Negotiating global partnerships

Management Challenge Carlos Slim Helu is chairman of Mexico's Grupo Carso and reportedly one of the wealthiest people in the world. His advice on success in global business is straightforward, “Don't try to be and do everything yourself; rather, create alliances and partnerships with others.” If building global partnerships is so important to competitiveness in turbulent environments, how do managers and their companies negotiate such alliances? What special skills are required? Can these skills be developed or are some people just naturally born negotiators? It has been said that negotiation is an art, not a science. If so, the question before us is how to develop this art. Understanding basic negotiation processes is a good beginning. Developing specific bargaining strategies and tactics is another. And once agreements have been signed, knowing how to implement them is also important. Throughout, an understanding – and willingness – to build mutually beneficial long-term relationships is perhaps most important of all. CHAPTER OUTLINE • Negotiations and global partnerships page 196 • Preparing for cross-cultural negotiations 201 • Negotiating strategies and processes 207 • Managing conflicts and compromise 211 • Managing agreements and contracts 214 • MANAGER's NOTEBOOK: Negotiating global partnerships 218 • Key terms 221 • Discussion questions 221 • Case: Perils of being a junior manager 222 APPLICATIONS 7.1 Airbnb, Cuba page 198 7.2 Apple iPhone 200 7.3 GM–SAIC partnership 204 7.4 Bargaining at Teotihuacan 206 7.5 Changed circumstances at Cosco 217 Negotiating agreements and building global partnerships can be a perilous enterprise. The stakes are often very high, both for the firms and for the negotiators. Indeed, problems often begin as soon as negotiations are opened, with each side trying to gain an advantage at the other's expense (e.g., lower prices, royalty distributions, proprietary technology, market access, and so forth). If and when a contract is signed, the problems only multiply. How do we manage the partnership? Who is in charge? How do we build trust between the partners? How do we harmonize our long-term interests? Indeed, what is the meaning of the contract on which the partnership itself is based? Throughout the process, moreover, the personalities and private agendas of the principal negotiators and their teams and organizations have different goals, demands, and constraints, which can also play a significant role in determining success or failure.