Lesson 3 - FINAL - May 27th

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    2011 IBEC Co., Ltd. - Lesson 3 Identifying Issues 1

    Identifying Issues

    1. Student-Lead Discussion Based on Pre-Reading (30 min.)

    1. Pre-Reading

    Pre-Reading Goals

    After reading this chapter, you should be able to understand:

    Opening Negotiations Identifying Issues Identifying Issues Clarifying Questioning Confirming Setting the Agenda Collaborative Negotiations Creating Win-Win Outcomes Focusing in Interests, not Positions

    Lesson Objectives

    After this lesson, you will be able to:

    1) Understand principled negotiation2) Focus on interests, not positions3) Create win-win negotiations4) Open negotiations effectively5) Identify issues

    3

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    2011

    C C

    - ss 3

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    1.

    Getting to YES

    1.1 O

    w

    Made fam ! " s by the 1981 bestselling book on negotiation,Getting to YES, which many consider

    to be the ultimate negotiation guidebook, the concept of principled negotiations means to

    negotiate based on principles based on objective facts and merits rather than through a

    drawn-out haggling process focused on what each side says they will and will not do. Developed

    at the Harvard Negotiation Project, it explains the importance of looking for mutual gains

    wherever possible and insisting on using fair standards independent of either partys demands.

    Principled negotiation is hard on meritsand soft on people, stressing fairness above all.

    1.2 Getting to YESSu# #

    $ %y Article

    y Read the following article.

    In the classic textGettingtoYES, Fisher and & ry describe their four principles for effective

    negotiation.

    Their four principles are:

    1. Separate the people from the problem2. Focus on interests rather than positions3. Generate a variety of options before settling on an agreement4. Insist that the agreement be based on objective criteria

    Separatin ' People an ( Issues

    Fisher and ) ry's first principle is to separate the people from the issues. People tend to become

    personally involved with the issues and with their side's positions. And so they will tend to take

    responses to those issues and positions as personal attacks. Separating the people from the

    issues allows the parties to address the issues without damaging their relationship. It also helps

    them to get a clearer view of the substantive problem.

    The authors identify three basicsorts of people problems. First are differences on perception

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    among the parties. Since most conflicts are based in differing interpretations of the facts, it is

    crucial for both sides to understand the other's viewpoint. The partiesshould try to put

    themselves in the other's place. The partiesshould not simply assume that their worst fears will

    become the actions of the other party. Nor should one side blame the other for the problem.

    Each side should try to make proposals which would be appealing to the other side. The more

    that the parties are involved in the process, the more likely they are to be involved in and to

    support the outcome.

    Emotions are a second source of people problems. Negotiation can be a frustrating process.

    People often react with fear or anger when they feel that their interests are threatened. The first

    step in dealing with emotions is to acknowledge them, and to try to understand their source.

    The partiesmust acknowledge the fact that certain emotions are present, even when they don't

    see those feelings as reasonable. Dismissing another's feelings as unreasonable is likely to

    provoke an even more intense emotional response. The partiesmust allow the other side to

    express their emotions. They must not react emotionally to emotional outbursts. Symbolic

    gesturessuch as apologies or an expression ofsympathy can help to defusestrong emotions.

    Communication is the third main source of people problems. Negotiatorsmay not be speaking

    to each other, but may simply be grandstanding for their respective constituencies. The parties

    may not be listening to each other, but may instead be planning their own responses. Even

    when the parties are speaking to each other and are listening, misunderstandingsmay occur.

    To combat these problems, the partiesshould employ active listening. The listenersshould give

    the speaker their full attention, occasionally summarizing the speaker's points to confirm their

    understanding. It is important to remember that understanding the other'scase does not mean

    agreeing with it. Speakersshould direct their speech toward the other parties and keep focused

    on what they are trying to communicate. Each side should avoid blaming or attacking the other,

    and should speak about themselves.

    Generally the best way to deal with people problems is to prevent them from arising. People

    problems are less likely to come up if the parties have a good relationship, and think of each

    other as partners in negotiation rather than as adversaries.

