Multilateral Agreement

A multilateral agreement is a trade agreement established between three or more countries with
the intention of reducing barriers to trade, such as tariffs, subsidies, and embargoes, that limit a
nation’s ability to import or export goods. They are considered the best method of encouraging a
truly global economy that opens markets to small and large countries on an equitable basis.

In general, trade agreements between nations are either bilateral, involving only two nations, or
multilateral. By their very nature, requiring concessions by several countries that have
traditionally used trade barriers to protect certain industries or domestic goods, multilateral
agreements are much more difficult to negotiate than bilateral agreements.

Examples of Multilateral Agreements

Multilateral agreements are usually negotiated between countries that share a geographic region,
and some of the most well known regional agreements are the North American Free Trade
Agreement (NAFTA) and the Central American-Dominican Republic Free Trade Agreement
(CAFTA). However, multilateral agreements can also be international in nature, with perhaps the
most successful international trade agreement being the General Agreement on Trade and Tariffs
(GATT), negotiated between 153 countries following the end of World War II.

There is a debate as to their effectiveness. For instance, those in favor of multilateral agreements
point to the economic benefits they provide smaller countries with emerging markets, while
those against them claim that they provide multi-national companies increased control over the
individual sovereignty of nations.

Advantages of Multilateral Trade Agreements

Liberal economists are perhaps the leading proponents of using multilateral agreements as the
ideal way to encourage free and unencumbered global trade. The benefits they point to include:

 Granting of “favored nation status” – No nation that is a party to a multilateral

agreement can be granted more favorable trading rights than any other party to the
agreement. Each country is treated as an equal partner.
  Best use of a nation’s resources – Countries can focus on producing only those goods
that are deemed valuable by its partners to the agreement, creating efficiencies in the
allocation of resources.
 Exported goods are cheaper – Reduced tariffs mean that countries exporting their
products no longer face artificial barriers to trade.
 Standardization of regulations - Companies can more easily navigate trade between
signatory countries as a result of agreed upon rules of commerce. In
addition, international intellectual property rights can receive greater protection.
 One agreement versus many – While multilateral agreements are often complex by
their very nature, they actually save countries the time and effort it takes to negotiate
separate agreements with every potential trading partner.
 Emerging markets flourish – Bilateral agreements tend to favor the powerful.
Multilateral agreements level the playing field for all participants, particularly the little
guys who have been pushed around for years.

Disadvantages of Multilateral Agreements

Multilateral agreements also have their opponents. Their reasons for seeing these agreements as
failing to provide any lasting benefits include:

 Ceding of sovereign rights – Countries that are partners in a multilateral agreement give
up degrees of sovereignty over the way they conduct business with other countries, which
often is in direct opposition to the democratic principles on which they were founded.
 Some parties win, but some parties lose – Certain industries within partner countries
may be adversely affected by the low cost of imported goods by competing nations.
 Complex and time-consuming negotiations – Due to the complex nature of an
agreement that must be negotiated by several countries with often competing interests,
multilateral agreements can take a great deal of time to complete. There is no guarantee
that after years of negotiation an agreement will actually be reached.
 Misunderstandings and Misconceptions - Negotiations during an agreement are often
conducted in a confidential manner that breeds mistrust and controversy between
corporations, special interest groups, labor organizations, and the media.
  Rise of multi-national corporations – Smaller businesses often find it difficult to
compete with large corporations as traditional borders to trade are erased. This can lead
to unemployment in certain industries and lower standards of living as wages are cut in
order for these companies to compete.

Bilateral trade agreement

A formal agreement involving commerce between two countries. Such agreements sometimes
list the quantities of specific goods that may be exchanged between participating countries within
a given period.

In a bilateral trade agreement, the countries involved provide each other access to their markets,
which leads to trade and economic growth. The agreement also creates an environment that
promotes fairness since a set of rules in business operations is observed. Here are the five areas
covered by bilateral agreements:

1. With the elimination of tariffs and trade-related taxes, companies located in countries
with a bilateral agreement enjoy a price advantage, especially for nations that flourish in
different industries.
2. Countries involved in the agreement will not offer products at a low cost only to gain a
bigger share in the market. They will not offer goods at prices that are even lower than
production costs, then increase prices when they’ve overcome the competition.
3. The countries will not use unfair subsidies. For instance, when countries subsidize energy
or agriculture, producers will see lower costs, giving them an unfair advantage when they
export the goods.
4. Because of standardized business operations such as labor standards and environmental
protection, exporters operate in a level playing field.
5. The agreement involves not stealing the innovative goods of other exporters. Countries
adhere to existing copyright and intellectual property laws.
Advantages of Bilateral Agreements

1. Since it involves only two countries, entering into a bilateral agreement is much easier as
compared to multilateral trade agreements.
 2. It gives companies access to new markets.
3. When the parties involved see demand, they will open more job opportunities.
4. Bilateral agreements also enable consumers to buy goods at lower prices. For instance,
some types of products may be more expensive without an agreement.
Disadvantages

1. Just like in any other trade-related agreement, less successful companies will likely find it
hard to keep their business going as they will not be able to compete with more
successful industries in another country.
2. The elimination of trade taxes means companies lose their price advantage.
3. A bilateral agreement can result in competing agreements between other countries.

India has bilateral agreements with the following countries and blocs

 Australia
 Bhutan
 Chile
 Japan
 Malaysia
 Nepal
 Singapore
 Sri Lanka
 South Korea
 Mauritius
 United Arab Emirates
Feature Bilateral Trade Multilateral Trade
Definition A trade agreement between two Trade agreements between
countries is referred to as bilateral more than two countries are
trade. referred to as multilateral trade.
Type of Big and powerful nations are involved in Several small nations are
Nations bilateral trade. involved in multilateral trade.
Involved
Type of Only commodities is exchanged. Goods and services are both
Exchange exchanged.
Type of In bilateral trade between two countries, In a multilateral trade,
Commodity the commodity is mostly commodities can be raw
complementary. A product that adds materials, services, or finished
value to the other. For example, DVDs goods, making the trade
and a DVD player. supplementary.
Level of Less complex More complex
Complexity
Type of Market Smaller market Larger market
Time is taken Less time is taken for negotiations as The time taken for negotiations
for only two countries are involved in this in this type of trade is longer.
Negotiations type of trade.
Promotes Economic cooperation between the two Globalization
countries involved
Examples Agreement between India and Finland NAFTA (North American Free
India Malaysia agreement on economic Trade Agreement)
partnership SAFTA (South Asian Free Trade
Area) of South Asian
Association for Regional
Cooperation (SAARC)

Indian Government supporting trade delegation

Trade delegations are established by a decision of the state and with the consent of the host gover
nment. The delegations represent the state in trade matters and seek to develop trade relations. Or
ganizations empowered to engage in foreign trade rely upon the services of trade delegations, wh
ich issue import licenses, transshipment permits, and other trade-related documents. Trade delega
tions study the market needs, supply sources, and level of technology of the host country and rep
ort on economic conditions to their respective ministries of foreign trade.
 A trade delegation forms part of a plenipotentiary mission and as such enjoys certain privileges a
nd immunities. For example, the buildings and grounds of the delegation enjoy extraterritoriality,
and the chief trade delegate and his deputies have diplomatic immunity. Trade delegations also e
njoy certain immunities when carrying out their commercial functions. A delegation may appear
as a defendant in a foreign court, but only in disputes arising from trade deals that the delegation
has concluded in the given country and only in states where the delegation’s home government h
as agreed to such procedures.
The Central Government may, by Order published in the Official Gazette, make provision for the
development and regulation of foreign trade by facilitating imports and increasing exports.
Trade mission is an international trip by government officials and businesspeople that is
organized by agencies of national or provincial governments for purpose of
exploring international business opportunities. Business people who attend trade missions are
typically introduced both to important business contacts and to well-placed government officials.
A trade mission is a way in which countries or organizations can seek out potential buyers and
sellers. Trade missions will usually occur after one party has undergone significant market
research. In short, trade mission is a trip that is designed to transport business executives into a
foreign business environment to achieve International business relationship.
India Trade Promotion Organisation
India Trade Promotion Organisation (ITPO) is the premier trade promotion agency of India,
provides a broad spectrum of services to trade and industry and acts as a catalyst for growth of
India’s trade. The main Corporate objectives of ITPO are:
 To promote external and domestic trade of India in cost effective manner by organizing and
participating in international trade fairs in India and abroad; organizing buyer-seller meets and
contact promotion programmes abroad; conducting overseas market surveys, exchanging and
contact promotion programmes abroad; conducting overseas market surveys, exchanging and
coordinating visits of business delegations, and undertake need based research to facilitate trade
in specific sectors/markets;
 To support and assist small and medium enterprises to access markets both in India and abroad;
 To disseminate trade information and facilitate E-commerce/trade;
 To develop quality physical infrastructure, services and management so as to enable holding of
trade promotion events such as conventions and trade exhibitions of international standard; and
 To enlist the involvement and support of the State Governments, other government trade
promotion agencies, trade and industry associations in trade promotion of India’s external and
domestic trade.
Example of recent Indian trade delegation
The union government send trade delegations to as many as nine countries, including Indonesia
and the Philippines, to explore ways to enhance wheat exports. This comes amid a major
shortage of the food grain world over after nearly a third of global wheat exports via the Black
Sea got impacted owing to the Ukraine war. The Centre will send trade delegations to Morocco,
Tunisia, Indonesia, the Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon for
exploring possibilities of boosting wheat exports from India
International trade fairs : A stage-setting event in which firms of several nationalities present
their products or services to prospective clients in a pre-formatted setting, usually a booth of a
certain size which is located adjacent to other potential suppliers
Trade fairs, conferences, business events, economic forums and exhibitions can be defined in a
unified manner as sophisticated platform for conducting business on a national and international
scale. It is more than just a marketing tool as the entire marketplace is at your fingertips. As a
source of market information they fulfill your needs in a centralized way.

