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    East-West Negotiation Strategies: Dealing with Seniority Status

    September 18th, 2014  by  Asia-Pacific Global Research Group - Jasper Kim

    11503915-3d-rendering-of-signs-with-west-and-east-pointing-in-opposite-directions
    Seniority is a near universal norm. Those who are older in age are generally given more deference and respect by those who are less senior and younger. So how is this different in Confucian cultures? Probably it’s the degree of deference and respect given to elders, which typically goes much beyond many Western “Socratic” cultures.
     
    Within the Confucian Code, age is a valuable poker chip. It may well surpass all other factors in determining who is in the more senior bargaining position. Conversely, those who appear young are generally viewed as inexperienced and more of a pupil than a master. This is in stark contrast to many Western cultures where youth is viewed as beneficial since it may provide a new perspective (albeit at the cost of lengthier experience).
     
    A problem occurs to a mainframe computer system in Japan. The person who is best positioned to understand and solve the problem is a relatively junior worker from California who has three years of experience. Although young, he knows the mainframe computer as well as anyone in the firm. So he is sent to Tokyo the next day. Upon his arrival, he notices right away that the reception he receives at the Japanese firm is less than friendly. Why would this be the case, he asks himself. After all, he is there to help the company solve the problem.
     
    Any guesses? It turns out that it was a Confucian Code gap in terms of how to solve the problem. Both sides certainly shared the same goal of solving the mainframe computer problem. But the “Socrates v. Confucius” invisible non-meeting of the minds occurred because of differences in the process of how to solve the problem, specifically, who should be sent to solve the problem.
     
    For the Socratic side, it believed it did the right thing by sending the most qualified person (based on knowledge, not on age). But for the Confucian side, it also believed it did the right thing by expecting an experienced person to do the job (which under the Confucian Code is generally thought of as a person with many years of experience).
     
    Was one side intentionally acting in bad faith leading to this gap? Absolutely not. Both acted reasonably and did in the right thing according to each sides’ respective view based on two separate cultures–which can be akin as operating systems in a smartphone–both trying to get the job done but in different approaches.
     
    Ideally, a person who appears in form to be senior, while also having a good working knowledge of the issue at hand would be the ideal situation. But if this isn’t possible, then spending slightly more on two people (or similar team composition) with a person who understands a particular issue in great detail along with a person with less detailed knowledge but appearing more senior could be the next best thing.

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     

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    Relationships in Asian Negotiations: Knowing What You Want (To Get What You Want)

    August 21st, 2014  by  Asia-Pacific Global Research Group - Jasper Kim

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    Do you value all relationships equally for the Asia-Pacific markets?
     
    Your answer should be no. We may all have a sense and have been told that relationships dealing with Confucian cultures are important. But the better question is, “Why do place value on relationships?” It is generally for the expected value (EV) derived or desired relating to a particular relationship where negotiation, persuasion, and influence may be needed. Your relationship calculation is based on all the information available to you (both public and non-public).
     
    Thus prioritize the relationships into the following matrix:
    Y axis (Time): Short-term, Medium-term, and Long-term
    X axis (EV): Low, Medium, and High
     
    The strategic question is thus, “Which matrix box does your relationship fit in?”
     
    The higher your EV, the more resources in terms of time, energy, and economics should be invested into the relationship. Conversely, if your relationship EV is low, then you should strategically minimize your exposure for the sake of the relationship.
     
    Your family will likely have a high relationship EV. The person selling you a used hat at the local flea market will likely have a low relationship EV. Your relationship EV calculation should be done in the preparation (pre-negotiation) stage. This is then constantly calibrated as more information and details become available and are incorporated into your EV matrix.
     
    This strategy in effect reverse engineers your desired relationship outcome. You first decide what you expect and/or aspire towards in the relationship, and then work backwards to step one.
     
    Your relationship EV calculation will clarify exactly what relationship you want, incorporating why you want such relationship level.

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     

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    Trust-Building in Negotiations: Key Points

    July 23rd, 2014  by  Asia-Pacific Global Research Group - Jasper Kim

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    How do you establish trust in negotiations?
     
    How to establish trust is the source of much attention in the negotiation field. This makes sense, since for many, negotiation success is largely driven by the level of trust established between the parties.
     
    A. Being Aware of Your Negotiation Trust Level

     
    The first step towards establishing trust is a keen understanding and awareness of the exact level of trust among the negotiation parties.
     
    Three Levels of Trust:
     
    According to Accordence, three levels of trust-related elements exist:
    1. Rapport: This represents the initial negotiation stage. It involves mostly superficial exchanges between the parties. Examples include shaking hands, exchanging contact details, and superficial level of information exchange. Here, no duty to the relationship exists.
    2. Reciprocity: This represents the mid-tier negotiation stage. It involves more substantive exchanges between the parties. Examples include a “give and take” in terms of information, and communication attempts seeking clarity regarding negotiation positions (“what” is being sought) and interests (“why” such positions are being sought). Here, a testing of the relationship occurs.
    3. Trust: This represents the upper-tier negotiation stage. It involves substantive exchanges between the parties. Such exchanges do not always need to be an equal quid pro quo. Even if a misunderstanding or good faith mistake occurs by one party, a benefit of the doubt is usually given by the counterparty. Here, both parties are working for the sustainable benefit of the working relationship.
     
