Section 13 - Negotiation Tactics & Competitive Strategies

Question 1

Negotiation Barriers

Answer 1

Four general sources of cultural conflicts:

• Language: ineffective translators (or none).
• Nonverbal behaviour: conflicting signals.
• Values: ethic standards, short-term vs long-term goals.
• Thinking and decision making processes: linear or parallel evaluation.

Question 2

Linguistic Aspects and Nonverbal Behaviours (videotaped negotiations).

Answer 2

It went over the bargaining behaviours of different cultures during negotiations and the frequency of behaviours that occur across cultures and countries.

Question 3

Negotiating Styles: Japan

Answer 3

Their style of interaction is among the least aggressive (or most polite).
Facial gazing, touching or the use of “no” are the least among all sampled groups.
Threats, commands, and warnings are avoided; positive promises and recommendations (for agreement) and silence (for disagreement) are the more common responses.
Frequent use of silent periods.

Question 4

Negotiating Styles: South Korea

Answer 4

Negotiators used considerably more threats and commands than did the Japanese.

Silent periods are not used; “no” is often used; interrupting is acceptable.

Question 5

Negotiating Styles: China

Answer 5

There is an emphasis on asking questions, but little information is offered.
Most statements made by Chinese negotiators were classified as information-exchange tactics (but without the follow-through).
Other behavioural aspects of their behaviour were quite similar to the Japanese, particularly the use of silent periods.

Question 6

Negotiating Styles: Taiwan

Answer 6

The behaviour of the businesspeople in Taiwan is similar to that in South Korea.
The Chinese in Taiwan were exceptional with the time duration of facial gazing; almost 20 or 30 minutes.
They ask fewer questions but provide more information (self-disclosures) than did any of the Asian groups.

Question 7

Negotiating Styles: Russia

Answer 7

The Russians’ style was quite similar in many respects to that of the Japanese.
Only the Russians used more silent periods than did the Japanese.
They used “no” and “you” infrequently and used the most silent periods of any group.
Only the Japanese did less facial gazing, and only the Chinese asked a greater percentage of questions.
But during intense negotiations, they became vocal and aggressive (similar to Spanish negotiators).

Question 8

Negotiating Styles: Germany

Answer 8

The behaviours of the Germans fell toward the centre of almost all the categories.
Germans demonstrated a high percentage of self-disclosures (47%) and a low percentage of questions (11%).

Question 9

Negotiating Styles: US, UK

Answer 9

Like the Germans, the U.S. and British managers fell in the middle of most categories.
They interrupted less frequently than all the others, but that was their only unique distinction.

Question 10

Negotiating Styles: Spain

Answer 10

The Spanish used the highest percentage of commands (17%) of any of the groups.
They gave comparatively little information (self-disclosures, only 34%).
They interrupted more frequently than any other group and used the terms “no” and “you” very frequently.

Question 11

Negotiating Styles: France

Answer 11

French negotiators were the most aggressive of all the groups.
They used the highest percentage of threats and warnings.
They also used interruptions, facial gazing, and “no” and “you” very frequently as compared with the other groups.

Question 12

Negotiating Styles: Brazil

Answer 12

Brazilian businesspeople, like the French and Spanish, were quite aggressive.
They used the second-highest percentage of commands of all the groups. On average, the Brazilians said the word “no” 42 times, “you” 90 times, and touched one another on the arm about 5 times during 30 minutes of negotiation.
Facial gazing was also high.

Question 13

Negotiating Styles: Mexico

Answer 13

Both verbal and nonverbal behaviours were quite different than those of their Latin American (Brazilian) or continental (Spanish) cousins.
In many respects, the Mexican behaviour was very similar to that of the negotiators from the United States.

Question 14

Negotiating Styles: French-Speaking Canadians

Answer 14

French-speaking Canadians behaved quite similarly to negotiators from France; they used a high percentage of threats and warnings, and were comfortable with interrupting and maintaining extended (aggressive by some cultural standards) eye contact. This style does not work well with English-speaking Canadians.