Trade fairs provide an excellent opportunity to assess opinions from clients and determine
market potential, conduct research and evaluate competition, develop commercial structures by
identifying new agents and distributors, and initiating joint ventures and project partnerships. It
provide a unique networking platform to both Indian and foreign participants. They help in
promotion, marketing and publicity efforts of participating companies. Exhibitions lead to joint
ventures, tie-ups and they also help bring in investment in the Country.
Fairs had little impact on business activity till mid-seventies but with the amalgamation of
Directorate of Exhibitions, Indian Council of Trade Fairs and India International Trade Fairs
Organisation, the Trade Fair Authority of India (TFAI) was formed in March 1977 as an
acceptance of the role of fairs and exhibitions in promoting trade and industrial activity.

What followed was a number of fairs organized in Pragati Maidan during the period 1977-1992.
The advent of liberalization saw a new development to further enhance the productivity of fairs;
the Trade Development Authority was merged with the TFAI to form India Trade Promotion
Organisation in early 1992. The step catapulted the fair industry to the new levels of excellence.
Among other benefits, these fairs provide the business houses and individuals a face to face
meeting point, which is seen as a perfect cost effective means for achieving trade objectives

The major players in the interactive media like ITPO, CII, FICCI, ASSOCHAM, IMTMA,
IPPAI, Exhibition India, Franchise India Holding, INTERADS, Services International, Images
Multimedia, TRIUNE, Zak Trade Fair, REED Exhibition, The Times group, Bharat Exhibition,
Fair Design, TIE, Expo Media, Tafcon Projects, Media Expo, Garment Tech, etc., organize
international events on a mammoth scale, the effort needs to be compounded to harness the
benefits in future as India is being seen as the next big thing in the coming decade.

International Trading House

A trading house is a business that facilitates trade between two countries – i.e., a foreign country
and a home country. It provides a service that eliminates trading barriers to enter into foreign
markets, especially for small companies with limited resources or import or export capability.
Trading houses promote both imports and exports by purchasing and selling products through
local or overseas sales offices. A trading firm can also market goods and services produced
locally in foreign countries while performing other intermediary roles
 A trading house serves as an intermediary. It might purchase t-shirts wholesale from China, then
sell them to a retailer in the United States. The U.S. retailer would still
receive wholesale pricing, but the price would be slightly higher than if the retailer purchased
directly from the Chinese company. The trading house must mark up the price of the goods it
sells to cover its costs and earn a profit, however, the t-shirt retailer avoids the hassles of
importing. The retailer also may be able to simplify its operations by dealing with one or two
trading houses to get its inventory instead of dealing directly with numerous wholesalers.

Small businesses that use a trading house can benefit from its expertise and insight into
international markets they operate in, as well as get access to vendor financing through direct
loans and trade credits

Advantages

Economies of Scale
A trading house typically has a large portfolio of clients that provide economies of
scale benefits. For example, a large trading house can use its significant buying power to
receive discounts from manufacturers and suppliers. A trading house can also reduce
transportation costs if it ships to customers in large quantities.

International Foothold
Trading houses have an extensive network of contacts in international markets that help them
secure favorable deals and find new customers. They may also have staff working in foreign
offices to work with customs officials and manage legal issues to ensure the smooth operation
of the business.

Currency Management
Because a trading house is continually importing and exporting products, they have expertise in
managing currency risk. Trading houses use risk management techniques, such as hedging, to
avoid getting exposed to adverse currency fluctuations. For example, a trading house that has a
future payment in euros may use a currency forward contract to lock in the current EUR/USD
exchange rate.

Indian Trading house example: Adani Enterprises was the leading trading company in India as of
March 2022, based on market capitalization valued at over two trillion Indian rupees. Sundram
came in second with about 185 billion rupees in the same time period.

Industry association is an organization that supports companies and employers of a particular

type of industry and protects their rights
Some of the Industry Associations in India:
 SME India.
 National Bank for Agriculture & Rural Development (NABARD)
 Laghu Udyog Bharati (LUB)
 PHD CHAMBER OF COMMERCE AND INDUSTRY.
 SME Network - Network of Small and Medium Enterprises Associations & Members.
 Federation of Indian Chambers of Commerce and Industry (FICCI)

Advantages

1Training and Certification

Industry and professional associations are a great place to access ongoing training and education.
Some associations offer specialized training programs while others offer criteria for certification
and validation. You can find opportunities to develop, refine, and expand your skills and
knowledge or to receive association-backed certification. Associations can leverage resources to
bring in expert trainers and offer leading-edge courses. Members can often suggest topics for
training.

2. Networking
Networking is vital for the advancement of any industry. Bringing creative minds, ideas,
perspectives, and experiences together leads to new breakthroughs. There is no easier or more
intentional place for this to happen than within an industry association. The people you will
network with in an association are already committed to improving the industry. They share a
vision similar to yours. An association is also a place where people can learn and discover what
you bring to the table, with your unique skills and experiences.

3. Staying up on Trends
The internet has created so many channels for news and communications. While this is beneficial
in reaching more people with more information, it can also be hard to sift through everything.
What are the latest trends you need to be aware of in your industry? An industry association can
help. You will have access to what is most important. The association can bring you highlights of
the latest news that impacts your industry. And you will be able to discuss and respond to these
trends with other association members in a timely way.

4. Advocacy and Voice

One of the major strengths of industry associations are their ability to advocate for professionals
and companies within the industry. Associations are able to educate consumers, regulators, and
leaders of related industries on important aspects of your industry. You can help shape industry
standards and policies that impact your industry. By bringing together a committed group of
professionals and resources, industry associations are able to solve problems, set standards, and
improve conditions within the industry. They are also able to advocate for a better future at the
intersection of industry and society. As a member of the association you will benefit from this
industry-wide advocacy and also have the opportunity to influence industry standards and
developments. You will have a voice to shape the future of your industry.

5. Collaboration
What better and easier way to connect on collaborative projects than to join an industry
association. When you become an active participant, you will have opportunities to interact with
others of likeminded interest and focus. People who are attracted to industry associations are
actively engaged in leadership, innovation, and implementation. You will find many
opportunities to collaborate on cutting-edge projects that can benefit your business and shape the
industry. You will be able to contribute to practical innovation and thought leadership in ways
you might not find anywhere else.

6. Credentials
Being an active member of a leading industry association boosts your professional credentials.
Your membership speaks volumes about your commitment to developing your skills and
expertise and improving the industry as a whole. Aligning with the right industry associations
enhances your professional reputation and helps you stand out in your field. The better known
you become by other association members, the more referrals you will have as well.

7. Inside Opportunities
Do you ever wonder how people get in on the best and latest opportunities? And why you always
hear about them after the fact? An industry association can help you bridge that gap.
Associations often sponsor sub-groups of people who collaborate with each other on specific
projects. When people get to know you through an association, you will also be first on their list
to contact when they have a new idea and need some help. Because people come to industry
associations from a broad range of interests, you might have access to opportunities you
wouldn’t otherwise. You might hear of situations you’ve never even thought to explore, and
there may be an opening for you to participate.

8. Access to Resources
In the internet economy, many people work in isolated pockets with limited resources. Imagine
bringing all of those resources together for collaborative projects. Industry associations are often
the best source of information, knowledge, and access to particular skills and expertise.
Associations are often able to leverage their membership rosters for special access to resources
and other benefits. Because associations represent such a large membership population, they can
open doors that individuals cannot.

