international logistics

Posted on Nov 22, 2020 in History

1.Personal Selling—1 to 1 communication

oMost effective element of promo mix b/c you can adapt message to fit customers’ needs

§Seller can ask questions & probe the consumer in order to adapt

oUsed for high volume products (houses)

oDisadvantages

§Time consuming

§Difficult to do well; skill needed by the seller

2.Advertising—communication using mass media which you have to pay for

oAdvantages

§Reach large # of people at the same time with a standardized message

§Cost per contact is very low (total cost is frequently high)

oMass media types:

§Broadcast: appeals to both sight & sound

§Print

§Other: billboards, transit, internet

oCan be misleading, leaving consumers skeptical

3.Sales Promotion—short term marketing activities used to see a change now

oStimulate customer purchases & improve retailer or middlemen effectiveness and cooperation

oMay enhance advertising & personal selling efforts and can be effective substitute when environmental constraints prevent full advertising

oEx. Coupons, giveaways, 2 for 1 sales, point of purchase displays

oDisadvantage:

§Difficult to use internationally because don’t know how different cultures will react (ex. Don’t know coupon reduction rates)

§Success of promotion may depend on local adaption

4.Public Relations—try to get mass media to talk about your company without paying for it via press release or press video/conference or sponsorship

oRole: creating good relationships with the popular press & other media to help companies communicate messages to their publics

oAdvantages:

§Good credibility: people believe PR over advertising

§Cheap

oDisadvantages:

§Can’t do anything about negative publicity

Sales Promotion Neglected

·Success of promotion depends on local adaption

·Major constraints are imposed by local laws, which may not permit premiums or free gifts to be given

·Some countries’ laws control the amount of discount given at retail

·Others require permits for all sales promotion, and in at least 1 country, no competitor is permitted to spend more on a sales promotion than any other company selling the product

Public Relations Neglected

·It can be seen as negative

·PR works best when coordinated and reinforced with a consistent advertising campaign

International Communication Process (ICP)

·Affects the accuracy of the communication process. When not considered, the different cultural contexts can increase the probability of misunderstandings (message is encoded in one culture and decoded in another)

·7 Steps:

1.Information source—an international marketing executive with a product message to communicate

2.Encoding—the message from the source converted into effective symbolism for transmission to a receiver

osuch factors as color, timing, values, beliefs, humor, tastes, and appropriateness of spokespersons can cause international marketer to symbolize message incorrectly

3.Message channel—the sales force and/or advertising media that convey the encoded message to the intended receiver

4.Decoding—the interpretation by the receiver of the symbolism transmitted from the information source

5.Receiver—consumer action by those who receive the message & are the target for the though transmitted

6.Feedback—information about the effectiveness of the message that flows from the receiver (the intended target) back to the information source for evaluation of the effectiveness of the process

oImportant as it is a check on effectiveness of the other steps

7.Noise—uncontrollable and unpredictable influences such as competitive activities & confusion that detract from the process and affect any or all of the other six steps

oEffectiveness of ICP can be impaired by noise

Legal Constraints on Advertising

·Laws that control comparative advertising vary from country to country in Europe

oIllegal in Germany (sued by competitor if you do)

oDirective covering comparative advertising allows implicit comparisons that do not name competitors, but bans explicit comparisons between named product

·Comparative advertising is heavily regulated in other parts of the world as well (Asia, India)

oBanning explicit comparisons will rule out an effective advertising approach heavily used by US companies at home and in other countries where it is permitted

·A variety of restrictions on advertising of specific products exist around the world

oAdvertising of pharmaceuticals, toys, tobacco, and liquor is restricted in many countries (Canada, France)

oTelevision ads are strictly controlled in many countries

§China beginning to require proof of ad claims

§Kuwait—restricted number of advertising min per day

§Russia—no subliminal advertising, violence of ads in other places

Media Planning and Analysis

·Tactical Considerations

oAvailability—some countries have too few media, others have too many

oCost—media prices are susceptible to negotiation in most countries

oCoverage—majority of the population of LDCs can’t be reached readily through the traditional mass medium of advertising

§Because of lack of adequate coverage by any single medium in eastern Europe countries, companies must resort to a multimedia approach

oLack of Market Data—verification of circulation or coverage figures is a difficult task

§Radio & TV audiences are difficult to measure, but in most countries geographic coverage is known

oNewspapers—suffering from lack of competition in some countries

oMagazines—use of foreign national consumer magazines by international advertisers has been notably low

oRadio & TV—become major communications media in most nations

§Radio has been devalued to a subordinate position in the media race in countries where TV facilities are well-developed

