Chapter 10 Intercultural Negotiation Process

Copyright © 2014 Pearson Education, Inc. Objectives Define the intercultural negotiation process Understand the steps in the negotiation process Learn how to avoid mistakes commonly made in intercultural negotiations Become knowledgeable about intercultural negotiation models Understand negotiation strategies, including conflict resolution Understand various trade agreements that affect intercultural negotiations Copyright © 2014 Pearson Education, Inc. 2

Copyright © 2014 Pearson Education, Inc. Definition Intercultural negotiation involves discussions of common and conflicting interests between persons of different cultural backgrounds who work to reach an agreement of mutual benefit. Copyright © 2014 Pearson Education, Inc. 3

Copyright © 2014 Pearson Education, Inc. “In business, you don't get what you deserve, you get what you negotiate.” Why take “no” for an answer? Successful people don't. They get what they want by negotiating better deals for both parties. Copyright © 2014 Pearson Education, Inc. 4

Copyright © 2014 Pearson Education, Inc. Negotiation is . . . winning a means of getting what you want from others gaining the favor of people from whom you want things managing power and information time and opportunity management more of an art than a science selling the least troublesome method of settling disputes Copyright © 2014 Pearson Education, Inc. 5

Steps in the Negotiation Process Preparation and Site Selection Team Selection Relationship Building Opening Talks Discussions Agreement Copyright © 2014 Pearson Education, Inc. 6

Preparation and Site Selection Hiring a consultant in the country Negotiating resource videos and written materials are helpful Choosing a site—here or there can be important Copyright © 2014 Pearson Education, Inc. 7

Copyright © 2014 Pearson Education, Inc. Team Selection how team is selected background of players expectations of other negotiators, their style, and the roles they have played in past negotiations environment free of tension Copyright © 2014 Pearson Education, Inc. 8

Relationship Building Time required Intermediaries or agents Friendship versus business relationship Copyright © 2014 Pearson Education, Inc. 9

Copyright © 2014 Pearson Education, Inc. Opening Talks Should they start promptly or should you engage in small talk? Is an agenda proper or not? Who should be present? Copyright © 2014 Pearson Education, Inc. 10

Copyright © 2014 Pearson Education, Inc. Discussions Variety of behaviors and norms Emotions Concessions Copyright © 2014 Pearson Education, Inc. 11

Copyright © 2014 Pearson Education, Inc. Agreement Close negotiations properly. Expect delays. Get tax and legal advice. Expect a long wait until final approval. Understand that contracts are not always considered final. Copyright © 2014 Pearson Education, Inc. 12

Common Negotiation Mistakes Making negative initial impression Failing to listen and talking too much Assuming understanding by the other culture Failing to ask important questions Showing discomfort with silence Using unfamiliar and slang words Interrupting the speaker Failing to read the nonverbal cues Failing to note key points Making statements that are irritating or contradictory Failing to prepare a list of questions for discussion Being easily distracted Failing to start with conditional offers Failing to summarize and restate to ensure understanding Hearing only what you want to hear Failing to use first-class supporting materials Copyright © 2014 Pearson Education, Inc. 13

Intercultural Negotiation Models Problem-solving approach—considers national and organizational cultural differences Competitive approach—individualistic and persuasive orientation Compromising—seeks a middle ground Forcing—makes the other party comply Legalism—uses legal documentation to force the partner to comply Copyright © 2014 Pearson Education, Inc. 14

Four-Stage Negotiation Model Investigative Presentation Bargaining Agreement Copyright © 2014 Pearson Education, Inc. 15

Negotiation Strategies People act on basis of their own best interests Truth in negotiations Faith Fact Feeling U.S. negotiators make fewer adjustments to their opponent Include: preparation, tactics, conflict resolution and mediation, and observation, analysis, and evaluation Copyright © 2014 Pearson Education, Inc. 16

Copyright © 2014 Pearson Education, Inc. Trade Agreements Validated license—specific exporter and specific products Free trade zones or trade blocs—products enter without customs duties Copyright © 2014 Pearson Education, Inc. 17

Copyright © 2014 Pearson Education, Inc. NAFTA Benefits To eliminate barriers to trade and facilitate cross-border movement of goods and services To promote fair competition To increase investment opportunities To provide adequate and effective protection for intellectual property To develop effective procedures for handling disputes To expand cooperation and increase benefits to the three countries (Canada, Mexico, U.S.) Copyright © 2014 Pearson Education, Inc. 18