9. Special Events
When you join an industry association, you will have access to the latest information on industry
events. That alone is a convenience – to stay up to date on the best conferences and workshops.
Many associations put on or sponsor events as well – from major conferences to smaller
specialty workshops. Members often receive substantial discounts or special privileges, such as
the ability to showcase products or services. You will be the first to learn about speaking
opportunities as well.

10. Making an Impact

It’s always good to give back. An industry association has a collective voice to advocate for the
industry, the economy, and society. This doesn’t just benefit the industry. As an association
member, you can truly make a difference in how your industry impacts the well-being of people
in your community and around the world. Associations open possibilities for innovation that
transforms the economy. Many opportunities for investing in lives and communities come with
association membership. You will see a tangible, real-world impact from your participation. You
might also discover individual opportunities to make a difference. Perhaps you can speak at an
association gathering; write an article for an association publication; teach a seminar; or share a
case study. Associations often sponsor mentorship opportunities where you can invest in the next
generation.

Module 4: Ethics in negotiations

To some people, the word negotiation has a negative connotation. Typically, these people feel
that negotiation is what a salesperson does to get them to buy his products and services. But
negotiation is not a negative thing. In fact, every one of us negotiates almost every waking hour
of every day. Whenever you communicate--whether you are trying to get your teenager to clean
his room, convince your significant other to take you out to dinner, or encourage an employee to
show up to work on time--you are negotiating. Girard Nirenberg, the author of the first formal
book on negotiation, explains it this way: "When two or more people exchange ideas with the
intent of changing the relationship in some way, they are in negotiation." When we view
negotiation from this perspective, we can see how important it is to improve our ability to
negotiate so we can be more successful in achieving our goals. What we want to ensure is that
when we do negotiate, we do so in a way that will ensure a win-win outcome--one that meets the
needs and goals of both counterparts, and makes both of them willing to come back to the
bargaining table to negotiate with each other again at a later time. What is the role of ethics in
negotiation? The dictionary definition of ethics is: "a system of moral principles or values; the
rules or standards governing the conduct of the members of a profession; accepted principles of
right or wrong." Ethics establish the means of doing what is right, fair and honest. Why are
ethics important in a negotiation? Let's look at an example. On April 23rd, 2003, Don Carty, the
former CEO of American Airlines, ended his 20-plus-year career when he was forced to resign
over what the unions considered to be a lapse in his ethics. While Carty was asking rank-and-file
employees to take deep pay cuts to save the company, he was also putting together a package
that included $41 million in pension funding for 45 executives. If Carty had been upfront with
the unions about this arrangement--perhaps explaining that he felt these benefits were necessary
to retain an executive team that could help pull American Airlines through the crisis--the
outcome may have been different. Instead, the unions got the facts from the press and demanded
Carty's resignation. Reputation plays a vital role in every negotiation. It's much easier to achieve
win-win outcomes when you have a reputation for being fair, honest and willing to do the right
thing. A counterpart who feels you are unfair, dishonest or unwilling to do the right thing will be
less willing to make concessions or even to begin a negotiation with you in the first place. So
guarding your reputation by always acting in an ethical manner is key to successful negotiation.
When making any decision, remember this: A reputation takes years to build, and only minutes
to destroy.

The following 10 tips will ensure that you build all your negotiations on a foundation of ethics-
which will, by the way, increase your chances of achieving win-win outcomes. Ethical
negotiators don't think only about what they can "get" out of a negotiation but also about what
they can "give" to their counterpart. In this way, they take the long-term view. They know that a
counterpart who walks away from a negotiation feeling successful will be willing to come back
and negotiate again in the future.
1. Know what is not negotiable. Whenever we work with bank employees, we love to ask the
following question: "How much can you steal from this bank before you get fired?" The question
always draws a laugh because, of course, everyone knows that anyone who steals from a bank
would be fired immediately. This is simply not an area that is negotiable. Knowing what is
negotiable and what is not will make you a much more effective negotiator.
2. Be honest. In a negotiation, whenever you are ethical and honest even though it costs you
something, you gain points. If a counterpart makes an invoice error that is to your advantage and
you inform him of it, that costs you something--but it also earns you respect. A client recently
called to inform us that we had not sent an invoice for services we had performed for her. That
one telephone call let us know that this client is honest. That fact will undoubtedly affect all our
future negotiations with her.
3. Keep your promises. In your eagerness to put a deal together, you may sometimes make
promises and concessions you hadn't planned to make. You demonstrate your ethics when you
fulfill those promises long after the desire to do so has left you.
4. Have multiple options. Going into a negotiation with multiple options will help both you and
your counterpart achieve your goals. If someone proposes an option you feel is unethical, you
will be ready with another, ethical option for accomplishing the same goal. Sometimes you may
encounter negotiators who are unilateral thinkers who have only one option. With them, it's their
way or the highway. If their way is unethical in your opinion, you have only one option--to walk
away from the deal.
5. Be willing to say "no." Some negotiators are quite comfortable looking a counterpart in the
eye and saying "no" when they feel something is not right. Others worry that saying "no" seems
confrontational, even when a proposal does not seem ethical--then later they regret agreeing to
the proposal. Being willing to say "no" to something that is not right is a great strength.
6. Be familiar with the law. Ignorance of the law is not a good excuse for unethical behavior.
When in doubt about the law governing some aspect of your negotiation, check it out.
7. Go with your gut. Recently we were in a negotiation with a company and a person in one
division of the company suggested that we not inform another division of an action we were
planning to take. One counterpart said, "This just smells bad." What he was saying was that this
deal point simply did not feel right. Telling the members of the other division what we were up
to, even though we knew they would be adamantly opposed to it, was the right thing to do.
8. Practice the concept of "no surprises." Gomer Pyle, played by the late Jim Nabors, used to
draw a laugh whenever he said, "Surprise, surprise, surprise, Sergeant Carter." What made this
line so funny was that Gomer Pyle's surprises were always negative. My wife is fond of telling
me, "If you are going to surprise me, stick it in a jewelry box and put a bow on it." Making sure
that a negotiation does not contain any negative surprises will reduce the chances of an ethical
lapse.
9. Follow the Platinum Rule. The Golden Rule tells us to treat people the way we would like to
be treated. Dr. Tony Alessandra's The Platinum Rule™ tells us to treat people the way they want
to be treated. Caring about your counterparts enough to treat them the way they want to be
treated helps build long-term relationships based on ethics and trust.
10. Be willing to walk away from a deal. When it comes to effective negotiations, remember,
some of the best deals you will ever make are the ones you did not make. All of us have
contemplated buying something from an individual, or entering into a business relationship with
a company, and just getting a gut feeling that we should say "no." So we have walked away from
the deal. Later, when we heard negative information about this individual or company, the
information reinforced the fact that we had made a great decision. In negotiations, your head
may try to rationalize deal points to make your gut feel more comfortable. Remember to go with
your gut instinct, since it does not rationalize as well as your head.
Putting these tips into use is critical to your success as a negotiator. Your reputation is at stake.
And, as some CEOs and CFOs have recently learned, your job is at stake. Practicing ethical
negotiations is not only right--it is a wise investment for your future
There are three major ethical approaches that managers might use in making an ethical choice
- a utilitarian or consequence approach, a negative or positive rights approach, or a virtue-based
ethical reasoning approach. Here is a description of the three approaches and the advantages and
disadvantages of each one.

Using a Utilitarian or Consequence-Based Approach

A utilitarian or consequence-based manager would look at the possible choices for taking a
certain action in light of the results of doing one thing versus another. For example, suppose that
the manager could earn extra money from fees or contributions from patrons from putting on a
certain program or that the city is offering to sponsor a recreational sports program like boxing,
but the program would negatively impact a small group of people in the neighbourhood who
would risk damage to their property from attendees or a high level of noise during the activity.

Also, there might be a risk of injury to some of the players participating, though they would have
to sign waivers that they are assuming the responsibility for any injury. In the consequence-based
approach, the manager would look at this event from a cost-benefits perspective and decide that
most people in the community would enjoy this activity and that the organization would make
more money from offering the program, and would have little financial risk due to injuries
because of the waivers signed by participants. The manager would also dismiss the neighbours
complaining about possible property damage and noise, since this would seem to be of lesser
concern compared to the popularity of and income from the event.

The advantage of operating as a utilitarian manager is it might bring in more money and provide
a popular form of entertainment that draws a large crowd. Also, the manager might be correct in
weighing the potential risk of damage or injury against the potential financial gain from the
event, as well as the possibility of bringing in new member of the organization from attendees.
However, the disadvantage is that this approach disregards the rights of the minority who don't
want the event - the neighbours who will be negatively impacted by it.

Another disadvantage is that the manager using this approach might under estimate the negative
costs of the event, in that the angry neighbours might sue for property damage or for damages
due to the high noise level in a residential neighbourhood, leading to a costly suit the
organization might lose.