§Television & radio advertising availability vary b/w countries; 3 patterns:

ØCompetitive commercial broadcasting—countries with free competitive commercial radio & TV broadcasting normally encourage competition & have minimal broadcast regulations

ØCommercial monopolies—local or national monopolies are granted by the gvt & individual stations or networks may then accept radio or television commercial according to rules established by gvt

ØNon-commercial broadcasting

§Lack of reliable audience data is another major problem in international mktg via radio & TV

oSatellite and Cable TV

§Advertisers & governments are concerned with impact of satellite TV

ØGovernments are concerned b/c they fear further loss of control over their airwaves & the spread of “American Cultural Imperialism”

§One of the drawbacks of satellites is also their strength, that is their ability to span a wide geographical region covering many different country markets (single message is broadcast throughout a wide area)

§PVI (Princeton Video Imaging) is an innovation that will make regional advertising in diverse cultures easier that it presently is when using cable & satellite TV

oDirect Mail—important when other media is not available

§Industrial advertisers are heavy mail users & rely on catalogs & sales sheets to generate large volumes of international business

oInternet—can reach a large portion of B2B markets

§Although limited in its penetration of households globally, it is being used by a growing number of companies as an advertising medium for consumer goods

oOther Media

§Restrictions on traditional media or their availability cause advertisers to use lesser media to solve local-country problems

ØCinema is an important medium in many countries, billboard for countries with high illiteracy rates; In Spain, private cards are painted with advertisements for products & serve as moving billboard

Global Ad Agencies

·Multinational agency with local branches has the sophistication of a major agency with local representation

·These agencies are better able to provide a coordinated, world-wide advertising campaign

·Many companies with global orientation employ 1 or 2 agencies to represent them worldwide

·Compensation arrangements for advertising agencies throughout the world are based on the US system of 15% commission

·Services provided by advertising agencies vary greatly, but few foreign agencies offer the full services found in US agencies

Chapter 17

Living Abroad: Stages during the Assignment

1.Honeymoon Stage

oUpon receiving international assignment, satisfaction booms—it is something new, similar to a vacation. You earn a high level of respect

2.Reality Stage

oVacation wears off, reality of job & living overseas sets in

o2 main causes of unhappiness:

§Family adjustment: spouse & children bear bulk of burned of adjusting to culture—they have nothing to do

§Culture shock: gradually increasing anxiety & tension felt when living in a place where all cultural rules are different

3.Adjustment Stage

oSome people become so unhappy that they can either quit or adapt to the culture

Primary Problems Associated with Living Abroad; Why Assignments End Early

·Family Adjustment

oIf the family travels with the family member assigned to a job overseas, the adjustment can be hard; They struggle to survive & have not gone through any cultural training

oIf the family stays in the US they sometimes will pressure the assigned family member to come back home

·Culture Shock

oIt is hard to adjust to new & strange cultures

oIt is worse for their families b/c they usually receive cross cultural training; called “out of sight, out of mind”

§The sum total of anxiety that you feel every time you encounter unpredictable minor changes tend to build on top of each other

·Re-acculturation—“reverse culture shock”—occurs after you come home, your perspective of the world has changed, you realize everyone  is essentially the same so you’re put off by unfair stereotypes, you company puts you back where you were, you miss what you had abroad

·Problem with keeping them abroad for their assigned time

·Female members can often not be employed & face social restrictions

·New consumption patterns have to be learned

·Low morale & growing amount of attrition among returning expatriates

oFinancial & lifestyle adjustments—compensation packages—they must readjust when they have to give those up in home country

·Repatriation—moving back to home country

oIt is a problem b/c expatriates have to relearn the rules of how to get along in their home country

oNow that they are back, the home company may not know what to do with you; they often put you back in the same position

§Company doesn’t appreciate how you’ve changed

§New skill set may not fit with current position

§Missed out on social network—don’t know what’s going on with the firm & employees

oThis can be so difficult to some where they decide to quit

Strategies companies use to improve Expatriate Success

·Candidates picked thoughtfully, returned to the home office at the right moment, and rewarded for good performance with subsequent promotions

·Evaluate their family

·Cultural training more popular b/c it eases adjustment

·Hardship allowances- cover special education requirements that include private schools, housing, all-expense paid vacations

·Hire the RIGHT person

oEasily adaptable and flexible, not set in their ways

oCapable of independent work

oLanguage fluency

oIllegal questions/guidelines that cannot enter into the equation

§Young vs. Old

ØYounger people may be more adaptable but get bored quickly & may not stick to things.