The U.S. Negotiator’s Global Report Card Competency Grade Preparation B- Synergistic approach (win-win) D Cultural I.Q. D Adapting the negotiating process to the host country environment D Patience D Listening D Linguistic abilities F Using language that is simple and accessible C High aspirations B+ Personal integrity A- Building solid relationships D Copyright © 2014 Pearson Education, Inc. 19

Statements Characteristic of U.S. Negotiating Style "I can handle this myself." (to express individualism). "Please call me Steve." (to make people feel relaxed by being informal). "Pardon my French." (to excuse profanity). "Let's get to the point." (to speed up decisions). "Speak up; what do you think?" (to avoid silence). "A deal is a deal." (to indicate an expectation that the agreement will be honored). Statements Characteristic of U.S. Negotiating Style Copyright © 2014 Pearson Education, Inc. 20

Copyright © 2014 Pearson Education, Inc. China Reserved; known for good manners and hospitality Give small, inexpensive presents Do not like to be touched Consider mutual relation-ships and trust very important Technical competence of negotiators necessary Prefer to use an intermediary Rarely use lawyers Ample room for compromise Copyright © 2014 Pearson Education, Inc. 21

Copyright © 2014 Pearson Education, Inc. France The French have a sense of pride sometimes interpreted as supremacy. French logic ("Cartesian" logic) proceeds from what is known in a point-by-point fashion until agreement is reached. Protocol, manners, status, education, family, and individual accomplishments are keys to success with the French. Copyright © 2014 Pearson Education, Inc. 22

Copyright © 2014 Pearson Education, Inc. Germany Protocol is important and formal. Dress is conservative; correct posture and manners are required. Use titles when addressing members of the negotiating team; use please and thank you often. Germans prefer to keep a distance between themselves and the other team negotiators. Include technical people as part of the negotiation team as Germans are detail oriented. Punctuality is expected. Contracts are firm guidelines to be followed exactly. Copyright © 2014 Pearson Education, Inc. 23

Copyright © 2014 Pearson Education, Inc. India Bribery is common; having connections is important. Avoid using the left hand in greetings and eating. Request permission before smoking, entering, or sitting. Building relationships is important; an introduction is necessary. Intermediaries are common. Use titles to convey respect. Knowledge of local affairs is important. Negotiation process can be long. Copyright © 2014 Pearson Education, Inc. 24

Copyright © 2014 Pearson Education, Inc. Japan Business etiquette is very important. Meeting should be arranged by an intermediary who has a relationship with both parties. Negotiating parties usually consist of five people. Business card exchange is common. Subtle and complex verbal and nonverbal cues are used to avoid having someone lose face or lose the group harmony. Negotiating practices are based on the keiretsu system (a company group formed by the principal company and the partner companies); a keiretsu group is viewed as a long-term commitment. The Japanese use more silence and less eye contact than do people of the U.S. View contracts as flexible instruments. Are suspicious of a negotiating team that includes lawyers. Copyright © 2014 Pearson Education, Inc. 25

Copyright © 2014 Pearson Education, Inc. Latin America Relationships are important. Bribery is common. Government is very involved in business. Negotiators chosen based on family connections, political influence, education, and gender (females should be in the background). Latinos are very individualistic but group oriented concerning family and friends. Social competence is important; will ask about one's health and family. Most agreements are consummated over lunch. Numerous meetings is the norm; time is not seen as important. Avoid gestures. Copyright © 2014 Pearson Education, Inc. 26

Copyright © 2014 Pearson Education, Inc. Nigeria Nigerians are skillful negotiators; view negotiation as a competitive process. When selecting negotiators, consider age (equated with wisdom), gender, cultural background, and educational credentials. Developing a personal relationship is important. Time is not particularly important so negotiations may be lengthy. Use titles and last names. Use an intermediary to make initial introductions. Being well dressed is important; courtesy and consideration are also expected. Contracts considered flexible; they may be oral or written. A bribe may be needed to expedite business. Copyright © 2014 Pearson Education, Inc. 27

Copyright © 2014 Pearson Education, Inc. Russian States In the past, negotiation sessions have been long, with Russians controlling the agenda. Russians are concerned with age, rank, and protocol. Russians tend to be formal. Friendships are not crucial to conducting business. Contracts are interpreted rigidly. Russians are concerned with maximizing their profits. Copyright © 2014 Pearson Education, Inc. 28

Copyright © 2014 Pearson Education, Inc. “Negotiating on a global scale can present tremendous opportunities.” Corporations can expand their markets, increase their markets, their profits, and their productivity, and lower their costs by negotiating globally. Copyright © 2014 Pearson Education, Inc. 29

30