Question 15

Negotiating Styles: English-Speaking Canadians

Answer 15

If English is their first language, they used the lowest percentage of aggressive tactics (threats and warnings) of all groups.
However, they used noticeable more interruptions and “no’s” than negotiators from either of their major trading partners: the United States and Japan.

Question 16

Differences in Decision-Making Processes

Answer 16

When faced with a complex negotiation task, most Westerners divide the large task into a series of smaller tasks (linear, monochronic).

Asians prefer all issues to be discussed at once (parallel, polychronic).

Question 17

Negotiation Process Overview

Answer 17

1. Selection of the appropriate negotiation team
2. Management of preliminaries such as training, preparations, and manipulations of negotiation settings.
3. Management of the negotiation process (the planned negotiation agenda).
4. Appropriate follow-up procedures and practices.

Question 18

Aspects of the Negotiation Setting to be Manipulated Ahead of Time

Answer 18

1. Location: The Russians who wanted to spend their winter in southern France and so took a couple months to negotiate with the Americans who wanted to get the deal done.
2. Physical arrangements: shape of the table and lucky numbers based on the culture and their preferences.
3. Skill sets of participants
4. Number of participants
5. Audiences (news media, stakeholders, junior managers, etc.)
6. Preferred communication format
7. Time limit

Question 19

Theory #1: Porter’s Five Forces on Competition:

Porter’s Force 1: Threat of New Entrants: Barriers to Entry

Answer 19

• Economies of Scale
• Production Differentiation
• Capital Requirements
• Switching Costs
• Distribution Channels
• Government Policy
• Competitor response

Question 20

Porter’s Force 2: Threat of Substitute Products

Answer 20

Availability of substitute products places limits on the prices market leaders can change. 
High prices (or quality/reliability issues) may induce buyers to switch to a substitute.

Question 21

Porter’s Force 3: Bargaining Power of Buyers

Answer 21

The most influential buyers are manufacturers and retailers, not consumers.
Buyers seek to pay the lowest possible price. They have leverage over suppliers when:
-They purchase in quantities large enough to ensure that an order cancellation can threaten the seller’s future.
-They are allowed ‘backward integration’; they gain partial control of the manufacturing process in terms of specific features and quality.

Question 22

Porter’s Force 4: Bargaining Power of Suppliers

Answer 22

When suppliers have leverage, they can raise prices high enough that they will control the profit margins of the sellers. This occurs when:

• Suppliers are large and few in number.
• Supplier’s products are critical inputs, are highly differentiated, or carry substantial switching costs.
• Few substitutes exist.
• Suppliers are capable of selling the product themselves.

Question 23

Porter’s Force 5: Rivalry Among Competitors

Answer 23

This feature refers to all actions taken by firms to improve their positions and gain advantage over each other. It is usually a function of:

• Price competition
• Advertising battles
• Product positioning
• Differentiation

Question 24

Theory #2: The Competitive Advantage

Answer 24

A competitive advantage will exist when there is a match between a firm’s distinctive competences and the factors critical for success within its industry.
There are two marketing/prices concepts that will achieve competitive advantage:
-A low-cost strategy that enables it to offer products at lower prices than competitors.
-Differentiating products so that customers perceive unique benefits, often accompanied by a premium price.

Question 25

Generic Strategies for Creating Competitive Advantage

Answer 25

Broad Market Strategies: Cost Leadership - Low Price
Product Differentiation - Premium Price

Narrow Market Strategies: Cost Focus - Low Price
Focused Differentiation - Premium Price

Question 26

Theory #3: The Flagship Perspective: A Business Network

Answer 26

The flagship firm is at the centre of a collection of four other partners that forms a business system. These partners include:

• Key suppliers: they supply or manufacture critical components.
• Key customers: the success or failure of these customers can determine the future of the flagship firm.
• Key competitors: these companies are usually watched closely (or in some cases, partnered with for joint ventures or strategic alliances).
• Nonbusiness infrastructure: research sources (such as universities), governments, trade unions, and other entities that can supply intellectual property and technology.