ØOld people are set in their ways, but may stick it out

§Single vs. Married

ØMarried: friend on your trip to confide in vs. being single

§Man vs. Woman

ØWomen listen better & pick up more easily on contextual cues; some companies won’t send women as too dangerous of places

·Training—more training, the better (job, culture, political, language)

·Pre-Assignment visit

oAllows employee to visit so they know what to expect and how to prepare for the move

·Allowances—cash bonuses paid to employee for various reason

oCompletion bonus: if you complete the assignment, you get % of you total salary while there

oHardship allowance: given to people for working in undesirable places

oEducation & Housing allowance

·Repatriation Plan: developed before leaving for an assignment

oDevelop a career path

oPlan what is being done on assignment & upon returning home

oAssign pen pals to keep the company updated

Sources of International Sales Staff

·Expatriates

oNumber of companies relying on expatriate personnel is declining as volume of world trade increases and as more companies use local to fill marketing positions

oExpatriate sales person may have advantages of greater technical training, better knowledge of company and its product line, and proven dependability

§Because they are not locals, they can sometimes add to the prestige of the product line in the eyes of foreign customers

§Effectively communicated with and influence headquarters personnel

oMajor disadvantages of expatriate sales force are the high cost, cultural and legal barriers and the limited number of high-caliber personnel willing to live abroad for extended periods

·Virtual Expatriates

oInternet & other advances in communications technologies, along with the growing reluctance of executives to move abroad, are creating a new breed of expatriate, virtual

oVirtual expatriates manage operations in other countries, but don’t move there

§They stay in hotels, make long visits, and maintain their family at home

§Some people spend up to 75% of their working time traveling

oClose contact with subordinates & customers is tougher for virtual expatriates

oFrom the firm’s perspective, virtual assignments may be the only option and often a good way to avoid the extra expenses of an actual executive move

·Local Nationals

oThe historical preference for expatriate managers & sales people from the home country is giving way to a preference for local nationals. At the sales level, the picture is clearly biased in favor of the locals because they transcend both cultural & legal barriers

oLocal salespeople are better able to lead a company through the maze of unfamiliar systems & referral networks

oPools of qualified foreign personnel available in some places cost less to maintain than a staff of expatriates

oDisadvantage:

§Tendency of headquarters personnel to ignore their advice

§Lack of availability

·Third-Country Nationals (TCNS)—expatriates of their own countries working for a foreign company in a 3^rd country

oGroup whose nationality has little to do with where they work or for whom

oAmerican companies often seek TCNs for other English-speaking countries to avoid the double taxation costs of their American managers

oTCNs often sought b/c they speak several languages & known an industry or foreign country well

Chapter 18

Demand-Based Pricing vs. Cost-Based Pricing

·Demand-Based Pricing—how much are people willing/able to pay

oAdvantage: maximizes sales

oDisadvantage: no relationship to cost—may not cover costs or product profit

·Cost-Based Pricing—sum of costs (fixed, variable) and then add on profit margin amount

oAdvantage: never lose money

oDisadvantage: price may be too high & consumers won’t buy

oFull-Cost Pricing: total cost of any one product equals the fixed costs plus variable costs associated with that products

§TC= (FC/# products) + VC

·Should use a combination of demand & cost to determine price of product

Variable Cost Pricing

·Firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets

oSuch firms regard foreign sales as bonus sales & assume that any return over their variable cost makes a contribution to net profit

·These firms may be able to price most competitively in foreign markets, but b/c they are selling products abroad at lower net prices than domestically, they may be subject to charges of dumping

oIn that case, they open themselves to Anti-Dumping tariffs or penalties that take away from competitive advantage

·Variable cost (or marginal cost) pricing is a practical approach to pricing when a company has high fixed cost & unused production capacity

·Any contribution to FC after VC are covered is profit to the company

·Total Costs=Variable Costs

oCan be used when you have recovered other costs from somewhere else

oAllows companies to charge different prices depending on the market

·Ex. Baby Formula—US $5 vs. UK $2

Parallel Imports

·Develop when importers buy products from distributors in one country & sell them in another to distributors who are not part of the manufacturer’s regular distribution system

oProfitable when wide margins exist b/w prices for the same products in different countries

