INTERNATIONAL MANAGEMENT Chapter 10: Influence and Negotiation
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Chapter 10
INFLUENCE AND NEGOTIATION
Learning Objectives
After studying this chapter, you should be able to:
2. identify and analyze the six primary approaches to influence.
4. analyze the international applications and concerns.
General Teaching Suggestions
Consider an important political or economic issue in the country. Have the students
discuss the proceedings of the issue. Identify the challenges and successes of the
negotiation process.
Opening Case Discussion Guide
The case illustrates Unilever’s efforts at combining efforts with not-for-profit
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CHAPTER OUTLINE: KEY CONCEPTS AND TERMS
Sections I through V of Chapter 10
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I. PERSUASION
1. Key Concepts
It is important to distinguish between persuasion and influence.
• Persuasion and Influence: Persuasion is a change in a private attitude or belief
resulting from the receipt of a message. Influence is an action that leads to a
change in behavior. Persuasion is a deeper form of change than influence. The
2. Key Terms
• Influence – Seeking to change people’s behaviors.
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• Persuasion – Seeking to change people’s beliefs or attitudes.
• Cognitive response model of persuasion – A model of persuasion that views the
II. INFLUENCE
1. Key Concepts
Social influence is defined as encouraging a change in behavior that was caused
by real or imagined external pressure. There are three behavior outcomes deriving
from a successful influence attempt:
i. conformity,
ii. compliance, and
iii. obedience.
• Six Universal Principles of Influence
Social psychologist Robert Cialdini has identified six universal principles of
influence.
doing this, but don’t you do it.’’
• Authority: People are also influenced by authority and expertise because it gives
them a shortcut to an assessment or decision—if the authority says so, it must be
ok. The authority principle is helpful to some extent because we do not have time
• Liking: People also seek opinions from and are thus influenced by those who
they like, are similar to, or feel connected with in some way. Two striking factors
that increase liking are: similarity and praise. Similarity increases liking: The
INTERNATIONAL MANAGEMENT Chapter 10: Influence and Negotiation
because most individuals prefer to be consistent with statements and beliefs that
they have made public so as to reduce cognitive dissonance.
• Scarcity: People find objects and opportunities more attractive to the degree that
they are scarce, rare, or dwindling in availability. Reactance basically states that
when we are told that we cannot have or do something, then we want it more.
2. Key Terms
• Conformity – Changing one’s behavior to match the responses or actions of
others, to fit in with those in proximity.
• Compliance – The act of changing one’s behavior in response to a direct request.
• Obedience – A special type of compliance that involves changing one’s behavior
in response to a directive from an authority figure.
• Social proof – A principle of influence that states people are more likely to want
to do something if they believe that many others are doing the same thing or
buying the same product.
• Authority – A principle of influence that states people are more likely to say yes
to a request or purchase a product if an authority says it is good to do so.
• Liking – A principle of influence that holds that people are more likely to be
III. NEGOTIATIONS
1. Key Concepts
• Cognitive Shortcuts and Negotiation: Even in the careful, studied process of a
long negotiation, people’s decisions can be affected by availability, loss aversion,
consistency, and other heuristics that bias decisions.
• A Rational Approach to Negotiation: In international business, it is essential to
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2. Key Terms
IV. THE NEGOTIATION PROCESS
1. Key Concepts:
• Heuristics and Biases Revisited: Some of decision-making heuristics are quite
useful because they reduce the amount of time and effort needed to make a
decision.
• Unrealistic Expectations: Negotiators need to recognize that unrealistic
expectations can include those that are too high or too low.
• Anchors: Anchoring is a cognitive bias that describes the common human
• Escalation of Commitment: Pressure caused by the threat of failure or not
reaching an agreement in a negotiation can be significant leads managers to
sometimes escalate their commitment during a negotiation until they end up
accepting a deal that they should have walked away from.
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• Target Price: Negotiators should also set targets for what the price they wish to
pay or receive. This is the value that you would like to have—your preferred, or
‘‘blue sky,’’ agreement.
• Framing: Negotiators can react very differently to identical proposals when the
perspective, or framing, changes. The way a situation is framed or presented also
• Impasses in Negotiations: Several strategies can help restart stalled negotiations.
First, try to focus on underlying interests or values rather than only on positions.
Second, as the reciprocation principle recommends, make an initial small
concession, then suggest one in return. Third, the arbitrator also suggested that it
may be helpful to bring in a third party. In cases where you cannot reach an
agreement, always terminate a negotiation cordially. An ultimatum is an attempt
to break an impasse and force a deal.
• Positive Emotion
Negotiators who are in positive moods are more likely to achieve integrative
agreements. Emotions can be very important in negotiation and decision making,
diversity.