    Focus on Interests

    Good agreements focus on the parties' interests, rather than their positions. As Fisher and 0 ry

    explain, "Your position issomething you have decided upon. Your interests are what caused you

    to so decide. "Defining a problem in terms of positionsmeans that at least one party will "lose"

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    the dispute. When a problem is defined in terms of the parties' underlying interests it is often

    possible to find a solution which satisfies both parties' interests.

    The first step is to identify the parties' interests regarding the issue at hand. Thiscan be done

    by asking why they hold the positions they do, and by considering why they don't hold some

    other possible position. Each party usually has a number of different interests underlying their

    positions. And interestsmay differ somewhat among the individual members of each side.

    However, all people will share certain basic interests or needs, such as the need for security and

    economic well-being.

    1 nce the parties have identified their interests, they must discuss them together. If a party

    wants the other side to take their interests into account, that party must explain their interests

    clearly. The other side will be more motivated to take those interests into account if the firstparty shows that they are paying attention to the other side's interests. Discussionsshould look

    forward to the desired solution, rather than focusing on past events. Partiesshould keep a clear

    focus on their interests, but remain open to different proposals and positions.

    Generate Options

    Fisher and 2 ry identify four obstacles to generating creative options for solving a problem.

    Partiesmay decide prematurely on an option and so fail to consider alternatives. The parties

    may be intent on narrowing their options to find the single answer. The partiesmay define the

    problem in win-lose terms, assuming that the only options are for one side to win and the other

    to lose. 3 r a party may decide that it is up to the other side to come up with a solution to the

    problem.

    The authors also suggest four techniques for overcoming these obstacles and generating

    creative options. First it is important to separate the invention process from the evaluation

    stage. The partiesshould come together in an informal atmosphere and brainstorm for all

    possible solutions to the problem. Wild and creative proposals are encouraged. Brainstorming

    sessionscan be made more creative and productive by encouraging the parties to shift between

    four types of thinking:stating the problem, analyzing the problem, considering general

    approaches, and considering specific actions. Partiesmay suggest partial solutions to the

    problem. 3 nly after a variety of proposals have been made should the group turn to evaluating

    the ideas. Evaluation should start with the most promising proposals. The partiesmay also

    refine and improve proposals at this point.

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    Participantscan avoid falling into a win-lose mentality by focusing on shared interests. When

    the parties' interests differ, they should seek options in which those differencescan be made

    compatible or even complementary. The key to reconciling different interests is to "look for

    items that are of low cost to you and high benefit to them, and vice versa."[p. 79] Each side

    should try to make proposals that are appealing to the other side, and that the other side would

    find easy to agree to. To do this it is important to identify the decision makers and target

    proposals directly toward them. Proposals are easier to agree to when they seem legitimate, or

    when they are supported by precedent. Threats are usually less effective at motivating

    agreement than are beneficial offers.

    Use O45

    ective Criteria

    When interests are directly opposed, the partiesshould use objective criteria to resolve their

    differences. Allowing such differences to spark a battle of wills will destroy relationships, is

    inefficient, and is not likely to produce wise agreements. Decisions based on reasonable

    standardsmake it easier for the parties to agree and preserve their positive relationship.

    The first step is to develop objective criteria. 6 sually there are a number of different criteria

    which could be used. The partiesmust agree which criteria is best for their situation. Criteria

    should be both legitimate and practical. Scientific findings, professional standards, or legal

    precedent are possible sources of objective criteria. 7 ne way to test for objectivity is to ask if

    both sides would agree to be bound by those standards. Rather than agreeing in substantive

    criteria, the partiesmay create a fair procedure for resolving their dispute. For example,

    children may fairly divide a piece ofcake by having one child cut it, and the other choose their

    piece.

    There are three points to keep in mind when using objective criteria. First each issue should be

    approached as a shared search for objective criteria. Ask for the reasoning behind the other

    party'ssuggestions. 6 sing the other parties' reasoning to support your own position can be a

    powerful way to negotiate. Second, each party must keep an open mind. They must be

    reasonable, and be willing to reconsider their positions when there is reason to. Third, while

    they should be reasonable, negotiatorsmust never give in to pressure, threats, or bribes. When

    the other party stubbornly refuses to be reasonable, the first party may shift the discussion

    from a search for substantive criteria to a search for procedural criteria.

