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Step 12: Negotiating and quoting in exports

You are here:Step 12: Negotiating and quoting in exports > The art of negotiating in export markets


 

 

The art of negotiating in exports

 

Negotiating strategies

Negotiation can be defined as "any sequence of written and or verbal communication processes whereby parties to both common and conflicting commercial interests and of differing cultural backgrounds consider the form of any joint action they might take in pursuit of their individual objectives and which will define or redefine the terms of their independence"1

  • The skilled negotiator is more focused on outcomes or options for action
  • The skilled negotiator pays far greater attention to common ground.
  • The skilled negotiator takes a longer-term view
  • Skilled negotiators are more likely to set their objectives in terms of a range (e.g. I hope to get a price of R15/kg, but will settle for R12/kg), while average negotiators tend to focus on a single-point objective (e.g. I want R15/kg and nothing less)
  • Skilled negotiators show marked differences in their face-to-face behaviour and avoid irritating words and phrases like "generous offer" used by a negotiator to describe his/her own proposal
  • When the opposition (a competitor) puts forward a proposal, skilled negotiators generally avoid immediately making a counter-proposal
  • Average negotiators will often consider numerous reasons for doing something as more persuasive than having only one reason. Skilled negotiators, on the other hand, use fewer reasons to back up their arguments
  • Skilled negotiators also do considerably more checking out, testing their understanding and summarizing thoroughly during the negotiation process and reviewing it afterwards

Adapted from: International Management, May, 1987

 

It's all about being prepared

The first step in any negotiation activities you may undertake is to understand your target audience better and that means doing a bit of research. You might want to begin with reading up about a particular country using a website such as CountryHelp and search for more specific information on Google. Give the local Embassy or Consulate of the country you're planning to visit a call and find out if they have a business library - some do. Take the time to visit the libary and browse through some of the magazines and newspapers to get a feel for what is happening in the country and what the important issues are. If the Embassy or Consulate have a trade section, try and make an appointment with the trade representative (sometimes they are very willing to help, while other times they are very unhelpful as they are more focused on promoting exports from their country to South Africa - take a chance anyhow). If you manage to get an appointment, ask for some guideance in doing business in their country and what courtesies and social practices you should follow. Their feedback and advice could be very helpful.

The keys to successful negotiation

Kim Beardsmore, in his article "Business negotiation: Keys to negotiating well" suggests that there are 8 keys to successful negotiation. These are:

  1. Know the outcome you want - you need to know what you want if you want to implement a strategy to get there
  2. Know your 'position' - have all your facts at your finger tips
  3. Know your counterpart's 'position' - put yourself in your customer's shoes
  4. Work out different scenarios ahead of time - don't be surprised by the customer's approach
  5. Know yourself - know your strengths and weaknesses
  6. Back up your position with logic - don't negotiate from an emotional position
  7. Work out what you can concede - negotiation is about give and take
  8. Have an exit strategy - know when you'll get out

Click here to read the full article.

When negotiating in foreign cultures, you need to be sensitive about the following issues:

  • The role of silence in a conversation - some countries consider silence important for reflection on the what has just transpired, while in other countries it is considered a singn of weakness
  • The importance of punctuality in some societies - some countries place great emphasis on punctuality, while in other countries the approach is much more lax
  • The personal space between two persons facing each other - some countries the space is very close and backing away woould be considered rude
  • Whether institutions or individuals are generally trusted more in negotiations
  • The impact of eye contact - in some countries direct eye contact is important, while in others direct eye contact is seen as rude, insolent and/or threatening
  • Cleanliness and neatness - while casual dress and an unkept appearance may be acceptable in some countries, others would frown upon such appearances
  • Orderliness - while some countries may be tolerant of the disorganised businessperson, others would see it as poor form
  • Competition - some cultures favour the competitive situation, while others prefer to reach concensus
  • Gestures - gestures can mean completely different things in different countries, so try not to gesture too much
  • Humour - while humour can help ease a tense situation, different cultures react very differently to humour; also, what is funny in one country may be offensive in another

When you enter a foreign country and it is important for you to succeed in your negotiations, you cannot expect to blunder in and enforce you culture and norms on your potential customer. Instead, you need to become very sensitive to what makes your negotiating partner comfortable as well as uncomfortable and to focus on the former and to steer clear of the latter. Indeed, you need to become self-conscious, even introspective, in order to ensure that you are not doing or saying things that may upset the delicate balance of negotiation. Try to let your customer take the lead and follow their example.

Additional links

References:

McCall, J B. and Warrington, M B., 1989. Marketing by Agreement. A Cross-Cultural Approach to Business Negotiations. John Wiley and Sons, Chichester.

 

 
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Step12: Negotiating and quoting in exports
      .Quoting for exports
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More information on Step 12
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
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