© 2006 Prentice Hall5- 1 Chapter 5 Cross-Cultural Negotiation and Decision Making PowerPoint by Kristopher Blanchard North Central University & Dr Asma Abdullah (Malaysian Interculturalist)

© 2006 Prentice Hall5-2 Negotiation Management’s ability to negotiate productively effects their ability to implement strategies Negotiation is the process of discussion by which two or more parties aim to reach a mutually acceptable agreement Negotiating across borders is more complex because of the number of stakeholders involvedstakeholders

© 2006 Prentice Hall5-3 The Negotiation Process

© 2006 Prentice Hall5-4 Stage One – Preparation Negotiator must familiarize themselves with –The entire context and background of their counterparts –To the specific subjects to be negotiated –Differences in culture, language, and environment Managers must have an understanding of their own negotiating style

© 2006 Prentice Hall5-5 Stage One - Preparation Managers should find out as much as possible about –The kinds of demands that might be made –The composition of the opposing team –The relative authority that the members possess Develop a profile of their counterparts They consider different variables during this process as well

© 2006 Prentice Hall5-6 The Negotiation Process Relationship building – taking time to build mutual trust before starting business discussions Exchanging task related information – during this stage each side makes a presentation and states its position, normally followed by a question-and- answer session

© 2006 Prentice Hall5-7 The Negotiation Process Persuasion – during this stage both parties try to persuade the other to accept more of their position while giving up some of their own; there are recognizable tactics for this stage Concessions and Agreements – at this point each side will make various concessions so that an agreement can be reached and signed

© 2006 Prentice Hall5-8 Understanding Negotiation Styles

© 2006 Prentice Hall5-9 Understanding Negotiation Styles For North Americans, negotiations are businesslike; their factual appeals are based on what they believe is objective information, presented with the assumption that it is understood by the other side on a logical basis. Arabs use affective appeals based on emotions and subjective feelings. Russians employ axiomatic appeals – that is, their appeals are based on the ideals generally accepted in their society.

© 2006 Prentice Hall5-10 Profile of an 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

© 2006 Prentice Hall5-11 Profile of an American Negotiator 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

© 2006 Prentice Hall5-12 Profile of an 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

© 2006 Prentice Hall5-13 Profile of an Indian Negotiator 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 party’s 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

© 2006 Prentice Hall5-14 Profile of an 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

© 2006 Prentice Hall5-15 Profile of an Arab Negotiator 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

© 2006 Prentice Hall5-16 Managing Negotiation

© 2006 Prentice Hall5-17 Managing Negotiation Successful management of intercultural negotiations requires the manager –To gain specific knowledge of the parties in the upcoming meeting –To prepare accordingly to adjust to and control the situation –To be innovative

© 2006 Prentice Hall5-18 Using the Web to Support Negotiations Negotiation Support Systems (NSS) can provide support for the negotiation process by: Increasing the likelihood that an agreement is reached when a zone of agreement exists (solutions that both parties would accept) Decreasing the direct and indirect costs of negotiations, such as costs caused by time delays (strikes, violence), and attorneys’ fees, among others Maximizing the chances for optimal outcomes

© 2006 Prentice Hall5-19 Comparative Management in Focus: Negotiating with the Chinese The Chinese think in terms of process that has no culmination. Americans think in terms of concrete solutions to specific problems.... The Chinese approach is impersonal, patient and aloof...To Americans, Chinese leaders seem polite but aloof and condescending. To the Chinese, Americans appear erratic and somewhat frivolous. — Henry Kissinger, Newsweek, May, 2001

© 2006 Prentice Hall5-20 Comparative Management in Focus: Negotiating with the Chinese Business people have two major areas of conflict when negotiating with the Chinese –Amount of detail about product characteristics –Apparent insincerity about reaching an agreement Chinese negotiation process is affected by three cultural norms –Politeness and emotional restraint –Emphasis on social obligations –Belief in the interconnection of work, family, and friendship

© 2006 Prentice Hall5-21 Comparative Management in Focus: Negotiating with the Chinese Tips to foreigners conducting business in China –Practice patience –Accept prolonged periods of stalemate –Refrain from exaggerated expectations –Discount Chinese rhetoric about future prospects –Expect the Chinese to try to manipulate by shaming –Resist the temptation to believe that difficulties are your fault –Try to understand Chinese cultural traits

© 2006 Prentice Hall5-22 Managing Conflict

© 2006 Prentice Hall5-23 Decision Making Stages in the Rational Decision Making Model –Defining the problem –Gathering and analyzing relevant data –Considering alternative solutions –Deciding on the best solution –Implementing the decision

© 2006 Prentice Hall5-24 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)

© 2006 Prentice Hall5-25 Cultural Variables Affecting Decision Making

© 2006 Prentice Hall5-26 Comparative Management in Focus: Decision Making in Japan

© 2006 Prentice Hall5-27 Negotiations across Cultures Americans - linear, fact driven and numbers oriented - impatient and the contract is their central focus Asians - avoid conflict - express opinions indirectly and maintain a face of surface harmony when too direct can be seen as rude French - enjoy emphasising distinctions and differences - blunt and logical approach to conflicting points of views that can seem antagonistic to people from other cultures Middle Easterners and Latinos - passionate expression of differences - save face and preserve dignity Russians a great deal of posturing and theatrics

© 2006 Prentice Hall5-28 Guidelines on Negotiation across Cultures Check whether they think like you Spend time on non-task sounding matters to establish personal relationships Know the differences between your opponent’s social, political and economic systems and yours Know how the above differences affect his thinking, authority and negotiating methods Know your opponent’s legal, technical and financial systems Know how the above will affect our choice of tactics Know the effects of ethical standards (right, wrong, reasonable) Know the importance of face saving

© 2006 Prentice Hall5-29 Guidelines on Negotiation across Cultures Recognize the role of status Understand the role of government in the affairs of your opponent Identify the levels of approval Ask questions, but don’t put pressure Ensure there is a suitable communication system with Head Office Identify the right leader for the situation Make sure when using an interpreter he is skilled in both languages and negotiation. Have a dummy run with him. Get him to translate gestures etc Avoid using jargon Confirm in writing and use words carefully to avoid ambiguity Use team approach by using experts Recognize differences in perceiving contractual differences and agreements Make concessions only after issues are discussed.

© 2006 Prentice Hall5-30 Behaviours of Successful Negotiators Have greater flexibility - wider range of influence styles Recognize that an agreement can only be reached through exchange Label their behaviors - I want to propose I want to give three reasons why.. Limit their reasons to two or three strongest points and repeat them if necessary Evaluate behavior they like positively attributing it to themselves Use incentives and find alternative currencies of value to the other party Summarize and test understanding Identify areas of agreement not on areas of conflict Avoid provoking the other party Use both verbal and nonverbal techniques to support ideas e.g. Use “ I” language to convey that the speaker accepts responsibility for what he or she is saying Maintain eye contact with others as eye contact communicates sincerity, concern and involvement Show a relaxed attitude towards time and do not place unnecessary pressure on themselves by creating artificial deadlines Have persistence and see a difficult task through its completion Value organizational goals above and over their own

© 2006 Prentice Hall5-31 Looking Ahead Chapter 6 - Formulating Strategy –Reasons for going international –Strategic Formulation Process –Steps in Developing International and Global Strategies

© 2006 Prentice Hall5-32 Stakeholders Return

© 2006 Prentice Hall5-33 Twelve Variables in the Negotiation Process

© 2006 Prentice Hall5-34 Persuasion Tactics Return