·Restrictions brought about by import quotes & high tariffs can lead to parallel imports & make illegal imports more attractive

·The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation b/w two markets (It is not unusual for companies to find themselves competing in one country w/ their own products imported from another country at lower prices)

·Exclusive distribution can create a favorable condition for parallel importing (perfume)

·Parallel imports can do long-term damage in the market for trademarked products

oCustomers who unknowingly buy unauthorized imports have no assurance of the quality of the item they buy, of warranty support, or of authorized service or replacement parts

Price Escalation

·When you product a product in 1 country & sell it in another, you incur may costs:

·Costs of Exporting

oAdded costs incurred as a result of exporting from 1 country to another

§Situations in which ultimate prices are raised by shipping costs, insurance, packaging , tariffs, longer channels of distribution, larger middlemen margins, special taxes, administrative costs & exchange rate fluctuations

oMajority of these costs arise as direct result of moving goods across borders from one country to another & often combine to escalate the final price to a level considerably higher than in domestic market

·Taxes, Tariffs, and Administrative Costs

oTariffs are one of the most pervasive features of international trade

oTaxes & tariffs affect the ultimate consumer prices for a product; in most instances, the consumer bears the burden of both

oA tariff, or duty, is a special form of taxation

§May be imposed for the purpose of protecting the market or for increasing government revenue

oA specific duty is a flat charge for a physical unit imported, such as 15 cents per bushel

oAd valorem duties are imposed as a percentage of the value of the goods imported

oIn addition to taxes & tariffs, a variety of administrative costs are directly associated w/ directly exporting or importing a product

·Administrative pricing end goal is to reduce the impact of price competition or eliminate

·Inflation

oCountries with rapid inflation or exchange variation, the selling price must be related to the cost of goods sold & the cost of replacing the items

oWhen payment is likely to be delayed for several months or is working out on a long-term contract, inflationary factors must be figured into the price

oBecause inflation & price controls imposed by a country are beyond the control of companies, they use a variety of techniques to inflate the selling price to compensate for inflation pressure & price controls

§They may charge for extra services, inflate costs in transfer pricing, or break up products

·Deflation

oJapanese economy has been in a deflationary spiral for a number of years

oDeflationary market, it is essential for a company to keep prices low & raise brand value to win trust of customers

·Exchange Rate Fluctuations

oIncreasingly, companies are insisting that transactions be written in terms of the vendor company’s national currency, and forward hedging is becoming more common

oThe added cost incurred by exchange rate fluctuations on a day-to-day basis must be taken into account, especially where there is a significant time lapse b/w signing the order & delivery of goods

·Varying Currency Values

oWhen the value of the dollar is weak relative to the buyer’s currency (ex. It takes fewer units of the foreign currency to buy a dollar), companies generally employ cost-plus pricing

§To remain price competitive when the dollar is strong (ex. When it takes more unit of the foreign current to buy a dollar), companies must find ways to offset the higher price caused by currency values

oCurrency exchange rate swings are considered by many global companies to be a major pricing problem

·Middlemen & Transportation Costs

oChannel length & marketing patterns vary widely, but in most countries channels are longer and middlemen margins higher than is customary in the US

§Diversity of channels used to reach markets & lack of standardized middlemen markups leave many producers unaware of the ultimate price of a product

§Marketing distribution channel & infrastructure are underdeveloped in many countries

oBecause no convenient source of data on middlemen costs is available, the international must reply on experience & marketing research to ascertain middlemen costs

Approaches to Minimize Price Escalation

·Lowering Cost of Goods: attempt to reduce manufacturing costs & price escalation

oEliminating costly functional features lowering overall product quality

oThe lower price to the buyer may also mean lower tariffs

·Lowering Tariffs: some products can be reclassified into different & lower customer classification (lower tariff category)

oLower tariff rate when imported unassembled, repackaging helps also

·Lowering Distribution Costs: shorter channels can help keep prices under control (fewer middlemen reduces middlemen markup)

·Using Foreign Trade Zones to Lessen Price Escalation: utilizing these can control price escalation resulting from the layers of taxes, duties, surcharges, freight charges, etc.; Permit any of these added charges to be avoided, reduced or deferred so that the final price is more competitive Exemption of duties on labor & overhead costs.

oTariffs may be lower b/c duties are typically assessed at a lower rate for unassembled vs. assembled goods

oLabor costs are lower=savings in final product cost

oOcean transportation rates are affected by weight & volume—unassembled goods may qualify for lower freight rates

