CHAPTER 3 INTERNATIONAL NEGOTIATION AND CROSS-CULTURAL COMMUNICATION

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Chapter 5
Cross-Cultural Negotiations and Decision Making
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Negotiation

• Negotiation is the process in which at least two
  partners with different needs and viewpoints try
  to reach an agreement on matters of mutual
  interest.
• A negotiation becomes cross-cultural when the
  parties involved belong to different cultures and
  therefore do not share the same ways of thinking,
  feeling, and behaving.

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INTERNATIONAL NEGOTIATION

• More complex than domestic negotiations
• Differences in national cultures and differences
  in political, legal, and economic systems often
  separate potential business partners

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Cross-Cultural Negotiation Variables(Exhibit 5-6)
Culture Goals
National/corporate Principles versus
specific details
Negotiating styles
objective/subjective/axiomatic
Negotiating behavior defense/attack/trust deceptio
n/pressure/concessions Verbal and nonverbal
behavior Attitudes toward time/scheduling
Trust level and duration relations
Task versus interpersonal relationships
Composition of teams Level of preparation
Culture
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Steps in the International Negotiation Process
STEP 1 PREPARATION
STEP 2 RELATIONSHIP BUILDING
STEP 3 EXCHANGING INFORMATION
STEP 4 PERSUASION
STEP 5 CONCESSIONS and AGREEMENT
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STEP 1 PREPARATION

• Is the negotiation possible?
• Know what your company wants
• Know the other side
• Send the proper team
• Agenda
• Prepare for a long negotiation
• Environment
• Strategy

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DIFFERENCES IN CULTURES IN KEY NEGOTIATING
PROCESSES

• Negotiation goal - signing the contract or
  forming a relationship
• Personal style - formal or informal
• Communication styles - direct or indirect
• Sensitivity to time - low or high
• Forms of agreement - specific or general
• Team organization - a team or one leader

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STEP 2 RELATIONSHIP BUILDING

• No focus on business
• Partners get to know each other
• Social and interpersonal matters
• Duration and importance vary by culture

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STEP 3 EXCHANGING INFORMATION

• Task-related information is exchanged
• First offer

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STEP 4 PERSUASION

• Heart of the negotiation process
• Attempting to get other side to agree to a
  position
• Numerous tactics can be used

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VERBAL AND NONVERBAL NEGOTIATION TACTICS

• Promise
• Threat
• Recommendation
• Warning
• Reward
• Punishment
• Normative appeal

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OTHER NEGOTIATION TACTICS

• Commitment
• Self disclosure
• Question
• Command
• Refusal
• Interrupting

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FREQUENCIES OF VERBAL NEGOTIATION BEHAVIORS
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DIRTY TRICKS IN INTERNATIONAL NEGOTIATIONS

• Dirty tricks are negotiation tactics that
  pressure opponents to accept unfair or
  undesirable agreements or concessions

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PLOYS/DIRTY TRICKS - POSSIBLE RESPONSES

• Deliberate deception - point out what is
  happening
• Stalling - do not reveal when you plan to leave
• Escalating authority - clarify decision making
  authority

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• Good guy, bad buy routine - do not make any
  concessions
• You are wealthy and we are poor - ignore the ploy
  
• Old friends - keep a psychological distance

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GENERAL RESPONSES TO DIRTY TRICKS

• Avoid using the tricks yourself.
• Point out the dirty tricks when they are used.
• Be ready to walk out of the negotiation if the
  other side fails to play fairly
• Realize that ethical systems differ by culture
  and understand that ...

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STEPS 5 CONCESSIONS AND AGREEMENT

• Final agreement The signed contract, agreeable
  to all sides
• Concession making requires that each side relax
  some of its demands

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STYLES OF CONCESSION

• Sequential approach - consider each issue as a
  separate point. Each side reciprocates
  concessions
• Holistic approach - more common in Asia.
  Concession making begins after all issues are
  discussed

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BASIC NEGOTIATION STRATEGIES

• Competitive
• The negotiation as a win-lose game
• Problem solving
• Search for possible win-win situations

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BASIC NEGOTIATION STRATEGIES

• Cultural norms and values may predispose some
  negotiators to one strategy
• Most experts recommend a problem solving
  negotiation strategy

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The Successful International Negotiator PERSONAL
CHARACTERISTICS

• Tolerance of ambiguous situations
• Flexibility and creativity
• Humor
• Stamina
• Empathy
• Curiosity
• Bilingual

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Successful negotiators

• Understand the negotiation steps
• Build cross-cultural communication skills
• Understand nonverbal communication
• Avoid attribution errors

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Profile of a Successful American Negotiator

• Knows when to compromise
• Takes a firm stand at the beginning of the
  negotiation
• Refuses to make concessions beforehand
• Keeps his or her cards close to his or her chest
• Accepts compromises only when the negotiation is
  deadlocked
• Sets up the general principles and delegates the
  detail work to associates
• Keeps a maximum of options open before
  negotiation
• Operates in good faith

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Profile of a Successful American
Negotiator(contd.)