    B. Establishing Trust Through the Likeness Theory:

     
    One such approach is the “likeness theory.” The likeness theory states what many of us may already instinctual believe to be true. That is, parties tend to trust others who are similar to themselves.
     
    This may seem obvious, but it has real potential upside in your negotiations. Beyond the superficial differences, seek specific (over general) similarities with your negotiation counterparties. Doing so, will help to accelerate and further trust. If not done, studies have shown that tendencies towards negative “biases” exist that may have the exact opposite of effect, that is,of acting as barriers to establishing trust. Such biases, according to the studies, include gender and racial stereotypes.
     
    Executive Summary:
     
    Keep in mind the three stages of trust. Awareness of which specific trust stage you and your negotiation team is in may help to determine your future negotiation strategies. Also have an expected value (EV) calculation in terms of the value of the counterparty relationship. If it is high, your aspirational negotiation stage should commensurately also be high. Thus, more effort and resources should be expended towards the relationship. Conversely, if it is low, then your aspirational negotiation stage should commensurately also be low. Thus, less effort and resources should be expended towards the relationship.

     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     

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    Hidden Meanings in Negotiations: 5 1/2 Things to Know

    June 21st, 2014  by  Asia-Pacific Global Research Group - Jasper Kim

    Negotiation
     
    Negotiation is based on communication. Communication, in turn, is based on verbal and non-verbal communication.
     
    Science and studies have led to some startling and valuable findings that may provide “hidden meanings” for your negotiations.
     
    They include the following:
     
    1. Opposites: Some expressions when said are signals that mean the opposite of what is being said. Examples include, “In my humble opinion…” and “Although I sympathize with your opinion..”
     
    2. Prenouncements: Prenouncements are neuro-linguistic cues. Examples include “As you are aware,” “Before I forget,” “Incidentally,” and “By the way.” When these terms are verbally communicated, it can signal to the listener that an important fact or opinion (potential game changer) may follow such expressions, hence the term prenouncement (words prior to an important announcement).
     
    3. Legitimizers: Legitimizers are terms used that attempt to legitimize a subsequent statement. Examples include “Frankly,” “Honestly,” and “To be honest.” Ironically, such terms used to justify a subsequent statement may be a hidden clue that this may not necessarily be true.
     
    4. Justifiers: Justifiers are linguistic terms used to prepare the listener for failure or not meeting expectations. Examples include “I’ll try my best” and “We’ll see what we can do.” As a countermeasure, the listener should then try to recalibrate the expectation value (in negotiation jargon, aspiration point) upwards.
     
    5. Erasers: Erasers are words used that completely reverse (negate) some, most, or all of what was just said. The main two examples are “But” and “However.” From a neuro-linguistic perspective, the listener remembers very little of what was said prior to such eraser verbiage. Instead, try using “At the same time,” or “Having said that.”
     
    5 1/2. Deceptions: Decepter linguistics are terms that serve to disguise the true knowledge or skill-set of the negotiator. Examples include “I didn’t graduate from a big name school, but” and “Although I’m not an expert.”
     
    Excerpts inspired in part from Secrets in Power Negotiating by Roger Dawson.
     
     
     
    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     

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    Thailand’s Military Strikes Back: Tail Risks Explained (Asia-Pacific Global Research Group)

    June 6th, 2014  by  Asia-Pacific Global Research Group - Jasper Kim

    An anti-government protester gestures towards anti-riot policemen outside the headquarters of the ruling Puea Thai Party of Prime Minister Yingluck Shinawatra in Bangkok
     
    It has been six months since our initial Asia-Pacific Global Research Group report on Thai political unrest and its potential impacts on investing in Thailand. In this blog we continue our analysis of the situations in Thailand and highlight some issues as they became illuminated during the past six months, as well as identifying further potential issues. We think it is helpful to use the concept of tail risk as a framework for the analyses because, as the recent media coverage about Thailand has demonstrated, events unfolding after our report six months ago appeared quite extraordinary, i.e. beyond the concept of normal distribution or acceptable standard deviation. They are, more or less, what portfolio theorists may describe as “fat tails”.
     
    1. The Recap
    In the non-bell curve world that is Thai politics in the past six months, there are at least four fat tails. To recap, as we noted in our initial report, protest politics has rarely been about “playing by the same rule”: In this case, the rule of the game at issue is the current election process, which brought decade-long landslide victories to a party controlled by former Thai prime minister Thaksin Shinawatra, a polarizing figure that the anti-government protesters sought to demolish from Thai political landscape. Thus, the protesters, led by ex-deputy prime minister Suthep Thaugsuban, are seeking “reform measures” to ensure this end before they will participate in any election, the current process of which the protesters perceived as being the “unfair rule” of the game, a view noted by many scholars as too extreme because the turnout rate in the February election shows that Mr. Shinawatra’s party can be beaten at the polls. As every game has an umpire, in Thailand’s case this role has been assumed by the Thai military, albeit somewhat reluctantly because of its long history of intervening in politics with mixed results. As up to the date of our last report (November 30, 2013) there has been no violent incident between the government and protesters, we then concluded that such incidents would have negative impact on both Thai politics and the country’s economy.
     