·Dumping: selling a product at a lossàselling for a price lower than it costs

oWTO rules allow for the imposition of a dumping duty when goods are sold at a price lower than the normal export price or less than the cost in the country of origin increased by a reasonable amount for the cost of sales & profits, when this is likely to be prejudicial to the economic activity of the importing country

oNot an economic issue as much as political

§Puts other companies out of business that cannot afford to lower prices

§Thought of as predatory pricing—increase market share by offering lower price, which in turn puts other companies out of business

Skimming vs. Penetration Pricing

·Skimming Pricing: used when the objective is to reach a segment of the market that is relatively price insensitive & thus willing to pay a premium price for the value received

oIf limited supply exists, a company may follow a skimming approach in order to maximize revenue & to match demand to supply

oWhen a company is the only seller of a new/innovative product, skimming may be used to maximize profits until competition forces a lower prices

oObjective: getting most money from the wealthiest people in the shortest amount of time

oONLY works in monopolistic & non-competitive environment

oSell as much as possible at given price

·Penetration Pricing: used to stimulate market & sales growth by deliberately offering products at low prices

oMost often used to acquire & hold market share as a competitive maneuver

§However, in country markets experiencing rapid & sustained economic growth, and where large shares of the population are moving into middle-income classes, penetration pricing may be used to stimulate market growth even w/ minimum competition

oMay be a more profitable strategy than skimming if it maximizes revenue as a base for fighting the competition that is to come

oThe price has to be set at a point at which the consumer will perceive value received, and the price must be within reach of the target market

oObjective: drive competitors out of the marketàconsidered a predatory pricing strategy

§Company sets their price below market price & over time, they gradually lower price (economies of scale)

§When you set price lower than competitors, you gain market share

Countertrade

·Pricing tool that every international marketer must be ready to employ, and the willingness to accept a countertrade will often give the company a competitive advantage

·Types

oBarter: direct exchange of goods b/w 2 parties in a transaction

§May be used to reduce a country’s foreign debt

§The seller must be able to dispose of the goods at a nice price equal to the expected selling price in a regular, for cash transaction

§No money changed hands, no 3^rd party involved

§Most popular form of countertrade & classic barter transaction

§Ex. Locomotive for palm oil

oCompensation Deals: involve payment in goods & in cash

§Advantage over barter is the immediate cash settlement of a portion of the bill’ the remainder of the cash is generated after successful sale of the goods received

§If company has a use for goods received, the process is relatively simple & uncomplicated

oCounter-purchase (offset trade): seller agrees to sell product at a set price to a buyer & receive payments in cash

§Transactions involving a high amount of money or highly valued goods (ones that may cause inflation to increase in buying country)àgoods going in one direction have to be offset by goods going in the other direction)

§Most frequently used type of countertrade

§2 contracts are negotiated:

ØFirst contract is contingent on second contract that is an agreement by the original seller to buy goods from the buyer for the total monetary amount involved in the first contract or for a set of percentage of that amount

ØThis arrangement provides the seller with more flexibility than the compensation deal b/c there is generally a time period (6-12 months or longer) for completion of the second contract

ØDuring the time that markets are sought for the goods in the second contract, the seller has received full payment for the original sale

ØFurther, the goods to be purchased in the second contract are generally of greater variety than those offered in a compensation deal

ØOffset trades are becoming more prevalent among economically weak countries

·Reasons for Countertrade:

oMany countries constantly face a shortage of hard currency with which to trade & thus resort to countertrades when possible

oGovernment may control money supply, especially if located in a poor country and FI’s can’t loan them what they need & they don’t have any credit

oTo preserve hard currency—Countries with nonconvertible currencies look to countertrade as a way of guaranteeing that hard currency expenditures (for foreign imports) are offset by hard currency (generated by the foreign party’s obligation to purchase domestic goods)

oTo improve balance of trade—Nations whose exports have not kept pace with imports increasingly rely on countertrade as a means to balance bilateral trade ledgers

oTo gain access to new markets—As a nonmarket or developing country increases its production of exportable goods, it often lacks a sophisticated marketing channel to sell the goods to the West for hard currency. By imposing countertrade demands, foreign trade organizations utilize the marketing organizations & expertise of Western companies to market their goods for them

oTo upgrade manufacturing capabilities—By entering compensation arrangements under which foreign firms provide plant & equipment and buy-back resultant products, the trade organizations of LDS can enlist. Western technical cooperation in upgrading industrial facilities.