    2. 0 Openin8

    Negotiations When opening any negotiation, it is essential that each party has a clear understanding of the

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    issues to be discussed, and that each side clarifies and confirm these issues.

    2.1 Presenting Overall O9 @

    ectives

    It iscritical to identify both overall objectives and specific points before a negotiation begins, as

    this helps to move the discussion along as efficiently as possible. To begin, it is important to

    make a general statement regarding the meetings overall objectives. Thiscomment does not

    need to be specific in nature, but rather a broad declaration of the main idea(s).

    Key Phrases

    The purpose of our meeting today is to discussthe price pointofournewproduct. We are here today to talk abouthowwecan reduceouroverheadnextquarter. Today we are here to look into the option of expandingour productline-up.

    2.2 Identifying Specific Points

    After making a general statement, it is important to identify specific points which will be

    addressed in the meeting. This allows everybody to be aware of the individual topics and thus

    helps the discussion to move forward smoothly.

    Key Phrases

    In particular, we need to address theissueofpricing. Specifically, we should talk abouttheimportanceofon-time delivery. In detail, it is important that we discuss the final quantity and price.

    Sample Dialogue

    A: The purpose of our meeting today is to talk about the possibility of our becoming your

    exclusive distributor in Japan.

    B: Yes, thats right. In detail, it is important that we discuss the pricing, quantity and

    payment terms. These issues are the top priorities for us.

    A: I see. In particular, we need to address the issue of pricing, I think.

    B: I agree with you. Taking the timing into consideration, we should try to agree on as

    many points as possible during our meeting today.

    A: I think so, too. As I mentioned in my e-mail yesterday, our target is 1,500 per unit. Would

    it be possible for you to meet that price?

    2. A Clarifying Issues

    In order ensure a smooth flow to the negotiation, each party should ask for clarification of the

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    othersspecific position on the variousmatters.

    Key Phrases

    In other words, do you mean that most important issue for you is price? IfIunderstand you correctly, you said your top priority is to discuss the quantity? Please let me clarify one other point: stable supply ismost important, right?

    Sample Dialogue

    A: Based on your comments before, let me check my understanding.In other words, do you

    mean that the most important issue for you is price?

    B: Yes, thats correct, since market conditions remain very weak at the moment. If I

    understand you correctly, you said your top priority is to discuss the quantity?

    A: Absolutely. The minimum quantity you order is a major issue for us, ofcourse.Please let

    me clarify one other point: stable supply ismost important for you, right?

    B: Oh, it is very important, since we need to ensure that we can meet our clients delivery

    demandsconsistently. Ofcourse, the price is also a critical issue.

    A: I understand your position, and Imsure we can offer a satisfactory delivery schedule.

    2.4 Confirming Issues

    At this point of the negotiation opening, each party should confirm once more to avoid any

    possible confusion. This helps to ensure that the discussionscan move forward without any

    information gaps holding back a positive outcome.

    Key Phrases

    Its clear to me that your number one priority is price. Correct? I think you said that we can discussthe quantityfurther, basedonthe price, right? Please let me confirm: stablesupplyisoneofthemostimportantareas.

    Sample Dialogue

    A: Judging from what you said, its clear to me that your number one priority is price.

    Correct?

    B: Yes, thats exactly right, since we need to be careful based on the economy.Ithink you said

    that we can discuss the quantity further, based on the price, right?

    A: Yes, I think we can. Please let me confirm: stable supply is nearly as important for you as

    the price. Do I understand correctly?

    B: Yes, you do. We have had some trouble in that area with previoussuppliers.

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    A: Imsorry to hear that and understand the situation. We will do everything possible to meet

    your supply needs, I promise.

    2.5 Setting the Agenda

    After clarifying and confirming the issues that need to be discussed, the next stage is to set the

    agenda. You need to agree on the order in which to discuss the issues.

    Key Phrases

    If you agree, Iwould like to open with yourannual quantity requirements. After that, we should discussprice details. We can then move on and talk aboutleadtime, paymenttermsandservice. As we have limited time, Isuggest we concentrate on quantityand price.

