that to you to understand
that caution is extremely important
if you want to be sure of your own side’s destiny.
Even with my teammates,
sometimes I don’t share everything
because I learned a piece of advice
when I was a young engineer,
from an old manager:
“If you can’t keep your secret
don’t expect anyone else,
even a partner,
to keep that secret.”
Powers of each member of the delegation
This is a very difficult matter to handle,
it must be regulated before going to negotiate,
including the powers of the delegation leader.
In projects with many complex stages,
when there are many employees of ministries,
branches and sub-company,
each employee must follow the direction
of at least two leadership lines.
They of course have to follow the direction
of the boss in their company,
but they also have to follow the direction
of the head of the negotiating team,
and the team leader is only a senior employee
of one of the companies present.
the team leader belongs to the main contractor.
It can be said that being a team leader to negotiate
with a large number of companies is extremely difficult,
and people with these abilities are very difficult
to find in the market.
I usually call these people superman!
They had to negotiate in all directions
while remaining calm,
not revealing a single wrinkle on their faces.
month after month,
they control themselves wonderfully.
Imagine the following situation:
in a power plant project,
the customer demanded a 5% discount,
the leader of the internal meeting,
asked each member company
to reduce the price by 5% evenly
according to the rule ” democracy”.
But the infrastructure side said
“I only got 0.6% down,
because in my country inflation is high,
employees have just received a raise in salary”,
the factory side only got 0.7% down for other reasons,
the system side.
The power system is only 1%
because the subcontractor increases the price,
so the team leader can’t go to a total of 5% of the project.
Sometimes it takes a whole week
to convince a teammate!
Experience has shown that internal persuasion is delicate
International client clients,
especially in large projects,
often require delegation members
to submit personal credentials.
In the letter of authorization,
the Board of Directors of each company solemnly acknowledges
before the law that the delegate
they send must be fully represented
and act without further support from the parent company.
the head of the negotiation team must have a special letter of authorization,
not only must his own company give the privilege,
but in addition,
each member company of the project also solemnly acknowledges
the broad supremacy of the group leader.
the preparation of credentials
before leaving is also a headache negotiation phase.
Middle Eastern Arab countries are very skeptical.
They examine the letter credentials meticulously.
We sometimes do not realize the full importance of letter of attorney.
Need or don’t need?
the negotiating team should bring a letter of authorization.
It gives the customer
or investor a sense of comfort,
knowing that the company delegate sent
to negotiate is actually authorized.
When they say or commit,
their company commits too!
I’ve been very lucky in my negotiating life.
For many years the business world has known
that not only am I permanently authorized
by the company’s Board of Directors,
but more than that,
I enjoy the special status of actually having broad authority
to make decisions right in the meeting.
This is an advantage
I have used many times and helps me
to cut hands on rival companies on the spot,
while if they want to fight,
they have to ask their boss for permission,
of course not at the table conference.
In other words,
I can decide quickly,
while the opponent needs time to explain to the boss.
If unfortunately their “boss” shirks responsibility again,
my advantage is obvious.
There are short negotiations,
and there are very long talks.
My team once negotiated a project for many years,
so not only did each individual in the team have
to prepare well spirit,
but also health,
the strength to endure hardships.
It’s a bit exaggerated to liken it to a torture,
but really the essence of a negotiation abroad is like going
to a monk or going to prison!
we were once forced to negotiate in the winter
without a heater in the room.
This happened so many times
that we thought they were intentionally “chilling” us in the hope
that we would freeze our limbs
and give in quickly.
Winter in Beijing is a terribly cold experience.
having to hit the floor all the time to keep moving;
fingers are so numb that it is difficult to hold a pen;
Can’t sit for a long time.
My side sat from month to month.
The Chinese side replaces a negotiation case every 4 hours,
deliberately hitting the body
to make our minds no longer clear,
hoping we quickly accept their unreasonable demands.
But before going to the conference,
our group had a friend who was adept at negotiating
with the Chinese in the winter.
This friend showed us what medicine to bring,
how to wear a shirt,
how thick socks should be.
Then bring hot tea and thermos,
bring along a hot water heater,
without relying on the other side’s hospitality.
We negotiated with the head wearing a beanie,
and shoes to go skiing.
Every time we breathe,
the cold smoke comes out of our chapped lips…
Who is unprepared won’t stay for more than half a week.
Exploring the North Pole may not be more difficult,
but here you have to grit your teeth in resignation,
knowing that you will have to sit for a few more months
before you can return to meet your wife
and children in the warm atmosphere
before returning to negotiate again.
When negotiating in a hot country,
the situation is opposite.
Wearing a tie,
wearing a vest in a hot room,
without air conditioning,
sometimes without even a fan.
customers are free to wear thin shirts and open sandals.
Our French company does not allow casual dressing
when meeting customers…
After the main preparations,
there are many other side jobs.
If you want to succeed in negotiation,
you have to pay dearly for an adventure
around the conference table.
all the preparations are just the routines of a person
with a professional attitude.
“Pro” (professional) is that!
After preparing in the Pro format,
then you can enter the world of the art of negotiation.
we can’t talk about art.
Members of the delegation speak the local language
and understand the local culture
When negotiating in a foreign country,
especially when their culture is very foreign,
there should be a member of the delegation who is familiar
with the customs and culture of the local customer.
It will be even better
if the member is fluent in the local language as well.
there are usually native intermediaries,
the delegation still has to have its own “internal tools”.
