Chapter 10: Negotiating internationally Concept 10.1: Approaches to negotiating in an international context Three topics: The nature of negotiating: Western and non-Western perspectives Facets of negotiation in an international business The issue of strategy adaptation when negotiating with counterparts from other cultures.

The nature of negotiation (1) The ‘Western’ approach: Negotiating is a problem-solving exercise. Tactics and strategies can be applied universally. Implicit is the assumption that the participants in negotiations share similar approaches, attitudes and principles. Focus is on what happens between parties. Two types of negotiation strategy predominate: the distributive (win–lose) the integrative (win–win strategy)

The nature of negotiation (2) In an international context: The assumptions and expectations of the west may not be shared. Even if behaviour displayed by both parties is similar in nature, it may reflect different motives. The very act of negotiating can be a concept, which is fundamentally alien to other cultures, e.g. for Japanese negotiators.

Key facets of negotiation Negotiation facet Elements Concepts Behavioural predispositions of the parties Interpersonal orientation Harmony, self-interest Power orientation Formal power, (informal) influence Willingness to take risks Negotiating party’s degree of delegated decision-making, and (lack of) uncertainty Underlying concept of negotiation Negotiation strategies Trust or mistrust as basis Strategic time-frame Logical, finite process or ongoing dialogue Negotiation process Styles of negotiation Work towards specific, concrete goals, or more towards principles, concepts Outcome orientations Iron-cast deal or less explicit agreement Table 15.1 Facets of negotiation Source: Usunier, 2003 (adapted)

Cross-cultural negotiation in practice: the USA and China (1) Interpersonal orientation: fundamental opposition For the Chinese, a negotiation is just part of developing a life-long relationship. Need to establish a good rapport before talking of a deal. The US sees the deal as the main objective of any negotiation. Very focussed bottom-line approach. Americans might feel that the wish by their Chinese counterparts to establish friendship is one way to get a better deal later on in the negotiation(s).

Cross-cultural negotiation in practice: the USA and China (2) Power orientation Clear hierarchy in US team. Deference shown, even if the language used informal. The boss will probably be given much leeway – already discussed with HQ. Risk-taking seen as inherent to getting the best deal possible. Often difficult to know who the Chinese team leader is. The consensus-building process occurs also within the Chinese team (parties both from within as well as outside company.) Will resist pressure from the American side until all Chinese parties satisfied. Any risk-taking must be carefully orchestrated.

Cross-cultural negotiation in practice: the USA and China (3) Underlying concept of negotiation Negotiation strategies: Both US approaches (win–win & win–lose) should lead to a definitive contract to which both sides are expected to adhere. The Chinese finds it difficult to take this linear approach. For them, the negotiation is just one of many encounters. The principle is to build a business partnership. Strategic time-frame: For the Chinese a deal made at the end of a negotiation remains negotiable in the long term. Agreements are based on trust and goodwill. This can be frustrating for Americans since for them time is of the essence – and a deal’s a deal!

Cross-cultural negotiation in practice: the USA and China (4) Style of negotiation US negotiators concerned with specifics, the information which allows them to pursue their way of negotiating. Need to gain a clearer idea of the other party’s concerns and interests to establish or modify their goals. Ready to give a lot of information if this is part of an exchange. For the Chinese, gaining trust + confidence is more important than facts and figures. May not have information asked for (possible face loss). However, collection of information is becoming more systematic. Younger managers more in tune with western behaviour norms.

Cross-cultural negotiation in practice: the USA and China (5) Outcome orientations For US negotiators, a detailed contract is the ideal conclusion to a negotiation: signed, sealed and delivered. In the final phase detailed points are hammered out: Implementation. Legal aspects. Chinese tend to avoid legalistic details. Prefer short contracts that show commitment to project. A contract is only a formal moment in development of a relationship. Further negotiations will happen using the goodwill and friendship established.

Cross-cultural negotiation in practice: the USA and China (6) The Chinese and American negotiators therefore face innumerable potential difficulties. The opposition in expectations and attitudes is clear, the expected frustrations and irritations evident. How can both sides resolve this dilemma? One possible way to deal with apparently conflicting cultural values is to use Weiss’s strategic framework.

Background to Weiss’ framework When in Rome, do as the Romans do? To what extent should a negotiator adapt to the cultural values of the other party. Are international negotiators expected to adapt totally? This is a simplistic approach It does not account for the dominant role of one or the other partner. Is it ever possible to ‘do as’ the Romans? It wrongly assumes that a ‘Roman’ will always act as a Roman with a non-Roman in Rome!

Cont. Roman may not always act Roman with a non-Roman or alternatively may not like a non-Roman behaving too much like a Roman. International managers need to assess to what degree they need to adapt to the local culture for maximum effectiveness. The adaptation strategy depends on the differences between the two cultures and the relationship and context.

