CES Negotiation & Closing Techniques 3 — Questions and Answers
Question 1: What is 'logrolling' in the context of export negotiations?
- Delaying negotiations until market conditions improve
- Trading concessions on issues where each party has different priorities (Correct answer)
- Rolling over short-term financing into a longer-term instrument
- Using a third-party mediator to resolve deadlocks
Correct answer: Trading concessions on issues where each party has different priorities
Logrolling involves trading items of different priority, allowing both parties to gain on what matters most to each.
Question 2: A foreign buyer insists on a price reduction citing a lower competing quote. What is the most effective counter-strategy?
- Immediately match the competitor's price
- Differentiate on value — quality, delivery reliability, after-sales support — rather than lowering price (Correct answer)
- Demand proof of the competing quote before responding
- Offer extended payment terms to offset the price difference
Correct answer: Differentiate on value — quality, delivery reliability, after-sales support — rather than lowering price
Competing on value avoids a race to the bottom and preserves margin by demonstrating superior total cost of ownership.
Question 3: Which Incoterms® 2020 rule places the maximum responsibility and cost on the seller, making it least favorable in price negotiations?
- EXW (Ex Works)
- FCA (Free Carrier)
- DDP (Delivered Duty Paid) (Correct answer)
- FOB (Free On Board)
Correct answer: DDP (Delivered Duty Paid)
Under DDP, the seller bears all costs including import duties and delivery to the buyer's premises, representing maximum seller obligation.
Question 4: When should an exporter use a 'trial close' during negotiations?
- Only after all objections have been resolved
- At the very start of the meeting to establish intent
- Periodically throughout negotiations to gauge the buyer's readiness (Correct answer)
- Only when the buyer explicitly signals readiness to buy
Correct answer: Periodically throughout negotiations to gauge the buyer's readiness
Trial closes test the buyer's position at various stages, providing feedback on whether to proceed or address remaining concerns.
Question 5: An exporter negotiating a large contract in Brazil should account for which unique local factor?
- Brazil prohibits all upfront payment structures
- Import financing through BNDES may affect the buyer's preferred payment structure (Correct answer)
- Brazil mandates arbitration in all commercial disputes
- All contracts must be denominated in USD
Correct answer: Import financing through BNDES may affect the buyer's preferred payment structure
BNDES (Brazil's development bank) offers financing for certain imports, which can influence how buyers prefer to structure payment terms.
Question 6: What is the primary purpose of a Letter of Intent (LOI) in export deal closing?
- To legally bind both parties to the final sale price
- To document preliminary agreement and signal commitment while details are finalized (Correct answer)
- To replace the need for a formal purchase order
- To secure payment before shipment
Correct answer: To document preliminary agreement and signal commitment while details are finalized
An LOI signals serious intent and outlines key terms without creating a fully binding contract, helping both parties commit resources while negotiating details.
Question 7: Which negotiation tactic involves deliberately introducing an extreme opening offer to shift the reference point for subsequent bargaining?
- Anchoring (Correct answer)
- Framing
- Mirroring
- Bracketing
Correct answer: Anchoring
Anchoring sets an extreme initial position that psychologically influences the final outcome by shifting the negotiation midpoint.
CES Negotiation & Closing Techniques 3
What is 'logrolling' in the context of export negotiations?