Secondly, there could be injuries not only to participants but to spectators at the event, and the
participants might be able to set aside any waiver they signed by making good legal arguments,
such as being underage or feeling coerced to participate. Another disadvantage is that this cost-
benefits approach might result in negative publicity for the organization and the city, as a result
of the press highlighting the plight of the neighbours or the potential injury of the participants,
and presenting the organization as being unconcerned about the interests of the community
members.
Using a Negative or Positive Rights Approach

A manager using negative or positive rights as a basis for decisions using the deontological
ethics model or rule-based ethics would take into consideration whether he or she has a duty or
obligation to act or not act in a certain way. Based on positive rights, the manager would have a
duty to take certain action to others, whereas based on negative rights, the manager would have a
duty to not take any action. The chosen action to take would in turn be influenced by whether an
individual has certain rights as a human being, such as the right to be treated fairly, or due to the
individual's status in society, such as the right not to be discriminated against because of that
person's race, or age.

A manager might be confronted by such a decision in a recreational program which is designed

to appeal to individuals of all sexes and ages in the community who pay a monthly or yearly
membership fee or pay for each event or class they attend. However, the manager may find that
some of the community members have difficulty participating in some of the classes, because
they lack some basic skills, such as using a computer; have a disability making it hard to
participate in exercise classes; or have financial difficulties preventing them from enrolling in
classes or paying for a monthly or yearly membership. Using the negative or positive rights
model, the manager would have to decide if he or she has any special obligation to accommodate
the community members who have a difficulty accessing the programs and if any obligations
take priority.

The advantage of this model is it would help the manager determine if he or she has any special
obligation to those who are disadvantaged from participating in the program, and this analysis
might show that he or she can make some reasonable accommodations to help the disadvantaged
person, but otherwise has no further obligation, since this is a voluntary program which is
available to those who wish to participate. However, individuals don't have to participate, such as
might be the case if this was a school. Also, relieving the manager of a special duty of care is that
center is supported by the fees of participants rather than being funded as a government agency
and therefore taxpayers' money. Thus, since the center depends on the fees of participants, the
manager is driven by putting on programs that are supported by those fees. For example, if there
is sufficient interest, the manager might add a class on basic computer skills; a special exercise
class for those with a disability; or create a program where those with financial difficulties could
volunteer to help the center in return for reduced fees or no fees. But the manager has no special
obligation to offer those activities without financial support. Accordingly, if there wasn't enough
interest to make it financially feasible to add these programs, the center would have no duty or
obligation to provide them.

The disadvantage of this approach is that it might leave those who don't have the ability or the
funds unable to participate in programs at the center and they might feel it unfair. Should enough
of them feel this way, this could lead to individual or class action lawsuits to require the
organization provide an opportunity to participate. But in this situation, I think the center would
prevail, since it has no obligation to provide these extra services if it determines there is not
enough interest to warrant adding them, since it has an obligation to its owners or shareholders to
continue to make a profit in order to sustain itself as an organization and continue to provide the
recreational services it does.

Using the Virtue-Based Ethical Reasoning Approach

A manager using virtue-based ethical reasoning to make decisions would do so based on the kind
of person s/he is or how s/he thinks of him or herself in the manager role. While such a manager
might want to look at the rules or code of ethics for the organization or might want to consider
the costs and benefits of a certain action, the manager would also want to make a decision in
keeping with his or her conscience or sense of acting with integrity. In so doing, he or she would
want to do what seems like the "right" thing to do in light of the circumstances, which might take
into consideration the ethical teachings of his or her religious faith, particularly if the manager is
working with a faith based organization, such as a church, temple, or mosque, that provides
recreational activities to its members.

An example of using virtue-based ethical reasoning might occur if a manager of a recreational

program for kids has to deal with a problem of bullying, where a stronger child is bullying
another child in the program, so that the younger, weaker child is afraid to continue to participate
and his parents are concerned. At the same time, the child who is the bully is the son of a
prominent family in the community who are contributors to the program and don't recognize the
problem. If the manager used a utilitarian cost-benefits approach to deciding what to do, he or
she might tend to support the prominent family and tell the family of the weaker child that he can
drop out of the program or participate in a different program where he won't have to confront the
child he is afraid of. If the manager used a rule based on rights by status approach, he or she
might side with the parents of the younger weaker child and prevent the bully from coming to the
program, because he has disobeyed the rules about bullying, regardless of any repercussions
from the parents.

However, if the manager uses a virtue-based approach, he or she might take steps to find a
solution that reconciles the relationships between everyone based on his or her beliefs about what
is the right thing to do. For instance, he or she might draw on his or her faith that preaches
understanding and forgiveness to bring everyone together to have a discussion about the
problem. Such a discussion might include both children and their parents, and he or she might
create a safe space where everyone feels free to share. The weaker child might talk about how he
feels afraid, while the bully might talk about his reasons for bullying, that could include feeling
bullied by other children and feeling he has to prove himself. Then, the manager might talk about
the importance of forgiveness and how he or she would like to promote understanding, so the
children could get along, and their parents could help them do so.
The advantage of using this virtue-based approach to choose a discussion of the problem in a
spirit of forgiveness is this discussion would help to bring out the issues and bring the people
involved closer together. It would creates a spirit of unity, in which everyone can work together
to resolve the problem, much like when a mediator brings together parties in conflict and
facilitates them solving the problem, rather than imposing a solution or taking sides based on the
two other ethical principles.

However, a disadvantage of this approach is that in some cases, such as this, it can take much
longer to reach a decision, much like the collaboration method of resolving a conflict, if the
manager thinks the ethical thing to do is to bring together all the parties to work towards
forgiveness. Another disadvantage of the approach in this case is that the parties involved in the
difficult situation may not want to meet together to work towards a solution, or if the parties do
meet, they may not feel comfortable talking through the situation and working towards
understanding or forgiveness. Then, too, because it may take more time to reach a decision, the
use of this approach could prove more costly to the organization due to the staff time involved in
having meetings to jointly achieve a resolution. However, I think where warranted, this kind of
discussion resulting from applying a virtue-based approach is a good approach to use, because it
can reach a fairer, more equitable resolution that all parties can agree on, because they have been
part of the resolution process.

The Importance of Relationship Building in Negotiations

Experienced negotiators know the importance of building a personal relationship before going
into a negotiation process, a negotiation involves two parties, usually an Organisation and its
Customers and/or Suppliers trying to come to a deal when both sides may want different things,
an overly heated atmosphere and anger can unravel the most carefully planned negotiation
process but there is much that can be done to avoid many of problems and issues when an
Organisation is trying to establish a “personal relationship” with its Customers and/or Suppliers
who will be on the other side of the negotiating table.

A personal relationship with an Organisations Customers and/or Suppliers against whom the
Organisation will be negotiating prevents an adversarial relationship from souring the deal before
it starts, if the Organisational negotiation Stakeholders see themselves as adversaries in a
confrontation with the Organisations Customers and/or Suppliers, both sides tend to become
defensive and reactive with each other.

In this situation, asking for even a small concession is seen as an encroachment or an attempt to
take advantage of the other party, however if both an Organisation and its Customers and/or
Suppliers share a personal relationship, it is easier to put these give-and-take dealings in the
context of building a consensus between them, if an Organisations opponent believes that the
Organisation is genuinely looking for a mutually beneficial deal, the Organisation is far more
likely to make a concession.

It is always good to remember that business is business, if an Organisation and its Customers
and/or Suppliers did not have divergent needs, there would be no need for negotiations, all of the
parties within a negotiation process will be asking the other to give up something within the
negotiation, this can create a difficult atmosphere if an Organisation is not careful.

Organisational negotiation Stakeholders should never make personal attacks or attribute any
combative exchange between an Organisation and its Customers and/or Suppliers to malice on
the part of their opponent, when things are getting tense within a negotiation process, it is always
best to suggest a break: taking some time away from the negotiating table can help all of the
parties within a negotiation process steer the conversation back to a more convivial personal
relationship, it always pays to not take things personally.

A good negotiator will build a personal relationship with the person against whom they will be
negotiating before they even get to the table, this means making those important social calls to an
Organisations Customers and/or Suppliers, the key is for the negotiator to frame themselves as a
friend first and a negotiator second to an Organisations Customers and/or Suppliers, which
transforms the relationship between the parties of a negotiation process from competitors to co-
operators, this can provide a positive perspective on the party with whom an Organisation will be
negotiating, understanding what they want can help an Organisation to get what they want.

Building personal relationships between negotiators is an essential part of reaching a deal, it is

wise to remember to not only to get to know the positions of the negotiators from the other side,
but the people with whom you are negotiating as well, focusing on seeking their co-operation can
be the element that closes the deal.

