Negotiating with International Customers, Partners, and Regulators

Learning Objectives The problems associated with cultural stereotypes How culture influences behaviors at the negotiation table Common kids of problems that crop up during international business negotiations The similarities and differences in communication behaviors in several countries How differences in values and thinking processes affect international negotiations The important factors in selecting a negotiation team How to prepare for international negotiations Managing all aspects of the negotiation process The important of follow-up communications and procedures

Global Perspective A Japanese Aisatsu Face-to-face negotiations are an omnipresent activity in international commerce. Executives must also negotiate with representatives of foreign governments. A crucial aspect of all international commercial relationships is the negotiation of the original agreement. If cultural differences are taken into account, business agreements can be made that lead to long-term, profitable relationships across borders.

The Dangers of Stereotypes Europeans Stereotype Themselves

The Dangers of Stereotypes Negotiations are conducted between people, not national stereotypes Cultural factors often make huge differences Negotiation behaviors are different across regions, genders, and type of industry Age and experience also make important differences Consider the culture of customers and business partners, but treat them as individuals

The Pervasive Impact of Culture on Negotiation Behavior Regional generalizations very often are not correct Cultural differences cause four kinds of problems in international business negotiations: Language Nonverbal behaviors Values Thinking and decision-making processes

Differences in Language and Nonverbal Behaviors Americans are near the bottom of the languages skills list Americans don’t like side conversations by foreigners in their native language The variation across cultures is greater when comparing linguistic aspects of language and nonverbal behaviors than when the verbal content of negotiations is considered

Differences in Language and Nonverbal Behaviors Japanese Negotiators Exchange Business Cards – Important Ritual

Differences in Language and Nonverbal Behaviors Verbal Negotiations Tactics – The What of Communic-ations

Differences in Language and Nonverbal Behaviors Linguistic Aspects of Language and Nonverbal Behaviors (How Things Are Said)

Differences in Language and Nonverbal Behaviors (continued) Japan Korea China (northern) Taiwan Russia Germany United Kingdom Spain France Brazil Mexico French-speaking Canada English-speaking Canada United States

Differences in Values Objectivity Competitiveness and equality Time “separating people from the problem” Competitiveness and equality Japanese appear to be the best negotiators with the highest profits Japanese appear to be more equitable with buyers Time The passage of time is viewed differently across cultures These difference most often hurt Americans

Cultural Differences in Competitiveness and Equality Insert Exhibit 19.3

Differences in Thinking and Decision-Making Processes Western approach: sequential Eastern approach: holistic Americans: business negotiation is a problem-solving activity Japanese: a business negotiation is a time to develop a business relationship with the goal of long-term mutual benefit

Implications for Managers and Negotiators Four steps for more efficient and effective international business negotiations: Selection of the appropriate negotiation team Management of preliminaries, including training, preparations, and manipulation of negotiation settings Management of the process of negotiations Appropriate follow-up procedures and practices

Negotiation Teams Willingness to use team assistance Listening skills Influence at headquarters (senior executive) Gender should not be used as a selection criterion for international negotiation teams

Negotiation Teams Women Get the Job Done – Chile’s Foreign Minister Maria Soledad Alvear

Negotiation Preliminaries Through His Books and Seminars, Chester Karrass Has Taught More People Negotiating Skills Than Anyone Else on Earth

Negotiation Preliminaries Checklist for planning international negotiations: Assessment of the situation and the people Facts to confirm during the negotiation Agenda Best alternative to a negotiated agreement (BATNA) Concession strategies Team assignments

Negotiation Preliminaries Different Negotiations Settings Have Different Advantages

Negotiation Preliminaries (continued) Aspects of the negotiation setting that should be pre-manipulated: Location Physical arrangements Number of parties Number of participants Audiences (news media, competitors, fellow vendors, etc.) Communications channels Time limits

At the Negotiation Table Nontask sounding Task-related exchange of information Persuasion Concessions and agreement

At the Negotiation Table Japanese vs. American Negotiating Styles

Nontask Sounding Learn the mood of the other side Learn about the client’s background and interest for cues about appropriate communication styles Judgments about the “kind” of person in the negotiation

Task-Related Information Exchange Let the foreign counterparts bring up business Expect a large number of questions but little feedback Allow periods of silence Use multiple communication channels Understand the lack of, or the bluntness of negative feedback Meet aggressive first offers with questions, not anger

Persuasion You want him on your side – Banana Salesmen in Agra, India are world renowned

Persuasion Task-related information exchange versus persuasion Avoid threats, warnings, and other aggressive negotiation tactics Avoid emotional outbursts Ask more questions Use third parties and information channels of communication

Concessions and Agreement Write down concession-making strategies Understand differences in decision-making styles In many cultures, no concessions are made until the end of the negotiations

After Negotiations In most countries other than America, legal systems are not depended upon to settle disputes Japan – contacts primarily contain comments on principles of the relationship China – contracts are more a description of what business partners view their respective responsibilities to be Many foreign CEOs expect a formal contract signing ceremony Follow-up communications are very important

After Negotiations Tung Chee Hwa, Chief Executive of Hong Kong Administrative Region and Mickey Consummate Deal for Walt Disney World

Conclusions Experience levels are going up worldwide Culture still counts Differences between countries and cultures, no matter how difficult, can be worked out when people talk to each other in face-to-face setting

Summary It is important to take cultural differences into account when meeting clients, customers, and business partners across the international negotiation table. Negotiators’ personalities and backgrounds influence their behavior, making it important to get to know the individuals who represent client and customer companies. Four kinds of problems frequently arise during international business negotiations: level of language, nonverbal behaviors, values, and thinking and decision-making processes. Much care must be taken in selecting negotiating teams. Situational factors such as the location for meetings and the time allowed must be carefully considered and managed.

Summary (continued) Business negotiations involve four steps: nontask sounding, task-related information exchange, persuasion, and concessions and agreement. The time spent on each step can vary considerably from country to country. Because Americans tend to be deal oriented, more care should be taken in follow-up communications with foreign clients and partners who put more emphasis on long-term business relationships.