Choose your Strategy The strategy adopted will depend on how familiar the negotiator is with the counterparts culture. Some suggested strategies for four different contexts, depending on degree of familiarity are: Low familiarity with culture. Negotiators cultural familiarity with counterparts culture low, but counterpart familiar with negotiators culture. Moderate familiarity with counterparts culture. High familiarity with counterparts culture.

Low familiarity with culture If the negotiators familiarity with the counterparts culture is low and vice versa, the two groups could employ an agent/adviser or mediator. Agents replace negotiators at the negotiating table and advisers provide information and recommend courses of action to the negotiator. A mediator is a middle-man or broker. In this strategy, both negotiator and counterpart rely on a mutually acceptable third party to facilitate their interaction. A mediator may belong to a third culture and need to maintain the trust and respect of both the parties.

Negotiators cultural familiarity with counterparts culture low, but counterpart familiar with negotiators culture If the negotiators familiarity with the counterparts culture is low, but the counterparts is familiar with the negotiators culture, then the negotiator can induce the counterpart to follow the negotiators script. Americans often adopt this strategy. Most negotiators are familiar with US culture because of Hollywood and US TV. Americans are known to be often ignorant of cultural differences.

Moderate familiarity with counterparts culture If the negotiator is moderately familiar with the counterparts culture then the negotiators can adopt to some degree to the counterparts script. When Americans from GM and Ford companies were negotiating with Toyota, the prepared themselves by studying the Japanese culture. They adjusted their Americans negotiating behavior and adapted some Japanese behavior such as paying extra attention to protocol. An international football team may have member from different national cultures (the spot provides a script for behavior and this script transcends national cultures.)

High Familiarity with Counterparts Culture If the negotiator is highly familiar with the counterparts culture, the choice of strategies he/she is very wide. If the counterparts is not familiar with the negotiator culture, then the negotiator can adapt to the counterpart culture. When Coca-Cola entering China, it adopt this strategy. They trained chemist of Chinese origin in the Chinese language and culture for one year. This chemist became the most active negotiator for Coca-Cola in a ten year endeavor. If both parties are very familiar with each other’s strategies, then they can formulate a new negotiating subculture.

Cultural approach of negotiating Stephen Weiss (1994) considers a ‘one-size-fits-all’ approach to be inappropriate. Weiss proposes instead a range of strategies which are: culturally responsive. reflect the skills of the individuals involved. take account of the circumstances in which they are working.

Negotiation as communicative event One basic aim in any communicative event: to make sense of the interaction. In negotiations this means that the least both parties must be able to do is (Weiss, 1994): recognize each other’s ideas and the types of behaviour evident. detect common and differing standpoints as well as changes made to these during the negotiating process. ensure that communication is maintained as the negotiation proceeds.

Negotiating process However, the knowledge and skills required to perform these crucial acts is often limited. What needed, Weiss says, is a strategic framework which allows the parties to: make sense of the negotiating process as best they can. use their own attributes. (where necessary) the skills of others.

Weiss’ strategic framework Figure 15.1 Strategic frame for negotiating Source: Weiss (1994a, Figure 2, p. 54‘Culturally responsive strategies and their feasibility’)

Cont. The five steps which Weiss proposes for selecting a negotiating strategy take account of these complexities Reflect on your culture’s negotiation script. Learn the negotiation script of the counterpart’s culture. Consider the relationship and circumstances. Predict and influence the counterpart’s approach. Choose your strategy.

Negotiating Tactics Used in Different Countries Japan Style of interaction is among the least aggressive and most polite. Positive promises, recommendations and commitments. Infrequent use of no and facial gazing, frequent silent periods. Korea Use of punishment and command. Frequent use of word no. No silent periods. United States Like the Germans and British, the Americans fell in the middle of most scales. Northern China Asking a lot of questions and the use of information exchange tactics. Infrequent use of no and you and some silent periods. Taiwan Use of face gazing. Asking fewer questions but providing more information. Russia Infrequent use of no, frequent silent periods and asking a lot of questions. Germany High percentage of self-disclosures. And low percentage of question asked.

Negotiating Tactics Used in Different Countries Cont. Countries Negotiating Tactics Used in Different Countries United Kingdom Falling in the middle of most negotiation scales. Did not interrupt each other frequently. Spain Highest percentage of commands and comparatively fewer self-disclosures. Highest percentage of interruption. High use of no and you. France One of the most aggressive negotiators. Highest of percentage of threats and warnings. Brazil Aggressive negotiators. Highest percentage of commands of all groups. Use of no, you and facial gazing and touching. Mexico Balance negotiators. Verbal and non verbal behavior much less aggressive than the Spanish and Brazilians.

Conclusion to Chapter 10 International business managers should be prepared for different communication style and get familiar with use of silence, threats and emotional appeals in your counterparts national culture. Respect and sensitivities of your partners personal status and national pride. International business negotiation are a challenge for any global manager. Managers who understand the influence of culture on negotiation are more likely to be able to create win-win situations and sustain long-term business partnerships with their counterparts in other countries.