Question 27

Theory #4: Creating Competitive Advantage via Strategic Intent: Deming

Answer 27

Deming: Whatever you’re doing or selling; never be totally happy with it. Always look for ways to improve yourself!

Question 28

Theory #4: Creating Competitive Advantage via Strategic Intent: Building Layers of Advantage

Answer 28

Evolutionary process. Successful companies build portfolios by establishing layers of advantage on top of one another. Just ditching your product that you’ve successfully made for years to make something totally different is always a mistake.

Strategic decisions related to this include:

• Enhancing current products.
• Enhancing current markets.
• Related diversification (incremental steps).
• Vertical integration.

Question 29

Theory #4: Creating Competitive Advantage via Strategic Intent: Searching for Loose Bricks

Answer 29

Search for opportunities in the defensive walls of competitors; this is a SWOT application. It may involve:

• Focus on a specific market segment.
• Focus on a geographic area to the exclusion of others.

Question 30

Theory #4: Creating Competitive Advantage via Strategic Intent: Changing the Rules of Engagement

Answer 30

Refuse to play by the rules set by industry leaders.
Example: some marketers argue that Apple brings products to market based on being able to announce new concepts; not based on actual market research.
Worth noting: Not all Apple products have been successful.
This strategy fails as often as it succeeds.

Question 31

Theory #4: Creating Competitive Advantage via Strategic Intent: Collaborating

Answer 31

Use the know-how developed by other companies.
Tools include licensing agreements, joint ventures, or partnerships.
If partnering with someone to start a business, partner with people who have different skills than you!

Question 32

Diamond Model

Answer 32

• Factor Conditions
• Demand Conditions
• Related and Supporting Industries
• Firm Strategy, Structure, and Rivalry

Question 33

When Marketers Incorporate Technology into Product Design, Be Aware of: Innovator’s Dilemma

Answer 33

Defined as staying committed to a current and profitable technology, but avoid:
Failing to provide adequate levels of investment into new and possibly risky technologies, but still…
Being responsive to the needs of established customers (who are the ‘cash cows’ that are financing your R & D).

Question 34

When Marketers Incorporate Technology into Product Design, Be Aware of: Value Network

Answer 34

Found in every industry, it is the cost structure that dictates the margins needed to achieve profitability.
Boundaries are defined by the unique rank ordering of the importance of various product attributes.
Each network has its own metrics of value.

Question 35

When Marketers Incorporate Technology into Product Design, Be Aware of: Sustaining Technologies

Answer 35

Defined as incremental innovations that improve product performance.
Most new technologies developed by established companies are sustaining in nature.
Examples:
Sail designs for ships - 2000 years of incremental innovations.
Reel-to-reel tape recorders - 25 years of incremental innovations.

Question 36

When Marketers Incorporate Technology into Product Design, Be Aware of: Disruptive Technologies

Answer 36

Defined as the proven innovation that redefines performance (and the target market’s expectations). These products are often:

• New entrants to an industry.
• Enabling something to be done that was previously deemed impossible.
• Enabling new markets to emerge.
• Not new inventions. Rather, they are current technologies being applied within a new context.

Question 37

Five Principles of Disruptive Innovations

Answer 37

• Innovations are based on both customer-driven and prospect-sourced research. By listening to only long-established customers, some new opportunities may be missed.
• Small markets don’t solve the growth needs of large companies (but several small markets can).
• Markets that don’t exist can’t be analyzed.
• An organization’s capabilities defines its disabilities.
• Technology supply may not equal market demand.

Question 38

Product Convergence

Answer 38

Convergence: The merging of previously separate products.
Telephones, consumer electronics, photography, and computers were all separate products in 1990.
In 2015 those four were all converged within smartphones and laptops.

Question 39

Current Issues in Competitive Advantage

Answer 39

In today’s business environment, market stability is undermined by: 
Short product life cycles. 
Short product design cycles. 
New technologies. 
Globalization. 

The result is an escalation of competitive forces and an acceleration of global competition.
Your product has to be pretty special to compete in today’s intense, global market.

The role of marketing is innovation and the creation of new markets.