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…”.

That’s all,

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 …”,

that’s all,

it’s simple.

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,

airports,

ports,

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,

how much,

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,

pricing,

deadlines,

project payment…

So a negotiation can group up to a dozen companies

with dozens of nationalities,

enough talk.

All languages,

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,

of course,

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

(however.

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,

financial consulting,

banking,

and lawyers.

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,

for example,

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,

60 experts,

engineers,

lawyers,

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.

Therefore,

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.

Therefore,

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.

Fortunately,

working forever

and getting used to the job,

and teammates also understand each other through eyes,

through gestures.

However,

even though there was a part of the work

that had been rehearsed many times in previous negotiations,

the preparation was still very heavy

and laborious,

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,

culture,

level;

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,

their preferences,

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.

Anyway,

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.

For example,

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.

Anyway,

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!

Sometimes,

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.

The partner

or the enemy has pre-set a spy system

to listen to the telephone,

read faxes…

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,

machinery,

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.

For example,

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”…

Don’t laugh

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.

Personally,

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”.

In 1986,

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.

Of course,

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,

of course,

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.

Usually,

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.

And so,

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

and laborious.

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.

Particularly,

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.

Particularly,

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?

In fact,

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,

strike quickly,

while the opponent needs time to explain to the boss.

If unfortunately their “boss” shirks responsibility again,

my advantage is obvious.

Health preparation

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,

rather,

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!

In China,

for example,

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.

Stinging feet,

having to hit the floor all the time to keep moving;

fingers are so numb that it is difficult to hold a pen;

red face;

dry neck;

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,

cape,

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.

Meanwhile,

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.

After all,

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.

Without Pro,

we can’t talk about art.

That’s it!

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.

Even though

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.

In addition,

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

by competitors.

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.

However,

choosing which bank,

choosing which lawyer is a whole thought

These consultants typically do not charge an initial fee.

However,

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.

Banks too,

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,

for example,

it is difficult for them to work for free.

In addition,

you should consider carefully in the recent past,

on another project,

have these same consultants ever collaborated with the other party?

If so,

they were more

or less connected in an intimate relationship.

Therefore,

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,

hotel fees,

travel tickets,

meals,

consulting fees,

media fees,

printing fees.

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.

Negotiation strategy.

The negotiating team is not an adventurous team,

because normally,

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.

discussion,

knowing in advance the dangerous attacks

that customers or opponents will reserve for their side,

at what time they will hit.

Of course,

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

and coherently.

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.