A relationship in negotiation is a perceived connection that can be psychological, economic,

political or personal: whatever its basis, skilled negotiators work to foster a strong connection
because effective leadership truly depends on it and positive negotiation relationships are
important not because they engender warm, fuzzy feelings but because they engender trust which
is a vital means of securing an Organisations desired actions from others, consider that any
proposed action, whether suggested by a negotiator at the bargaining table or a leader at a
strategy meeting, entails some risk.

People will view a course of action as less risky and therefore more acceptable when it is
suggested by someone that they trust, to create a durable relationship in negotiation, there are
four basic building blocks that can help an Organisation to create an effective partnership with its
Customers and/or Suppliers with whom an Organisations trades:

a. Two-way communication

b. A strong commitment from the Organisation to the interests of those with whom it trades

c. Reliability

d. Respect for the contribution’s trading partners make to the Organisation

People tend to respond to others’ actions with similar reactions, as research in the social sciences
has found, if an Organisations Customers and/or Suppliers co-operate with an Organisation and
treat an Organisations negotiation Stakeholders with respect, an Organisations Customers and/or
Suppliers tend to respond in kind, if an Organisations Customers and/or Suppliers seem guarded
and competitive, an Organisations negotiation Stakeholders are likely to behave that way, what is
more is that such exchanges can spiral into vicious cycles, those characterised by contention and
suspicion or virtuous cycles such as those in which co-operation and goodwill prevail.

The reciprocal nature of trust reinforces the value of taking time to get to know the other party
and build rapport with them before an Organisation begins to negotiate, it is important not to
assume that an Organisation can form a bond simply by exchanging a few friendly e-mails
before meeting in person, rather that they should try to forge a personal connection by meeting
for an informal lunch or two before the negotiation process begins.

What is ethical decision making

Ethical decisions inspire trust and with it fairness, responsibility and care for others. The ethical
decision making process recognizes these conditions and requires reviewing all available
options, eliminating unethical views and choosing the best ethical alternative.
Ethical decisions inspire trust and with it fairness, responsibility and care for others. The ethical
decision making process recognizes these conditions and requires reviewing all available
options, eliminating unethical views and choosing the best ethical alternative.
Good decisions are both effective and ethical. In professional relationships, good decisions build
respect, trust, and are generally consistent with good citizenship. Effective decisions are effective
when they achieve what they were made for. A choice that produces unintended results is
ineffective and therefore not good.

The key to making good decisions is to think about the different choices that lie ahead in order to
achieve the objectives. For that reason, it is also very important to understand the difference
between short-term vs. medium to long term objectives.

Making ethical decisions requires a certain sensitivity to ethical issues and a method of
examining all the considerations associated with a decision. Having a method or structure for
making ethical decisions is therefore essential. After this process has been performed a few
times, the method is trusted and it is easier to walk through the steps.

Below is a description of ethical decision-making methods.

Framework for ethical decision making

If ethics is not based on religion, feelings, law, social practices or science, what is it based on?
Countless philosophers and ethicists have attempted to answer this critical question. At least five
different ethical norms or standards have been proposed. The most important are explained
below.

The Utilitarian Approach

This approach dictates that the action that is the most ethical is the action that produces the most
good and causes the least harm. In other words, the decision that strikes the greatest balance
between good and evil.
In a business environment, it is therefore the decision that yields the most benefits and causes the
least damage to customers, employees, shareholders, the environment, etc.

The Right Approach

The right approach suggests that the most ethical decision is the one that best protects and
respects the moral rights of all concerned. This approach argues that people have a dignity based
on human nature or their ability to freely choose what they want to do with their lives.

Based on that dignity, they have the right to be treated equally by others and not just as a means
to an(other) end.

The Fairness or Justice Approach

All equals should be treated equally. The Greek philosopher Aristotle and others contributed to
that idea. Today, this idea is used to indicate that ethical decisions treat everyone equally. If not
equal, this must be based on a standard that is explainable.

People are paid more for their hard work when they contribute more to the organization. That is
fair. But many wonder whether the salaries of CEOs, some 100 times higher than others, are fair.
Is this standard defensible?

The Common Good Approach

The Greek philosophers also contributed to the idea that living in a community is a good thing.
People’s actions and actions must contribute to this. This approach suggests that relationships
within society are the basis of ethical reasoning and acting. Respect and compassion for all
others, especially the vulnerable, are prerequisites for maintaining an ethical way of life.

The Virtue Approach

An ancient approach to ethics is the belief that acting ethically must be in accordance with
certain virtues that ensure the development of humanity in general. Virtues are tendencies and
habits that enable man to act with the highest potential of human character.

Ethical decision-making process and roadmap

Below is a summary of the roadmap for the ethical decision-making process.

1. Gather the facts

Don’t jump to conclusions until the facts are on the table. Ask yourself questions about the issue
at hand, such as the 5 whys method. Facts are not always easy to find, especially in situations
where ethics plays an important part. Some facts are not available or clearly demonstrable. Also
indicate which assumptions are made.

2. Define the ethical issue

Before solutions or new plans can be considered, the ethical issue is clearly defined. If there are
multiple ethical focal points, only the most important should be addressed first.

3. Identify the stakeholders

Identify all stakeholders. Who are those primary stakeholders? And who are the secondary
stakeholders? Why are they interested in this issue?
4. Identify the effects and consequences
Think about the possible positive and negative consequences associated with the decision. What
is the magnitude of these consequences? And what is the probability that these consequences will
actually occur? Distinguish between short-term and long-term consequences.

5. Consider integrity and character

Consider what the community thinks would be a good decision in this context. How would you
like it if the national newspaper wrote about your decision? What is public opinion? How does
your character and personality influence the decision to be made?

6. Get creative with potential actions

Are there other choices or alternatives that have not yet been considered? Try to come up with
additional solutions or choices if a small number is considered.

7. Decide on the right ethical action

Consider the options based on each option’s consequences, duties, and character aspects. Which
arguments are most suitable to justify the choice?

Negotiation strategies that promote a mutual gains approach to the bargaining table can help
you not only achieve a negotiated agreement with a difficult counterpart but also help a
negotiator find ways to create value and expand the pie of resources. To do this, you have to
establish a relationship with your counterpart and through this discover the zone of possible
agreement with her (ZOPA).

When you know the areas of agreement where you and your counterpart are in alignment (and
those areas on which you diverge), a skilled negotiator can craft an agreement that most closely
approximates her own and her counterpart’s needs while building a bargaining relationship with
her counterpart. Rather than antagonistic, the negotiation process becomes a value-creating,
integrative situation in which each side gets a “fair share” of the pool of resources.

To mount a successful negotiation campaign, negotiators need to follow these negotiation

strategies:

1. Never take victory for granted in a complex, multiparty setting.

2. Identify and nurture potential allies before you need their support.
3. Identify all of your likely and potential opponents at the start of the process.
4. Beware of the possibility of opponents with diverse concerns teaming up to form a
blocking coalition.
5. Listen to the concerns of potential opponents and address them to the extent possible.
6. Remember that negotiation continues during the implementation stage and requires
ongoing support to succeed.
The best negotiators understand the importance of using these win-win negotiation strategies:
when both sides are satisfied with their agreement, the odds of a long-lasting and successful
partnership are much higher.

Negotiators have a tendency to negotiate from one of five styles: competing, accommodating,
avoiding, compromising, or collaborative
Competing

Negotiators that exhibit this style are assertive, self-confident, and focused on the deal and results.
These individuals tend to pursue their own concerns, sometimes at their counterpart’s expense, and in
the extreme can become aggressive and domineering. On the assertive vs. cooperative scale, this
style is higher in assertiveness and lower in cooperativeness. Using the substance vs. relationship
axes, competing negotiators tend to be more focused on the substance than the relationship.

Avoiding

Negotiators that exhibit this style are generally less assertive and apprehensive. They prefer to avoid
stepping into or creating tension. They stay neutral, objective or removed from the situation or leave
responsibility to their counterpart. The individual does not immediately pursue their own interests or
those of the other person and there is an element of self-sacrifice in this mode. This style is low in
assertiveness and in cooperativeness, and not focused on either the substance of the agreement or the
relationship.

Accommodating

Negotiators that exhibit this style focus on maintaining relationships with the other party. They tend
to smooth over tensions, minimize differences, and are most concerned with maintaining a good
rapport and satisfying the needs of the other party. This style is lower in assertiveness and higher in
cooperativeness. These negotiators tend to emphasize the relationship as more important than the
substance of the agreement.

Compromising

Negotiators that exhibit this style often split the difference, exchange concessions, and seek a quick
middle-ground solution, which tends to end in moderate satisfaction of both parties’ needs. This
style is intermediate in assertiveness and cooperativeness and more focused on creating a decent
agreement relatively efficiently while maintaining some relationship.