2. Key Terms
• BATNA – The Best Alternative to a Negotiated Agreement
• Reservation Price – A reservation price is the absolute bottom price that is
acceptable.
V. SUMMARY
1. Key Concepts:
• Persuasion and influence are important skills that international managers can
learn that will help them in negotiating, selling, and managing on a day-to-day
basis.
INTERNATIONAL MANAGEMENT Chapter 10: Influence and Negotiation
• Knowledge of these principles can help managers and organizations empower
employees, customers, or clients to make better-informed decisions.
• Some common judgment errors often undermine our abilities to negotiate optimal
agreements:
i. Under- or overconfidence.
ii. Escalation of commitment.
iii. Over-competitiveness
iv. Irrelevant anchors.
v. Biased framing
vi. Unrealistic risk assessment.
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END-OF-CHAPTER GUIDE
* MANAGERIAL GUIDELINES
* OPENING VIGNETTE DISCUSSION QUESTIONS
* DISCUSSION QUESTIONS
* IN-CLASS EXERCISES
* TAKE-HOME EXERCISES
* SHORT CASE QUESTIONS
MANAGERIAL GUIDELINES
1. Do not insist on too good a deal.
3. Be sure that the other party understands the cost of the concessions to your own
team.
5. Distrust will undermine your long-term agreements and block future agreements.
OPENING VIGNETTE DISCUSSION QUESTIONS
1. Do you think that partnerships between non-profit and for-profit entities have the
opportunity to be beneficial to all parties as it was in this case?
2. What other societal problems do you think could be solved by for-profit and non-
profit entities working together?
3. What are the difficulties that could arise in the negotiations between the parties in
those settings?
DISCUSSION QUESTIONS
1. American political consultants now often work for politicians in other countries.
Why do you think their persuasion and promotion techniques seem to be
transferable to other countries and cultures worldwide?
Research on the persuasion and influence has provided negotiators with powerful
2. Why might advertising campaigns have to be changed to be effective while
campaign methods would not?
The campaign methods that are used will be based on the negotiations and
3. How must your negotiation style change when dealing with a unionized plant as
an active multinational enterprise in a Latin American country versus that in the
U.S.?
4. What differences in cultural biases in making decisions do you think would exist
between North American and European managers?
INTERNATIONAL MANAGEMENT Chapter 10: Influence and Negotiation
Expectations of reservation price, concepts of fair distribution, and so on would
5. Suppose someone says: ‘‘I cannot understand why that guy [a mutual friend] did
not help me out last week. I mean, we are friends, aren’t we?’’ What influence
principle is your friend invoking? What is the downside of depending too much
on that principle and what might you recommend to him in dealing with that other
guy in the future?
IN-CLASS EXERCISES
1. Break into an equal number of teams and then pair up into teams of two. One
team will be the seller of a product while the other will be the buyer. Your
instructor will give each team some business specifics that the other team is not to
know about. Conduct a negotiation to buy a given number of products.
2. Influencing someone to do something and motivating someone to do something
seem to be about the same. Discuss with your neighbor how these two general
actions are different and give one action for each.
3. Why is it good to acknowledge a weakness in your argument or position first
before proceeding with trying to persuade someone? What does research show
about how you will most likely be perceived?
4. Break into teams of two. Discuss buying a lathe (a machining tool) and what
types of information you might need to have before entering into the negotiation
process.
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TAKE-HOME EXERCISES
1. Research a failed negotiation using an online search engine like Google. Identify
what you think was the principal cause of the failed negotiation.
Students should target a failed negotiation and identify the principal cause of
failure. The could consider the common judgment errors that often undermine our
abilities to negotiate optimal agreements:
i. Overconfidence
ii. Escalation of commitment.
2. Research a recent labor or sports figure negotiation. Detail the nature of these
negotiations and how they illustrate the concepts discussed in this chapter.
Students should examine the following factors that influence the negotiation
process:
i. Heuristics & biases
3. Based on earlier discussions of mergers and acquisitions, identify an international
merger or acquisition using an online search engine. What were the nature of the
negotiations that occurred for that M&A? How long did the negotiations take?
4. Research negotiations that have attempted to end a standoff in a country or region
facing severe political impasses. How do these negotiations differ from those in
business?
Political impasses might not have factors of reservation price or target price
SHORT CASE QUESTIONS
1. What do you think the differences would be in negotiations in Ireland and
Britain? Scotland and Britain?
Although principles of influence and negotiation have proven to be fairly uniform
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2. Do you think regional differences in a large country like China also have an
impact with different regions having different styles of negotiations?
As discussed in the chapter, cultural differences within the countries, as in
3. What might be the differences in the negotiations in the same industry, such as
venture capital, around the world?