    Sample Dialogue

    A: I think we have covered everything, but, if possible, we would like to hear about the

    quality of your steel and the stability of your supply first. After that, we should discuss

    price details.

    B: I understand, and I can explain that, ofcourse.As we have limited time, Isuggest we

    concentrate on your expected quantity and price.

    A: I see. Well, where do you think we should start?

    B:If you agree, Iwould like to open withyour annual quantity requirements.

    2.6 Noting the Time Frames

    After setting the agenda, it is a good idea to set some kind of time frame in which the

    negotiation should be completed.

    Key Phrases

    Given the urgency of the situation, we have to finish by3pm. Taking the timing into consideration, we should try to wrap up bynoon. If possible, we would like to reach an agreement no later thanthe end of the day.

    2.7 Starting the Negotiation

    The last stage isstarting the negotiation..

    Key Phrases

    With your agreement, Iwould like to start bydiscussing the price.

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    If there are no questions, let me begin by addressing the issue ofshipping costs. If everyone is ready, please allow me to bring up the subject ofqualitycontrol.

    3. 0 Collaborative Negotiations

    Collaborative negotiations are those in which the negotiating parties have goals which are

    clearly related to the positive outcome. They tend to be long-term in focus, with the parties

    intending to work together in the future; therefore they involve a spirit of trust, openness,

    active listening and jointly exploring possible alternatives during the negotiation.

    3.1 Creating Win B WinOutcomes

    To reach decisions which satisfy the interests of both sides in a negotiation, partiesmust be

    predictable and flexible, share information honestly and treat each other with respect. They

    should use logic, creativity and a constructive attitude to achieve the desired outcome, always

    asking What are the best ways to positively address the interests of all parties involved?

    Key Phrases

    Icompletely understand your interest in buyingatthe lowestpossible price. Your concern about the quantity seems reasonable basedon yourwarehousespace. Icertainly see your point regarding the delivery date duetothemanufacturingtime.

    Sample Dialogue

    A: Icompletely understand your interest inbuying at the lowest possible price, since you

    think that the market will remain weak.

    B: Thank you. Im glad you can see our long-terms interests on this issue. We must be very

    sensitive about the price point.

    A: I know. Your concern about the quantity seems reasonable, too,based on your

    warehouse space.

    B: I appreciate your understanding. As for the delivery schedule,Icertainly see your point

    regarding the date based on the manufacturing lead time. I hope we can work this out.

    A:I do, too, and I will certainly try my best.

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    3.2 Focusing on Interests, not Positions

    This is one of the most important elements in the book Getting ToYES, and essential means

    that a skilled negotiator must focus on their counterparts interests instead of simply the

    persons positions. According to the book, the fundamental problems which arise in a

    negotiation stem not fromconflicting positions but rather fromconflicts between the parties in

    terms of their individual needs, desires, concerns and fears; these four areas define the

    personsinterests, which in turn lead the person to taking a concrete position.

    Key Phrases

    It seems that you want a lower price since youthinkthatthemarketwill remainweak. I think your concern about the quantity is because yourwarehousespaceis limited. Your comment regarding the delivery dateseemsto be duetothemanufacturingtime.

    Sample Dialogue

    A: It seems that you want a lower price since you think that the market will remain weak.

    B: Yes, that is correct. Our primary interest is in maintaining positive cash flow since the

    economy is not improving quickly. Price is a major concern.

    A: I understand. I think your concern about the order quantity is because your

    warehouse space is limited. Is that accurate?

    B: Thats true. We have only one small warehouse in Saitama, so we must be cautious about our

    stock levels at all times. Your comment regarding the delivery date seems to be due to

    the required manufacturing lead time.

    A:Right. Frankly speaking, I am not sure that delivery in early December is realistic in thiscase.

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    4.0 Mitsui & Co. Application

    Lets focus on your own negotiation at Mitsui &Co. the Challenging Negotiation that you wrote

    down in the table fromPre-Reading 2, Exercise 4.0

    1. List your interests in this negotiation.2. List the other parties interests in this negotiation3. Indicate whether these interests are shared, differing, or conflicting4. Indicate the priority level of these interests.5. Be prepared to present these interests to your fellow classmates in the beginning of the

    class.