Collaborating

Negotiators that exhibit this style are often honest and communicative. They focus on finding novel
and creative solutions that fully satisfy the concerns of all parties, and suggest many ideas for
consideration before deciding. This style is high in assertiveness and in cooperativeness, promoting
both the relationship and the substance of the agreement at hand as very important. These negotiators
tend to value taking the time to create optimal long-term outcomes over efficiency and leaving value
on the table.

All styles serve, and each has advantages and risks. And sometimes one style may be more useful in
certain situations than in others. For example, as an accommodating negotiator, one should recognize
that with more transactional discussions, they may not need to take as much time to build a
relationship, if the deal works with their own interests. On the other hand, if they are negotiating with
someone they will be involved with for the long-term, whether that is a new client or recent hire at
the company, they will want to work on ways to develop a strong working relationship and strive for
the best deal to avoid setting a bad precedent.

In order to be the most effective negotiator, one must recognize one’s own tendency, assess as best as
possible their counterpart’s style, and adjust their own to allow for smoother negotiations.

In general, if negotiators strive for using a collaborative style, they incorporate the relationship focus
of an accommodating style, the assertiveness on own needs of a competitive style, the caution and
observational skills of the avoiding style, and value maximization often neglected by the
compromising style. While the collaborative style may not make sense in all negotiations, this mode
can be especially effective with business situations because of the long-term nature of the
relationships internally and externally, as well as the need for strong substantive negotiation
outcomes.

Types Of Negotiation

Negotiation is an important skill for the modern professional. Sometimes, negotiation also
involves meeting each other halfway as a compromise when both sides are on opposite sides of
the spectrum. There are various types of negotiation:

1. Distributive Negotiation
Distributive negotiation is when two parties bargain over a single product or issue, such as
price. For example, negotiating with a dealer over the price of a second-hand vehicle or
bargaining with a street vendor. Here, one party wins and the other has to take a step back and
suffers a loss. Your success eventually depends on your distributive negotiation skills.

2. Integrative Negotiation
Do you know what happens when representatives of an employees’ union meet the
management with their demands? They discuss, argue, present, oppose, convince, and so on.
Then, they strike a deal on salaries and other benefits. This is called integrative negotiation.

It is one of the types of negotiation where there is more than one issue that has to be put
through the negotiation process. Both parties gain something from the negotiation. An
integrative negotiation process ensures a win-win situation.

3. Multiparty Negotiation
The multiparty negotiation process involves three or more parties undertaking various
negotiation strategies to drive home their points. When six friends are deciding the venue of
the party and discussing its pros and cons, the type of negotiation can be said to be multiparty.

4. Team Negotiation
This type of negotiation process takes place between the two teams. For example, negotiation
strategies between the teams of two companies that are looking to merge are called team
negotiations.
 While putting together a negotiation team, a company looks for members with excellent
negotiation skills and highly-developed strategic thinking capacities.

5. Positional Negotiation
Positional negotiation is when you spell out the position you are in, at the outset. Then, you
defend that position against the attack. Important among the types of negotiation, positional
negotiation sees both parties having fixed stances and sticking to them obstinately. They may
not consider the other party’s interest or see where they are coming from. Positional
negotiation is not considered very productive.

Contracting practices

Know Your Goals Going In

With any contract, each side should enter negotiations with detailed thoughts and outlooks on
what needs to be accomplished. Issues such as timeframe for work being completed, what
exactly needs to be accomplished — and of course any dollar figures involved— will need to be
resolved with any potential partner before moving forward with a partnership. To have the
proper goals in mind, do research prior to negotiations to know where you have synergies and
what each side can contribute to the partnership.

Be Prepared to Compromise

While you should enter a negotiation with your ultimate goals in mind, know that compromise
may be needed, and determine your limits on how flexible you will be before beginning
negotiations. It’s also possible that some new information may surface during negotiations that
will impact the level to which you are willing to adjust.

Customization

Being flexible and offering customizability is also important. To achieve a successful business
relationship, there should be a focus on functionality and performance that meets customer
requirements as detailed in their RFQ. Software customization and optimization should be
offered to meet various customer requirements, and close attention must be paid to deliver
performance that exceeds customer expectations.

Show Your Successes and Provide Data

When negotiating with major companies such as OEMs or Tier 1 suppliers, showing what is
unique about your business and how you stand out from the competition is critical. Focus on
what makes you stand out in your field of expertise. Tout key successes to earn trust with
potential partners, such as number of published patents, and quick patent issuance time frames.
Be specific and show data detailing results you have achieved in the past, and how those
experiences can help lead to success in the new partnership.
Listen

Listening to your potential partner is equally as important as presenting them with information
about your company. What you hear may change the course of the negotiations in a way you had
not anticipated.

Mitigate Risks

Each side should create a checklist of key issues that need to be addressed during the
negotiations, so no key topics are forgotten. And if the contract changes throughout the
negotiations, keep track of all versions in case anything needs to revert.

Do not leave any important aspects out of the contract, even if you think they are implied. This
can only lead to complications. Cover your bases legally and ensure confidentiality. This
attention to detail is essential so both parties are on the same page and there are no
misunderstandings down the road.

Contract Templates and Established Language

One factor that can delay drafting and approval of contracts and partnerships is getting caught up
in technical language and details, and any legal language that must be included to ensure privacy
and confidentiality. To avoid these delays, this language can often be standardized, so it doesn’t
need to be rewritten for every contract. Any time saved by not thinking about this technical and
legal language means more time to focus on establishing trust and a relationship with a potential
partner.

Establish Workflow Process

Delays in contract review and approval can also come from not having an established workflow
for contracts. For whomever needs to see the contract at each partner company — from legal to
top management — there should be an established procedure for the order in which these
approvals are completed, as well as how changes are made once feedback is received.

Without a set process, there is a risk that bureaucracy could delay a contract from being
completed. For some deals where there is less risk involved, the contract workflow can be
simplified or even semi-automated to smooth out the process.

Renew or Expand Existing Contracts

Beyond bringing in new partners, it’s important to recognize the importance of contract lifecycle
management. It is critical that a business recognizes the status of existing contracts, maintains
strong relationships with existing partners and looks into how the partnership can be expanded
based on future opportunities.

Unethical practices

Examples of Ethically Ambiguous Tactics

Examples of common negotiation tactics that are potentially unethical in a given situation
include:

 Competitive bargaining - Competitive bargaining is generally assumed and ethical. Using

tactics, however, that are meant to deceive or coerce the other party may be seen as
unethical in a given situation. This is very subjective, but the negative effects of a tactic
being perceived as unethical is the same.
 Emotional manipulation - Using tactics that intentionally affect the emotional state of the
other party in an attempt to sway her otherwise-logical decision making may be seen as
unethical.

There are, however, tacitly agreed-on rules of the game in negotiation.

In these rules, some minor forms of untruths or misrepresentation of one's true position to the
other party, bluffs, and emotional manipulations may be seen as ethically acceptable and within
the rules.

Unethical Tactics in a Negotiation

Outright deception and falsification are generally seen as outside the rules.

Several categories of tactics that are generally seen as potentially inappropriate and unethical in
negotiation, including:

 Misrepresentation - Deception by omission versus commission. Passive

misrepresentation (also known as misrepresentation by omission) is a strategy in which a
negotiator does not convey his or her true preferences and allows the other party to arrive
at an erroneous conclusion. Active misrepresentation (also known as misrepresentation
by commission) is a strategy in which a negotiator deliberately misleads his or her
opponent.
 Backing out of a negotiated agreement - While breaching a legally binding contract is
illegal, there is a separate analysis as to whether it is unethical. Likewise, backing out of a
legally unenforceable contract may also be unethical.
 Revoking an an offer - Making or revoking an offer in bad faith (generally as tactical
move) is generally viewed as unethical by the affected party.
  Inappropriate information collection - This regards tactics used to collect information
from the other side that is either disingenuous or used to create a negative reaction in the
other party. Examples of this type of tactic would include bluffing, which is the
misrepresentation of a fact or position to achieve a desired reaction in the other party.
 Nickel-and-diming which is a colloquialism that refers to the strategy of repeatedly
asking for more favors or resources after a negotiation has presumably ended.

Bribery is an unethical practice, as it increases wealth inequality and supports corrupt regimes.
Bribery is the offering, giving, receiving, or soliciting of any item of value to influence the
actions of an official, or other person, in charge of a public or legal duty.As an immoral act,
bribery should be prosecuted even in countries in which it is an acceptable practice. Businesses
and governments should be considered moral entities that enter into a social contract.
Governments that fail to prosecute foreign bribery cases are complicit in the bribe and
responsible for the consequences that ensue.

