© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall Chapter 10 Intercultural Negotiation Process

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 2 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 3 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.

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 4 “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.

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 5 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 Negotiation is...

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 6 Steps in the Negotiation Process Preparation and Site Selection Team Selection Relationship Building Opening Talks Discussions Agreement

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 7 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 8 Team Selection how team is selected background of players expectations of other negotiators, their style, and the role they have played in past negotiations environment free of tension

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 9 Relationship Building Time required Intermediaries or agents Friendship versus business relationship

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 10 Opening Talks Should they start promptly or should you engage in small talk? Is an agenda proper or not? Who should be present?

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 11 Discussions Variety of behaviors and norms Emotions Concessions

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 12 Agreement Close negotiations properly Delays may happen Get tax and legal advice A long wait until final approval may happen Contracts are not always considered final

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 13 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 14 Intercultural Negotiation Models Problem-solving approach—considers national and organizational cultural differences Competitive approach—individualistic and persuasive orientation Compromising—seeks a middle ground a compromise Forcing—makes the other party comply Legalism—uses legal documentation to force the partner to comply

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 15 Four Stage Negotiation Model Investigative Presentation Bargaining Agreement

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 16 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 17 Trade Agreements Validated license—specific exporter and specific products Free trade zones or trade blocs—products enter without customs duties

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 18 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 to handle disputes To expand cooperation and increase benefits to the three countries

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 19 The U.S. Negotiator’s Global Report Card PreparationB- Synergistic approach (win-win)D Cultural I.Q.D Adapting the negotiating process to the host country environment D PatienceD ListeningD Linguistic abilitiesF Using language that is simple and accessibleC High aspirationsB+ Personal integrityA- Building solid relationshipsD Competency Grade

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 20 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).

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 21 China Reserved; known for hospitality and good manners Give small, inexpensive presents Do not like to be touched Consider mutual relationships and trust very important Technical competence of negotiators necessary Prefer to use an intermediary Rarely use lawyers Ample room for compromise

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 22 France 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 accomplish-ments are keys to success with the French

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 23 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 Prefer to keep a distance between themselves and the other team negotiators Have technical people as part of the negotiation team as Germans are detail oriented Punctuality is expected Contracts are firm guidelines to be followed exactly

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 24 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 25 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 that supply parts, equipment, financial support, or distribution of the final products); a keiretsu group is viewed as a long-term commitment The Japanese use more silence and less eye contact than U.S. Consider contracts as flexible instruments Are suspicious of a negotiating team that includes lawyers

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 26 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 well-being of family Most agreements are consummated over lunch Numerous meetings is the norm; time is not seen as important Avoid gestures

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 27 Nigeria Nigerians are skillful negotiators; they 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

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 28 Russian States In the past, negotiation sessions have been long, with Russians controlling the agenda Are concerned with age, rank, and protocol Tend to be formal Friendships are not crucial to business Contracts interpreted rigidly Concerned with maximizing their profits

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall 29 “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.

© 2011 Pearson Education, Inc. publishing as Prentice Hall© 2011 Pearson Education, Inc. publishing as Prentice Hall