• Respects the opponents
• States his or her position as clearly as possible
• Knows when he or she wishes a negotiation to move
  on
• Is fully briefed about the negotiated issues
• Has a good sense of timing and is consistent
• Makes the other party reveal his or her position
  while keeping his or her own position hidden as
  long as possible
• Lets the other negotiator come forward first and
  looks for the best deal

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Profile of a Successful Indian Negotiator

• Looks for and says the truth
• Is not afraid of speaking up and has no fears
• Exercises self-control
• Seeks solutions that will please all the parties
  involved
• Respects the other party
• Neither uses violence nor insults
• Is ready to change his or her mind and differ
  with himself or herself at the risk of being seen
  as inconsistent and unpredictable

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Profile of a Successful Indian Negotiator(contd.)

• Puts things into perspective and switches easily
  from the small picture to the big one
• Is humble and trusts the opponent
• Is able to withdraw, use silence, and learn from
  within
• Relies on himself or herself, his or her own
  resources and strengths
• Appeals to the other partys spiritual identity
• Is tenacious, patient, and persistent
• Learns from the opponent and avoids the use of
  secrets
• Goes beyond logical reasoning and trusts his or
  her instinct as well as faith

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Profile of a Successful Arab Negotiator

• Protects all the parties honor, self-respect,
  and dignity
• Avoids direct confrontation between opponents
• Is respected and trusted by all
• Does not put the parties involved in a situation
  where they have to show weakness or admit defeat
• Has the necessary prestige to be listened to
• Is creative enough to come up with honorable
  solutions for all parties
• Is impartial and can understand the positions of
  the various parties without leaning toward one or
  the other

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Profile of a Successful Arab Negotiator(contd.)

• Is able to resist any kind of pressure that the
  opponents could try to exercise on him
• Uses references to people who are highly
  respected by the opponents to persuade them to
  change their minds on some issues
• Can keep secrets and in so doing gains the
  confidence of the negotiating parties
• Controls his temper and emotions
• Can use conference as mediating devices
• Knows that the opponent will have problems in
  carrying out the decisions made during the
  negotiation
• Is able to cope with the Arab disregard for time

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Profile of a Successful Swedish Negotiator

• Very quiet and thoughtful
• Punctual (concerned with time)
• Extremely polite
• Straightforward (they get straight down to
  business)
• Eager to be productive and efficient
• Heavy-going
• Down-to-earth and overcautious
• Rather flexible
• Able to and quite good at holding emotions and
  feelings

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Profile of a Successful Swedish
Negotiator(contd.)

• Slow at reacting to new (unexpected) proposals
• Informal and familiar
• Conceited
• Perfectionist
• Afraid of confrontations
• Very private

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Profile of a Successful Italian Negotiator

• Has a sense of drama (acting is a main part of
  the culture)
• Does not hide his or her emotions (which are
  partly sincere and partly feigned)
• Reads facial expressions and gestures very well
• Has a feeling for history
• Does not trust anybody
• Is concerned about the bella figura, or the good
  impression, he or she can create among those who
  watch his or her behavior
• Believes in the individuals initiatives, not so
  much in teamwork
• Is good at being obliging and simpatico at all
  times

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Profile of a Successful Italian
Negotiator(contd.)

• Is always on the qui vive, the lookout
• Never embraces definite opinions
• Is able to come up with new ways to immobilize
  and eventually destroy his or her opponents
• Handles confrontation of power with subtlety and
  tact
• Has a flair for intrigue
• Knows how to use flattery
• Can involve other negotiators in complex
  combinations

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Implement and Evaluate
Define the Problem
Decision- Making Process
Specify objectives and Criteria /Gather and
analyze relevant data
Select the best one
Analyze Alternatives
Develop alternatives
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Cultural Variables Affecting Decision-Making

• Objective (basing decisions on rationality)
  versus subjective (basing decisions on emotions)
  approach
• Risk tolerance
• Locus of control internal (managers in control
  of events), or external (managers have little
  control over events)

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Cultural Variables in the Decision-Making
Process(Exhibit 5-9)
Culture
Individualism/collectivism Locus of decision
making
Utilitarianism/moral ideals
Risk tolerance
Past/future orientation
Problem Data Consideration of
Decision Implementation Definition
gathering alternative solutions
Objective/subjective perspective
Internal/external locus of control