Bribery can be viewed as exploitative. There are some cases in which bribery is a mutually
beneficial transaction whereby both parties emerge better off. For example, if a corporation pays
a foreign official a bribe in exchange for permission to conduct business in the country, both
parties win. However, the exchange is exploitative because it violates the corporation’s duty to
fairness. Although both parties benefit, the transaction will have the negative externality of
sustaining corruption and inequality in the culture. The corporation is exploiting the corrupt
political system that allows bribery to occur. Such political systems typically feature a powerful
elite amassing wealth at the expense of a poor citizenry. Therefore, the bribe indirectly supports
exploitative actions of a corrupt regime, making it an exploitative practice.

Multinational corporations have become richer and powerful due to illegal bribery and kickbacks
to government officials to exploit new markets, illegally pollute countries and obtain large
contracts at exorbitant costs. Many of these powerful multinational corporations are run by
corporate greed and have exploited peoples’ resources, populations, businesses, and entire
countries to maximize profits

Principles of Negotiation
When it comes to negotiating, understanding the best way to navigate your points can help you
approach the issue smoothly and come out successfully. In a successful negotiation, both parties
should come out satisfied on some level. There are many different rules of negotiation. When it
comes to effective principles of negotiation, you should consider the following:
 Know what you’re willing to accept in advance. In a negotiation, it can be easy to fall
into decisions made in the heat of the moment. What sounded good while talking with the
person suddenly doesn’t seem so promising now that you’ve had time to focus and
remove yourself from the situation. If you know what your limits are before you meet
with your prospect, you’re less likely to be put in that situation. This will help to ensure
that you will come to a mutually beneficial agreement.
 Study and understand your counterpart. Take the time to learn. The more you know about
people, the easier it can become to establish a connection. Learning about your
counterpart will also help you to understand their negotiation style. When possible, listen
and ask questions to understand fully what they are looking to accomplish. Try to
 discover where your goals overlap and where they don’t. This will also allow you to
focus on areas of true importance while gliding over topics that will easily be resolved.
 Let them go first. If you’ve presented your terms, and they want to negotiate, allow them
to begin the conversation. Sometimes we find ourselves wanting to assume what they
need or want and offer too much. Allowing them to speak first sets the stage for what
they are looking to get out of the negotiation. It is important to listen first, speak after.
 It may seem obvious, but some of the best negotiators are quiet listeners who allow others
to have the floor. It is important not to interrupt; you want the person you’re negotiating
with to feel that you are truly invested in what they have to say.
 Understand timing. Knowing when to negotiate is just as important as knowing how to
negotiate. You need to be able to read the room. Be sensitive to when you ask for things.
Be aware of pushing too hard since this could cause damage to the developing
relationship.
 Get something in return. In general, healthy relationships are developed out of mutual
respect and trust. When negotiating, the ideal outcome is a win-win for both sides. This
keeps you on equal footing as well as sets the foundation for a mutually beneficial
relationship.
 The win-win. This is exceptionally important if you have an ongoing relationship with a
person or party. It tends to allow room for later relationships. If one party feels that they
were unfairly treated, this could damage the relationship and impact any future
negotiations.
 Understand when you have to walk away. Your goal should always be to try to find
common ground where you can both be happy. This is not often the case. If you start to
feel that there is no agreement to be had, it is often better to walk away from the situation.
 Goals of accomplishment. It is beneficial to visualize the end result. You have to have a
solid notion of what you want out of the negotiation. Know what you will settle for, what
you won’t, and when you need to walk away
 Game Plan. The more prepared you can be, the better your negotiations will turn out. You
should consider who really needs this deal more. Is this negotiation beneficial to both my
short- and long-term interests? Every negotiation requires some level of compromise; just
know what your dealbreakers are.
 Close with confirmation. Even if there is no deal, it is important to end each meeting with
a recap of points and any areas of agreement that were met. Be sure that everyone
acknowledges what was accomplished that day. Don’t forget to follow up appropriately.
Best Practices in Successful Negotiation
Negotiation involves every aspect of a person. It isn’t just the words coming out of your mouth.
It is the way you express yourself, the way you look, carry yourself, and more. When
negotiating, you want to become a person that they feel they can trust. If they don’t believe you
truly have their best intentions in mind, there is only a small chance your negotiations will be
successful. When it comes to successful negotiations, some best practices to consider include:

1. Be aware of your body language. Your body language often communicates more than
your actual mouth does. Be aware of how you carry yourself. Fidgeting can lead to an
impression of impatience or frustration. Your arms should be relaxed at your side and not
crossed over your chest. When you cross your arms, you are essentially closing yourself
physically from others. A tall posture can impose a sense of confidence that slouching
 could diminish. You want your body to also communicate your openness for
negotiations.
2. Smile more. There is nothing more reassuring than a smile. A smile communicates that I
hear you and that I understand what you are saying. Remembering to smile also brightens
your face, showing that you are indeed approachable.
3. Listen to the other person. This truly can’t be stressed enough. A great negotiator can
hear out the other party, even if they might not agree with what is being said. You can
learn valuable information about what a person truly wants simply by listening. Showing
that you are committed to hearing the other side fully can only help to continue to build
the relationship.
4. Avoid arguing in turn. It is important to keep your emotions in check. You want to appear
level-headed and willing to hear and process whatever case the other side is building for
their end of the negotiation.
5. Pay attention to timing. If you come on too strong, they may feel pushed or rushed,
leading them to pump the brakes. In this situation, negotiation runs the risk of fizzling out
or completely stopping. You also want to make sure that you aren’t taking on too much
of the passive role. You want to balance your interest, your ability to listen, and your
ability to make your own case.
6. Read facial expressions carefully. Facial expressions can often answer a question for you
long before you get a response verbally. Understanding what different facial expressions
mean can help you determine whether to stay on your current path of negotiating or try to
switch gears.
7. Give them a sense of security. Whoever you’re negotiating with should ultimately be able
to trust you. They should be confident that you do have the best interest of both sides in
mind. If they don’t trust you, the negotiation won’t work.
8. Get the person on your side. The closer of a relationship you can build, the better. As
much as you want to try to get to know their side and desires, it is important that yours
come across as well. By showing that your ultimate goal is to benefit both sides, you
open the door for them to see your side.
9. Show that you are trustworthy, honest, and fair-minded. Choose your words carefully. Be
sure to listen and to respond after taking a moment to think. If you show no signs of
accepting or trying to understand the other side, odds are they will close the door to
negotiation. Whatever terms you suggest, stick to them. It is important to stick to your
principles. If you show yourself as an honest, fair-minded person, that person will want to
reflect that for you as well.
10. Remember that this is about finding a solution. Good negotiation isn’t about winning. It
is about coming to an agreement that leaves both parties happy. By finding a solution,
you allow for the possibility to negotiate again in the future. Finding a solution leads to
better relationships.

Business etiquette: is a set of rules that govern the way people interact with one another in
business, with customers, suppliers, with inside or outside bodies. It is all about conveying the
right image and behaving in an appropriate way. Business negotiations can be a tricky balancing
act. You don't want to push so hard that you unintentionally drive business away, but you also
don't want to come on so soft that you appear to lack confidence and fortitude. Landing
projects and finalizing business contracts takes a fair amount of gusto. By following proper
workplace negotiation etiquette, you avoid stepping on toes and keep goals in perspective so
you don't over commit or overpay.

Be on time

Whether you’re attending an interview or daily standup meeting, being on time in a work
environment shows that you respect everyone’s schedule. If punctuality isn’t something you’ve
prioritized in the past, brush up on some time management tips to keep yourself organized and
aware of your to-do list.
There are nuances to being on time—some cultures operate on a system of being slightly late to
everything. But when in doubt, show up on time and adjust from there if necessary.

Recognize your team

Acknowledging others is proper business etiquette for both casual and formal work
environments. When someone walks in the room at a business dinner or meeting, greet them and
say hello appropriately—whether by shaking hands or following some other cultural custom.

The same rule applies if you work from home and attend daily Zoom meetings. You may not be
required to get on camera in every business meeting, but speaking up and taking the time to
recognize your team members can let everyone know you’re listening and make others feel
noticed.

Dress appropriately

Dressing appropriately is subjective and will depend on whether you work in an office or from
home. Some companies that work in the office every day will expect everyone to dress in
business casual attire because much of the work involves face time with stakeholders or clients.
Other companies who work in a hybrid environment may encourage team members to dress
casually in order to promote comfort and productivity.
If you are unsure about appropriate business attire, ask your manager or supervisor for tips. It’s
especially common to feel unsure if you just started a new job, but don’t be afraid to send a quick
email before your first day to get a feel of the office policy. Alternatively, think back to your
interview and try to remember what everyone was wearing so you can dress accordingly.

