Guide To International Negotiation Planning

PurchTips - Edition # 42 February 10, 2004

By Charles Dominick, C.P.M., SPSM

Tips From The Purchasing Expert Panel

This article is our second in a series featuring a "Purchasing Expert Panel" - experienced individuals who share their insights to help you became a better purchaser. Next Level Purchasing posed this question to the panel: "What should a supply manager do differently when preparing for international negotiations compared to preparing for domestic negotiations?" Here are the panel's responses...

“As with any negotiation, PREPARATION is the key. However, for international negotiations that preparation must include understanding the culture of the company/person with whom you will be negotiating. Essential elements to understand are the cultural norms, which generally dictate the negotiating style. I have personally observed the success or failure of negotiations in foreign procurements result more from understanding or lack of understanding of the culture than from any other reason.”

Ernest G Gabbard, C.P.M., CPCM
Director, Corporate Strategic Sourcing
Allegheny Technologies, Inc.
Pittsburgh, PA

“All negotiations require clear objectives, a well thought out strategy, and a plan for implementing the objectives and strategy. When preparing for international negotiations the supply manager should give careful thought to the culture of the other party, the implications of cultural differences for his/her negotiation strategy and plan, and the implications of international currency exchange rates. The supply manager should also recognize that cross-cultural negotiations may take much longer due to differences in language, culture, and business practices.”

Dr. Michael A. McGinnis, C.P.M.
Associate Professor of Business
Penn State University New Kensington Campus
Upper Burrell, Pennsylvania

“There is one truism in negotiations and that is that the side that plans and prepares the best, wins. If the supply manger does a good job preparing for negotiations domestically then besides learning local customs and culture there is not too much of a difference in preparation for international negotiations. Unfortunately too many supply managers do very little preparation for negotiations and as a result give much more than they get. Just as in domestic negotiations, for international negotiations it is important to:

Take time to learn the local customs and culture
Know foreign expectations
Have a well developed Negotiation Plan
Take time to socialize before working
Make sure opening demands are not too modest
Provide enough time so as to not have to settle too quickly
Avoid the attitude of “America’s way is best way”
Not be afraid of silence
Not disclose too much too soon
Negotiate face to face
Use win-win tactics

Negotiating internationally is one of the most interesting, challenging, and richest experiences of the supply manager and with proper preparation it can be one of the most rewarding as well.”

Robi Bendorf, C.P.M.
President
Bendorf & Associates
Pittsburgh, PA

Thanks Panel!

Next Level Purchasing wishes to thank Ernest, Michael, and Robi for their insights. If you are interested in being on Next Level Purchasing's next "Purchasing Expert Panel," send your name and title to info@nextlevelpurchasing.com.

Spotlight On Professional Development Opportunities

Are the 7 little-known negotiating mistakes letting your suppliers laugh all the way to the bank? Look, even if you've successfully negotiated price reductions, you may not be getting the best deals possible. Knowing a few techniques is not enough. You especially need to know what NOT to do in a negotiation. In just 15 minutes, Next Level Purchasing's online tutorial "Negotiation No-No's" will teach you how to avoid the common negotiation mistakes that can cost your organization dearly. A "virtual negotiation" exercise allows you to assess your negotiation prowess.

Read more about this tutorial and other online classes at:

www.NextLevelPurchasing.com

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