    Interest Type Priority

    Your Interests

    Their Interests

    Type: S=Shared, D=Differing, C=Conflicting

    Priority: H=High, M=Medium, L=Low

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    Pre-Class Reading Worksheet

    Check your Understanding

    1. Do you understand why you should separate people from the problem?Yes /No

    2. Do you understand why you should focus on interests not positions? Yes /No

    3. Do you understand why you must generate a variety of issues before settling on a

    agreement? Yes /No

    4. Do you understand why you should insist that agreement be based on objective

    criteria? Yes /No

    5. Are you confident that you know how to open a negotiation effectively?Yes /No

    Points Requiring Clarification

    1.

    2.

    3.

    Points for Discussion

    1.

    2.

    3.

    Points to Expand Upon

    1.

    2.

    3.

    Points of Personal Interest

    1.

    2.

    3.

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    Discussion Questions

    Topic: Principled Negotiations

    Warm-up question

    Think about one of your recent experiencesnegotiating for Mitsui &Co.

    Discuss one specific example ofstrategies/actions you used using to achieve mutual benefits for

    both sides in these negotiations

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    Discussion questions

    1. Discuss a specific example of how you can focus on the interests and not the positions in

    negotiations.

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    2. Discuss how you can find out more about the other party's interests in the negotiations.

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    __________________________________________________________________________

    2

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    Application

    C . Application of Pre-Reading (30 min.)

    1.0 The Interests of your Challenging Negotiation

    TASK 1

    Lets focus on your own negotiation at Mitsui & Co.

    y Present the interests of your challenging negotiations to your classmates (fromExerc

    D

    se4.0, MD

    E s FD

    & Co. ApplD

    cG

    E

    D

    on, H re- I eading 3.)

    What are your interests in this negotiation? What are the other partys interests in this negotiation? Explain whether these interests are shared, differing, or conflicting Explain the priority level of these interests.

    3

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    2.0 Opening a Negotiation

    TASK 2

    1. Work with a partner and match the stage of the negotiation with the correct phrase.2. Number the stages in the correct order.

    Opening Negotiations

    1. Setting the Agenda A. Please let me clarify one other point: stable supply ismost important, right?

    2. Identifying Specific

    Points

    B. Please let me confirm: stablesupplyisoneofthemostimportantareas.

    3. Confirming issues C. We can then move on and talk aboutleadtime,paymenttermsandservice.

    4. Starting the

    Negotiation

    D. Specifically, we should talk abouttheimportanceofon-time delivery.

    5. Clarifying Issues E. The purpose of our meeting today is to discusstheprice pointofournewproduct.

    6. Presenting Overall

    Objectives

    F. If everyone is ready, please allow me to bring upthe subject ofquality control.

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    Key Phrases Opening Negotiations

    Presenting

    Overall

    Objectives

    The purpose of our meeting today is to discussthe price pointofournewproduct.

    We are here today to talk abouthowwecan reduceouroverheadnextquarter.

    Today we are here to look into the option of expanding our products.Identifying

    Specific Points

    In particular, we need to address theissueofpricing. Specifically, we should talk abouttheimportanceofon-time delivery. In detail, it is important that we discuss thefinal quantityand price.

    Clarifying Issues In other words, do you mean that most important issue for you isprice?

    IfIunderstand you correctly, you said your top priority is to discussthe quantity?

    Please let me clarify one other point: stable supply ismost important,right?

    Confirming

    issues

    Its clear to me that your number one priority is price. Correct? I think you said that we can discussthe quantityfurther, basedonthe

    price, right?

    Please let me confirm: stablesupplyisoneofthemostimportantareas.Setting the

    Agenda

    If you agree, Iwould like to open with yourannual quantityrequirements.

    After that, we should discussprice details. We can then move on and talk aboutleadtime, paymenttermsand

    service.

    As we have limited time, Isuggest we concentrate on quantity andprice.

    Noting the Time

    Frame

    Given the urgency of the situation, we have to finish by3pm. Taking the timing into consideration, we should try to wrap up by

    noon.

    If possible, we would like to reach an agreement no later than theend of the day.