Stay Genuine and Respectful

Keep a respectful attitude toward investors and business contacts, regardless of whether you're
able to solidify a deal. This is the No. 1 rule of etiquette. Even though negotiation might
require you to firmly state your position or valiantly persuade others to support your goals, it's
not time to jest, ridicule, complain, attack or belittle. When you negotiate, you're not just
selling a product, promoting an idea or marketing your services -- you're selling yourself. You
want investors and potential partners to see you as a sincere, honest, and likable person who is
approachable and easy to work with. Express sincere gratitude, stay humble and don't beg for
financial resources. The goal is to prove that not only are your products valuable, but your
skills, passions and expertise are worth the investment.

Be Patient and Listen

Take time to listen. You might feel like you're on the hot seat -- especially if your boss says
you're on the line to make the negotiations work -- but don't rush the process. If you don't take
time to listen to other viewpoints, goals and intentions, you might make wrong assumptions.
Ask questions, such as "What are you hoping to get out of these negotiations" or "How do you
think our company can help you meet your goals?" Take time to listen, even if it tests your
patience. You'll likely learn something important in the process that could help you finalize a
win-win contract.

Stick to Your Bottom Line

Always know your bottom line before entering business negotiations. Otherwise, you'll waste
everyone's time if you have to terminate the meeting to rethink your options. Plus, you don't
want to get swept away in the process and overbid or oversell. You want to make financial
decisions, including offers and counter offers, based on realistic numbers, not emotions,
suggests marketing expert Jerry Jao in a 2013 "Forbes" article. For example, if you're trying to
get a business loan or financial support from investors, be honest about how long it will take
you to pay back the funds. Or, if you're trying to buy out a competitor, offer a fair market value
and stick to it.

Know When to Back Down

Be polite and back down if negotiations become heated. Angry words and threats damage the
negotiation process and often force business associates to respond defensively. Business
negotiation etiquette always trumps ugly deal-making. Try to re-establish common ground,
review similar goals, and avoid being competitive or argumentative. The main objective of
business negotiation is to find solutions that satisfy both parties. No one wants to feel like he
got the raw end of the deal. Don't offer ultimatums or try to trap the other party in a corner.
You'll come across as unprofessional. If you've approached negotiations from every angle and
no resolution is in sight, be prepared to walk away with your head held high.

Observe International Business Etiquette

Research cultural norms before engaging in international negotiations. Most countries have
specific guidelines that govern business negotiations, and you don't want to risk offending
anyone. For example, in negotiations with Chinese associates, rank is extremely important.
Your senior staff members should always sit across from senior-level Chinese associates. Only
the senior Chinese negotiator will speak, so you may want to appoint one person from your
team to do most -- if not all -- of the talking. In China, being late for a meeting is seen as
disrespectful and insulting. When working with French business associates, stick to a rigid
agenda but retain a welcoming tone. Expect probing questions and follow up with intellectual
details to support your proposal. Be clear, concise and well-prepared to earn respect.

The Personality Traits of Good Negotiators

Although there are hundreds of books about how to negotiate more effectively, the advice they
offer is often difficult to apply, for three reasons. First, there are just too many contextual
specificities underpinning each negotiation, such that one size does not fit all. Second, the
effectiveness of each strategy is partly dependent on the personal background of the negotiators
— who they are, what they want, and how they connect. Third, many of the factors determining
the outcome of negotiations are more emotional than rational, which requires a deep
psychological understanding of the people involved.

Luckily, personality research provides valuable lessons in predicting an individual’s ability to

negotiate effectively. Some traits are clearly indicative of good negotiation potential, while
others are more of a handicap. That isn’t to say people can’t get better at it, but their success will
depend on their ability to understand their own and the other party’s personality.

Among the traits that improve individuals’ negotiation abilities, emotional intelligence (EQ) is in
a league of its own. Despite EQ’s relatively recent appearance in the realm of personality traits, a
Google Scholar search produces an astonishing 131,000 hits on EQ and negotiation. Most of
these articles highlight the beneficial aspects of EQ vis-à-vis negotiation. For instance, a study by
Wharton and MIT professors shows that people with higher EQ are more likely to induce
positive mood states in their negotiation counterparts and leave them more satisfied with the
outcome of the negotiation. EQ also translates into higher levels of satisfaction with
one’s own negotiation outcome, regardless of the objective result. Even more important, EQ is
linked to higher levels of self-control and likability, no doubt a powerful combination when it
comes to engaging with others in emotionally taxing situations. As if all of this weren’t enough,
people with higher EQ also tend to be more self-aware, so they are better able to understand how
other people see them, a critical advantage not just during negotiations.

Another trait that has shown a strong association with negotiation potential is cognitive ability
(IQ). In a comprehensive meta-analytic review examining almost 5,000 studies, higher IQ and
the related construct of cognitive complexity were found to predict better performance during lab
experiments on negotiation, such as the prisoner’s dilemma. While one would obviously expect
IQ to boost negotiation performance, the research also revealed a more surprising finding: People
with higher IQs tend to approach negotiations in a more cooperative or collaborative way,
treating their negotiation counterpart as a partner and embracing win-win strategies that tend to
leave both sides satisfied.

The same meta-analysis revealed that one of the strongest personality drivers of negotiation
potential is self-monitoring, defined as the tendency to examine one’s behaviors and the
impressions we make on others. This makes sense: We all have mental models to interpret other
people’s behaviors, and awareness of these models is key to influencing how people think of us.
Self-centered, narcissistic individuals who believe they can “just be themselves” and disregard
other people’s views of them are often celebrated in the Western world for their confidence and
self-belief. However, the reality is that those individuals will miss out on important social clues,
negative feedback, and the ability to connect with others. All of this will handicap them during
negotiations.

What traits are especially problematic when it comes to negotiating? Neuroticism, which
concerns lower emotional stability and a propensity to experience negative affect, is linked to
several ineffective negotiation strategies, such as an excessive tendency to bargain, complain,
and antagonize counterparts. In addition, neuroticism decreases one’s own satisfaction with the
outcome of negotiations, even when such outcomes are actually positive. On the other hand,
Machiavellianism, a dark-side personality trait associated with a tendency to manipulate and
exploit others and behave in risky and antisocial ways, motivates individuals to initiate
negotiations and predicts assertive negotiation tactics. However, some evidence suggests that
Machiavellians actually do worse in negotiations, perhaps for being overly competitive and
aggressive or pushing things too far. It should also be noted that not all Machiavellians have
sophisticated social skills, and many are overly impulsive.

Importantly, although our personalities certainly affect how we typically behave during
negotiations, we are still free to choose how we act, so this is not a deterministic model. That
said, in order to control our personality, we need to be aware of it, so it is pivotal to understand
what our default tendencies and predispositions are if we are interested in changing them, or at
least inhibiting them during negotiations. As the great Jean-Jacques Rousseau said: “There are
times when I am so unlike myself that I might be taken for someone else of an entirely opposite
character.” By the same token, being aware of your personality will enable you to leverage your
natural style in situations that are a good fit for it, for talent is largely personality in the right
place.

Negotiation skills

Here are a few examples of negotiation skills that can make you an excellent negotiator at the
workplace:

Communication

Communication is the backbone of negotiation. The way you communicate decides the fate of
the negotiation. It involves identifying the nonverbal cues, using the right words and expressing
your thoughts in a compelling and engaging way. Without being verbose, you need to
communicate the right message to the party. Often, negotiators are active listeners that help them
understand the other party's message. A healthy conversation ensures a mutually beneficial deal
and avoids misunderstanding that could prevent the parties from reaching a compromise.

Strategising

There may be instances where the other party disagree with the solution you provide. Good
negotiators often come with one or more backup plans. Consider all solutions to the problem
before entering a negotiation. For example, when negotiating your salary, the HR manager may
refuse to increase your dearness allowance (DA). Instead of focusing on the DA, you could ask
for better retirement or gratuity benefits.

Planning

Proper planning before the negotiation ensures you know the long-term consequences of the
negotiation terms. Planning comes in handy during the negotiation process and ensures the
successful execution of the decision.

Persuasion

Successful negotiators can influence other parties. Unless you possess the persuasion skills, it
becomes difficult to justify how your solution will benefit both parties. Your persuasion skills
decide whether the other party agrees to your solution.

Listening

Active listening is the key to a successful negotiation as it ensures that you listen to the other
party and understand what they are trying to say. Also, with active listening, you do not miss out
on crucial information, which builds trust and helps reach a consensus faster.

Problem-solving

Most negotiations occur to find a solution to an issue. With excellent problem-solving skills, you
propose viable and intelligent solutions that are beneficial for both parties.