    2. The Fat Tails: What caused the 2014 coup d’etat?
    This leads us to the first unexpected factor: a series of violent incidents that happened to the anti-government movement, which started with the shooting of student protesters at Ramkhamhaeng University and continued with a series of bombings and shootings that resulted in numerous injuries and death tolls, including the nation-shaking deaths of three children. The second unfortunate event that has unforeseeable consequence is the mismanagement of the rice pledging policy that led to the government default on payments due to farmers participating in the policy. This is perhaps the most fatal blunder by the government because it goes to the heart of how it frame the battle with the protesters: rural populists(the government) vs. the elite establishment(the protesters), i.e. it is rather difficult to claim to fight for farmers while breaching their trust at the same time. Thirdly, the Thai constitutional court has issued a series of “surprising” rulings against the government: a) nullifying the February election that the government had insisted to hold, despite suggestions otherwise from many independent organizations, including the Thai Election Commission, b) rendering unconstitutional the process initiated by the government to pass a bill that was aimed to finance a large-scale infrastructure development project, and c) holding that certain members of the government, including the prime minister Ms. Yingluck Shinawatra, must be removed from office as a result of their abusing of power by interfering with the transfer of a civil servant. Finally, there are signs of imminent clash in the week preceding the coup between the anti-government, who declared to “reach an endgame” in their rally that week, and the pro-government group, who had gathered at the periphery of Bangkok. Rumors about the stockpiling of heavy artilleries abounded during that period (some confirmed much later by press reports of arrests made in connection with the stockpiling in many locations). Following three days of this tense confrontation, the Thai military declared the Martial Law on May 20, and staged the coup on May 22, 2014.
     
    3. How will the capital markets react to these events?
    As we observed in our previous report, amidst deteriorating circumstance, the Thai capital market in the long term has rarely been affected. This view is shared by many investors especially those with extensive long-term exposure to Thai political risks. In the previous blog, we also observed the rise of “protest culture” and the rise in the Thai SET Index over the decade, and concluded that there seems to be no obvious negative correlation between the two. So this time we observe what happened in Thailand during the past six months and arrived at more or less the same conclusion: Investors seemed to get accustomed to Thai political risks and already priced them into their long-term expectation. For instance, while the political situation seemed to worsen every day for the past six months, the SET index had indeed plummeted sharply in January but regained its value to a little above (about 7 points, or .5%) of where it was six months earlier. In addition, although Moody’s has repeatedly warned investors about the escalation of political conflicts that could affect Thailand’s sovereign credit rating, the rating agency also noted in late April 2014 that the conflicts were not at a point “where they would prompt rating downgrades” while identifying Thailand’s core strength as stemming from its monetary policy. On the day of the coup, Standard & Poor cautiously delivered a similarly optimistic but cautious note, affirming the country’s current ratings while expecting Thailand to maintain its “external, fiscal, and monetary strengths in the face of the current political turmoil.” In short, despite a series of bad news, the Thai capital market is still viewed as remarkably resilient, albeit with expected near-term volatility.
     
    4. What are key factors for Thailand investment outlook?
    So, are we closer to business as usual in Thailand? In short, we are closer to it than the last six months. But the real bad news still is, as we noted in the previous blog, the Thai economy’s continuing contraction in real sectors and a series of challenging global factors. To return to stability there are few things to scan for the next time news involving Thailand come up. The first is an election date that all parties/factions can agree upon. The prerequisite to such election is how the Thai military will lead to unite all sides to decide and agree in a peaceful, non-violent fashion. The sooner Thailand can return to democracy, the better for its economy. Secondly, Thailand must find a way to resuscitate its struggling tourism industry. As we noted previously, the industry has been a roaring engine in a generally lumbering economy. That has changed. With tourism declined almost 10% year-on-year in March and almost 2% in April 2014, according to the Macroeconomic Assessment report by the Bank of Thailand, the overall growth outlook will be much weaker this year if the sector remains unfixed. Thirdly, among the officials appointed by the military to oversee economic policy, it is safe to assume that such officials should work to present a united front with the banking and financial regulators to preserve the key strengths that credit rating agencies have found so valuable in Thailand: the fiscal and monetary policy. Finally, as the world started 2014 with several new concerns such as geopolitics, “re-shoring” of capital as well as manufacturing bases, or the faded allure of emerging market investments, Thailand must be domestically equipped before it can tackle and thrive in this ever challenging global environment. Now that the umpire broke his silence, the world is watching where he will lead the second-largest economy in Southeast Asia.
     
     
    Kemavit Bhangananda is a U.S. attorney (licensed by New York Office of Court Administration) based in Bangkok, Thailand, and a former vice president of Lehman Brothers.

     
     
    If interested in how Asia-Pacific Global Research Group can help your organization, CONTACT US HERE.
     

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