Maybe for many days this particular member is not very useful,
maybe the partners are also aware that there is someone
in front of them who understands the language,
so they try to avoid internal discussions in front of this guy.
But as negotiations drag on,
during tough times,
the presence of a member who understands the language
and culture is very important.
this member is easier to contact
with the locals and of course has the ability
to check the work of his own middleman.
Bring “mines” to destroy the enemy
The “mine” here is not an explosive weapon,
but a document that makes the customer question the ability
of his company’s opponent in the bidding.
When I negotiate about power plants,
I usually have in my briefcase a full list of plants built
Whether there is a factory that has exploded,
a factory that does not deliver the expected performance,
is a broken turbine,
or has documents proving
that the opponent does not master a new technology,
still causes many problems,
even though the technology has been invented for many years.
These materials are like explosives.
Its harmful effects are terrible,
because once the document is made public,
there is no way the company at fault has any hope
of taking the project.
However, using “mines” is not simple at all
because the whole world will know who “planted mines”,
difficult to hide.
Being exposed is a must,
because even though customers don’t buy from a competitor,
they will panic even more
when they talk to a company with a disruptive mindset
that causes insecurity.
As a result,
“mine” throwers are sometimes subjected
to even more severe penalties,
which can lead to long-term isolation.
No one is better at throwing a “mine” than an intermediary.
These people usually only let customers see the file
but never leave a trace,
especially a copy.
Choose your consultant carefully.
In major negotiations,
the tendering company often brings along a number of key consultants.
The banker and the lawyer are two characters
that can’t be left at home,
as every line in the contract
It has its price on the company’s future spending lines.
Every legal error can carry additional risks for the company.
choosing which bank,
choosing which lawyer is a whole thought
These consultants typically do not charge an initial fee.
when the negotiations dragged on,
of course they were forced to take.
Choosing a famous lawyer is not necessarily necessary,
but it will be very expensive.
when it’s just regular meetings,
they accompany them for free.
But when the negotiation comes at a time
when the intrinsic value of the project must be calculated,
it is difficult for them to work for free.
you should consider carefully in the recent past,
on another project,
have these same consultants ever collaborated with the other party?
they were more
or less connected in an intimate relationship.
inviting these consultants into cooperation is very dangerous,
like dragging the insider of the opponent into one’s secret room.
At a minimum,
there will be information lost,
whether accidental or intentional.
Cost chart in negotiation
Any negotiation costs a lot.
In well-managed companies,
costs are tightly controlled
and of course all costs
of a negotiation are also tracked on a chart.
Expenses of all kinds:
salaries of the negotiating team,
If you add up the number is very high.
And of course no company allows the number to reach the sky.
Normally in small projects,
the number can be up to 10% of futures sales.
But when the project is super big,
many businesses will limit spending to a maximum of 2 or 3%.
During the negotiation process,
the head of the delegation also has to control standing expenses.
Foreign companies often never accept
to let a negotiating team spend more than the planned budget.
In special cases they may revise the number.
But in any case they will try to limit spending to stick to the budget.
The negotiating team is not an adventurous team,
there are at least two or three people in the team
who have experience in negotiation,
and then there will be a few more people
who understand the culture
of the host country,
understand how they love each other.
knowing in advance the dangerous attacks
that customers or opponents will reserve for their side,
at what time they will hit.
if the company sends out an inexperienced team,
the chances of failure are high.
In the private pocket of the head of the delegation,
there should always be a strategy
that has been endorsed by the Board of Directors.
Sometimes there is even an alternative strategy
if the planned strategy does not meet the situation.
One of the aspects of strategy is understanding the customer’s weaknesses,
the opponent’s weaknesses.
These facts are sometimes only known
Once they have reached the country of origin.
Another equally important thing is
to control the work of intermediaries.
The negotiating company cannot trust the intermediary 100%,
because even if they are honest and loyal,
they themselves can make mistakes,
or be too slow,
or not sophisticated
and delicate enough.
The case of choosing the wrong middleman is a very miserable case.
Intermediary change is one of the hardest things to do in the trade.
An intermediary is usually a person close to the customer,
sometimes even the brother of the investor!
But for some reason,
while the negotiation is going on,
it becomes clear that the mediator is not doing the job!
So you must have a solution to replace them.
Dismissing them is very difficult,
first because of the need to keep the friendship,
and then the customers will sooner
or later judge the company
by the intermediate handling.
The negotiating team always needs more allies from the other side,
because they will be the backing when needed,
will help with the intermediary assessment!
They will give their perspective every time an issue needs
to be enlightened and full of opinions.
If you read this far,
those of you
who are still interested must have commercial blood in the bone marrow.
In the following pages
I will illustrate the art of negotiation with real life examples,
experiences of failure as well as success in negotiation.
Things to remember
No negotiation is highly effective
without careful preparation.
If you are well prepared,
you can negotiate fluently
Whenever there is a lack of preparation,
it is as if the negotiation will end up stuck in the same place later.
The unprepared side is easily “pierced” and led astray.
The negotiating team must be organized
in order to be effective
and also to avoid mistakes on the spot,
and the loss of very harmful information.
The thoughtful preparation also allows the investor
to feel the professional working
of the participating company.
It will increase investor confidence.
As the negotiation drags on,
the lack of preparation becomes apparent.
Rarely does a customer retain trust
with a company that is too easy to negotiate.