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Business negotiation with Americans
GoalsStructuring the negotiation : different success keys to negotiate with Americans
Preparing the negotiation: to understand better the culture and the expectations of American buyers
Negotiation’s strategy :to adapt your marketing strategy to increase your success
Understanding the entry barriers to the U.S. market
© Consultation Contacts Monde 2007
Entering Your Chosen U.S. Market
3 strategies:Direct sellingIndirect selling (sellingthrough intermediaries)Selling through strategicalliances
© Consultation Contacts Monde 2007
Module 1: Structuring the negociation : differentsuccess keys to negociate with Americans
Diversification Methods
Direct selling Direct salesAgents
Indirect selling DistributorsBrokersTrading House
Partnerships Co-Enterprise/Co-MarketingAgreement with other manufacturersLicensingTechnology Transfer
© Consultation Contacts Monde 2007
1. Direct selling
Direct exportation from a distanceDirect salesRepresentative (paid manager)
Establish a U.S. presenceOpening a U.S. branch of your companyEstablishing a separate U.S. subsidiary, such as a corporation
© Consultation Contacts Monde 2007
Direct sellingAllow you to operate a retail outlet in the heart of your U.S. marketProtect your company’s assetsBe seen as more «American»Autonomy in the administration Better knowledge of the marketPermanent networkAll the benefits
Business implicationImportant financial resources (high fixed cost) Risk exclusively assumed by the export departmentInternational expertiseNeed more time before getting sales
© Consultation Contacts Monde 2007
2. Indirect selling
Trading housesRepresentative (agent)ImportersDistributorsBrokersSociétés de gestion exportBureau d’achat
© Consultation Contacts Monde 2007
Indirect sellingGetting an immediate presence in the United State market without setting up your own sales operationLimited riskLow implication (human and financial resources)
Less controlGreater distance from your customer baseControl on commercial politics: very low / nullPaying commissions: short term vision Screen between the market, the clients and the exporter
© Consultation Contacts Monde 2007
3. Selling through strategic alliances
Formal or informal
LicensingFranchisingCross-licensingCo-marketingCo-productionJoint venture
© Consultation Contacts Monde 2007
Cooperation / partnership
Sharing risk, cost and investmentSharing resources, know-how, contacts Sharing export activities(custom clearance) Resolving problem related to professional accreditation, movement of personnel acrossthe border and U.S. tax and legal statusCombining the technical and financial strengths of the twobusinessBetter knowledge of marketspecificitiesAccess to public invitation to tenderAccess to technology
Business implication Partial control on commercial politicsRisk to loose the know-howUnderstanding difficulties(culture, language) Time required to administrate the partnershipDifficulty to select partners
© Consultation Contacts Monde 2007
Expectations of your agent
Exportable goodsExport knowledgeFair agreement / partnership
© Consultation Contacts Monde 2007
Questions & answers on videosHow frightening?How different?How do you get started?What is the role of partnership?Is the partnership a threat?
Module 2: Preparing the negotiation: to understand betterthe culture and the expectations of American buyers
Personnel control on the environment and responsibilitiesPositive and natural perception on changes Time = $$$Egalitarianism and equityIndividualism and independenceSmartness et initiative
© Consultation Contacts Monde 2007
The culture of the American buyerCompetitionVision oriented on the futureVision and action work-orientedLack of formalitiesHonesty, open-minded, rightness (Enron !)
Practical and efficient nature Materialism
© Consultation Contacts Monde 2007
Reminder on negotiation from : Executive Planet.com
Make up their minds quickly and decisively. Information must be straightforward and to the point.Money is a key priority and an issue that will be used to win most arguments. Status, protocol, and national honour play a smaller role.American businesspeople are opportunistic and willing to take chances. Opportunism and risk taking often result in Americans going for the biggest possible slice of the business, 100% if possible.
© Consultation Contacts Monde 2007
Dislike periods of silence during negotiations and in conversations, in general. May continue to speak simply to avoid silence.Persistence is another characteristic you will frequently encounter in American businesspeople; there is a prevailing belief that there is always a solution. Moreover, they will explore all options when negotiations are at an impasse.When they agree to a deal, they rarely change their minds.Future oriented. Innovation often takes precedence over tradition.
© Consultation Contacts Monde 2007
Reminder on negotiation
Thinking tends to be analytical, concepts are abstracted quickly, and the "universal" rule is preferred.There are established rules for almost everything. Experts are relied upon at all levels.Lawyers everywhere ! The most litigious society in the world.Negotiating = problem-solving through "give and take" based on respective strengths. Often emphasize their financial strength and/or position of power.
© Consultation Contacts Monde 2007
Reminder on negotiation
In negotiations, points are made by the accumulation of objective facts. This evidence is sometimes biased by faith in the ideologies of democracy, capitalism, and consumerism. The subjective feelings of the participants are not as much of a factor. Therefore, they will not spend much time seeking consensus.Try to extract an oral agreement at the first meeting. Sometimes bring final contracts to first meetings. In large firms, contracts under $10,000 can often be approved by one middle manager in a single meeting.Limited knowledge of other cultures. May assume that their way is the "correct" or only way.
© Consultation Contacts Monde 2007
Reminder on negotiation
Strategy to diversify your marketing strategy: 2 websites to keep in mind
Manufacturers’ Agent National Association (MANA): 22 000 professional sellers, by line of business. Since 55 years. www.manaonline.org(Americans like to have a direct access to your products!)
For public sector: www.dfait-maeci.gc.ca : SALE2USGOV
© Consultation Contacts Monde 2007
Why working with an American representative (MANA) ?
Predictable Sales Costs That Go Up And Down With SalesLower Sales CostsIncreased SalesImmediate Access To The MarketFree consulting servicesCost of Training And Turnover In Sales Personnel Is EliminatedHighly Experienced, More Aggressive Sales ForceSales Forecasting Is Equal Or Superior To A Direct Sales ForceBroader Sales Context For Your ProductProvides Marketing Flexibility At Less CostCreates A Systems Approach To SellingEvery Call Is A Relationship Call For Your CompanyMulti-faceted, Multi-skilled Sales TeamBetter Market IntelligenceVested Partner In Manufacturer’s Success
© Consultation Contacts Monde 2007
Selling to the public sectorIt takes 3 to 5 years to close a selling with the U.S. ArmyIt takes 3 to 4 years to close a selling with a government department
Examples of procedures:Federal Acquisition RegulationCentral Contractor RegistryTax Identification NumberHelp of DFAIT representative
© Consultation Contacts Monde 2007
Module 4: Entry barrier on the U.S. marketThe legal and logistical side of exporting to the U.S.
Labelling et packaging InsurranceCustom’s lawQuotasTransportPayment methodsIntellectual Property
© Consultation Contacts Monde 2007
Patent: United States Patent and Trademark OfficeTrademarkNorms, certificates, probateAmerican Standards InstituteFood and Drug Administration (FDA)Travel’s status (Entry’s fee & visas)
Post 9/11 context
© Consultation Contacts Monde 2007
To conclude…
Sources of informationwww.international.gc.ca
Advices
Thank you !
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www.contactsmonde.com
© Consultation Contacts Monde 2007