    Starting the

    Negotiation

    With your agreement, Iwould like to start bydiscussing the price. If there are no questions, let me begin by addressing the issue of

    shipping costs.

    If everyone is ready, please allow me to bring up the subject ofquality control.

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    3.0 Identifying Issues

    a. Shall we begin?b. Actually, our standard policy is to c. Two of our top priorities are d. I hope we can come to terms.e. Well, we only have an 90minutes today, so f. The purpose of our meeting today is tog. I can understand why h. One of our top priorities is i. In addition, it is important that we discussj. Are there any other major discussion points for you?

    TASK

    Working with a partner, use the phrases from box above to fill in the spaces in the conversation

    below.

    A: 1. __________________ talk about the possibility of our company becoming the

    exclusive distributor of your new software in Japan.

    B: Yes, and that sounds very interesting to us.2. _________________ the pricing and your

    annual order volume. These issues are most important for us.

    A: I see. 3._________________ the payment terms.

    B: I understand. 4.______________we should try to agree on asmany points as possible

    during our meeting. 5._____________ the contract term for this deal, if we are able

    reach agreement on other issues. 6.______________________?

    B: Yes, actually, the shipping costs are a big factor.

    B: How do you deal with the shipping costs with your other software vendors?

    A: 7._________________split the costs 50/50.By doing so, we can offer competitive

    prices at the retail level, which iscritical for volume, ofcourse.

    B: Yes, I see and 8.________________ that particular issue is important.

    A: I appreciate that. 9.__________________.

    B: So do I. Well, as I said, we dont have much time today, so 10.__________________

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    Key Phrases for Identifying Interests

    Icompletely understand your interest in buyingatthe lowestpossible price. Your concern about the quantity seems reasonable basedon yourwarehousespace. Icertainly see your point regarding the delivery date duetothemanufacturingtime. It seems that you want a lower price since youthinkthatthemarketwill remainweak. I think your concern about the quantity is because yourwarehousespaceis limited. Your comment regarding the delivery dateseemsto be duetothemanufacturingtime.

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    3. Mitsui-Related Case Study - Negotiation Role Play (P

    Q min.)

    Negotiation practice

    Mitsui de MexicoSubsidiary ofMitsui in Mexico

    Jalisco Farmers AssociationAssociation representing the growers of blue agaveplant in Mexico

    3

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    Background information

    Mitsui de Mexico wants to purchase blue agave plants from the Jalisco Farmers Association.

    Blue agave is a plant that is an important economic product of the region of Jalisco, Mexico.

    Blue agaves are plants with spiky, fleshy leaves that can reach over two meters in height. The

    heart of the plant is also very large, normally weighing between 35~90 kg.

    Jalisco Farmers Association represents the local farmers in Jalisco who grow the blue agave.

    It is important to note that Jalisco is the only region in Mexico where it is allowed to grow blue

    agave, and the Jalisco Farmers Association controls the entire supplychain.

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    Negotiation Preparation Sheet

    1. ________________________________________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    _____________________________________________________________________________

    2. _______________________________________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    _____________________________________________________________________________

    ______________________________________________________________________________

    3. _______________________________________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    _____________________________________________________________________________

    _____________________________________________________________________

    4. _______________________________________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    ______________________________________________________________________________

    _____________________________________________________________________________

    3

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    2011 IBECCo., Ltd. - Lesson 3 Identifying Issues 22

    Negotiation Tips

    You should remember the tips below both before and during anynegotiation,

    as theywill help you achieve the most positive results.

    Separate the people from the problem.If you focus only on the individual rather thanthe issues at hand during the negotiation, it can cause negative emotions, which usually

    will damage the outcome of the negotiation.

    Focus on interests rather than positions.Focusing on positions only threatens tobreak down negotiations, as each party with tend to stop listening closely to the other.

    Alwaysconcentrate on you and the other partysinterests in order to reach agreement.

    Generate a variety ofoptions before settling on an agreement.A successful

    negotiator must be creative, always exploring new options with which their counterpart

    may agree.

    Insist that the agreement be based on objective criteria.A talented negotiator willuse logic to support their interests, based on facts and data. Not doing so means that your

    reasoning is unsupported.

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