oTo maintain prices of export goods—Countertrade can be used as means to dispose of goods at prices that the market would not bear under cash-for-goods terms

oTo force reinvestment of proceeds from weapon deals—Many Arab countries require that a portion of proceeds from weapon purchases to be reinvested in facilities designed by the buyer

·Problems of Countertrading:

oCrucial problem confronting a seller in a countertrade negotiation is determining the value of & potential demand for the goods offered

oFrequently there is inadequate time to conduct a market analysis

oSome preliminary research should be done in anticipation of being confronted with countertrade proposal

oReasons tax collectors dislike countertrade:

§Easy to hide transactions altogetheràno cash exchange

§Easy to misrepresent the value of a transaction, no cash involved.

Getting Paid

·Open Account

oThis is the typical payment procedure for established customers in the US domestic trade

oThe goods are delivered & the customer is billed on an end-of-month basis

oSales on open accounts are not generally made in foreign trade except to customers of long standing with excellent credit reputations or to a subsidiary or branch of the exporter

·Letters of Credit

oOpened in favor of the seller by the byer handle most American exports

oLetters of credit shift the buyer’s credit risk to the bank issuing the letter of credit

oExcept for cash in advance, letters of credit afford the greatest degree of protection for the seller

·Cash in Advance

oThe portion of international business handled on a cash-in-advance basis is not large

oCash places unpopular burdens on the customer & typically is used when credit is doubtful, when exchange restrictions within the country of destination are such that the return of funds from abroad may be delayed for an unreasonable period, or when the American exporter for any reason is unwilling to sell on credit terms.

Chapter 19

Impact of Culture on Negotiation (pg. 560-569)

·Cultural differences cause 4 kinds of problems in international business negotiations, at the levels of:

oLanguage: getting translations straight enhances efficiency of the interactions, and concessions often follower internal disagreements

oNonverbal Behaviors: when these are different b/w foreign partners, negotiators are most likely to misinterpret them without even being conscious of the mistake

oValues: harder to cure

§Objectivity

§Competitiveness

§Equality

§Punctuality

oThinking & Decisions Making Process: harder to cure (Westerners divide the large task up into series of smaller tasks—one issue at a time)

·The problems lower on the list are more serious b/c they are more subtle

Pre-Negotiation Planning (pg. 572)

·Given time constraints of international negotiations, preparations must be accomplished efficiently

·Recommendations to ensure proper preparation in planning for international negotiations:

oAssessment of the situation & the people

oList of key facts to confirm during the negotiation

oAnticipate that managers from other cultures may put less emphasis on a detailed agenda, but having one to propose still makes sense & helps to organize the meetings

oBest alternative to a negotiated agreement (BATNA)

oMost important idea in Getting to Yes is the notion of the BATNA

§This is how power negotiations is best measured

oPlan out and write down concession strategies

oSpecific team assignments should be made clear

·7 aspects of the negotiation setting should be manipulated ahead of time if possible:

oLocation: neutral location is preferred; speaks loudly about power relations

oPhysical arrangements (of rooms)

oNumber of parties

oNumber of participants

oAudiences (news media, competitors, fellow vendors, etc.) have crucial influence on negotiation

oCommunication channels

oTime limits: differences in time orientation should be planned for

Stages of Negotiation Process

·Nontask sounding: includes all those activities that might be described as establishing a report or getting to know one another, but does not include information related to the “business” of the meeting

oPreliminary talk—helps negotiators learn how the other side feels that particular day

oJudgments are made about the “kind” of person with whom one is dealing

oDefinite purpose—such time is often used to size up one’s client

·Task-related exchange of info: regards the parties’ needs & preferences. Let foreign counterparts decide when to bring up business

oImplies a two-way communication process

oExcellent negotiation tactic to “drain” information from one’s negotiation counterparts

oUsing multiple communication channels during presentation minimizes errors

oFeedback often difficult to obtain in many cultures (reluctant to voice objections)

oFirst offers of price are different across cultures

·Persuasion: involves the parties’ attempts to modify one another’s needs & preferences through the use of carious persuasive tactics

oHandling objections—providing clients with more info

oMost powerful persuasive tactic is actually asking more questions

·Concessions & agreement: involves the consummation of an agreement, which is often the summation of a series of concessions or smaller agreements

oAmericans often make concessions early, expecting foreign counterparts to reciprocate

oOther cultures—no concessions until end of negotiations

oUnderstand differences in decision making styles