1. Welcome to class of Business Negotiations Dr. Satyendra Singh
Professor, Marketing and International Business
University of Winnipeg
CANADA

2. Cultural differences cause 4 kinds of problems in international business negotiations
Language
Nonverbal Behaviours
Values
Decision-Making Processes 2

3. Language & Nonverbal Behaviours
Break in side conversation
Translation problem  rude?
Aaggressive vs. polite
Facial gazing/expressions/animation
Use of “no” and “you”
Silent periods
Touching arms
Punctuality and the concept of time
Making concession at the end vs. beginning
Problem solving and relationship building 3

4. Differences in Decision-Making Processes
Sequential Approach  In particular order
Divide tasks  price, warranty, delivery,…
Get to the point
In hurry
Western
Holistic Approach  No particular order
Eastern
Relationship  need to know you more  more time to study the issue 4

5. 4 Steps in Business Negotiations
1. Selection of the appropriate negotiation team
2. Management of preliminaries, including training, preparations, and manipulation of negotiation settings
3. Management of the process of negotiations, that is, what happens at the negotiation table
4. Appropriate follow-up procedures and practices 5

6. Negotiation Teams…
Maturity, emotional stability, breadth of knowledge, optimism, flexibility, empathy, and stamina are all important
Willingness to use team assistance, listening skill, and influence at headquarters
Willingness to use team assistance is particularly important for Canadian (and American) negotiators
# of people and their rank 6

7. The single most important activity of negotiation team
...is listening  collect information
goal is to enhance creativity
One member takes notes only, and not worrying about speaking during the meetings.
Members should know the language of clients and partners to understand their needs and preferences 7

8. Negotiation Preliminaries…
Assessment of the situation and the people
Info about markets – demand…
Facts to confirm during the negotiation
Best Alternative To a Negotiated Agreement
BATNA (You should have 2-3 BATNAs)
Concession strategies
Beginning vs. end
Team assignments
Good guy, bad guy, note taker, observer 8

9. Before and while making a deal
Best Alternative to Negotiated Agreement
If the deal fails, what next best alternative you have
Select your BATNA
Anticipate other party’s BATNA, though difficult
BATNA can be non-quantifiable 9 9

10. 7 Aspects of the negotiation settings to be manipulated ahead of time
Location  neutral, reduce jet lag
Physical arrangements  collective participation
Number of parties  buyer, seller…
Number of participants  outnumbered?
Audiences (news media, competitors, fellow vendors, etc.)  Internet, video conferencing?
Communications channels  dinner, Golf course?
Time limit  how much and how long? 10

11. At negotiation table: Negotiations proceed through 4 Stages
Non-task sounding
Task-related exchange of information
Persuasion
Concessions and agreement 11

12. Non-Task Sounding In the West: 5-10 minutes  weather, family…
It provides client’s background and interests and important cues about appropriate communication styles.
Similar people’s backgrounds  more efficient communication
engineers can use technical jargon
sports enthusiasts can use sports analogies
If one is an astute observer, one quickly learns what not to discuss…
When non-task is complete  trust is established 12

13. Task-Related Information Exchange
Let foreign counterpart decide when to negotiate the business
Japanese, Chinese, and Russian ask a lot of questions and give little feedback
Canadians are not used to this; it causes anxiety
Many negotiations take place outside business premises and after normal business hours in relationship-oriented cultures  Japan 13

14. Concessions/Agreement at Negotiations
Canadians often make concessions early, expecting foreign counterparts to reciprocate.
In many cultures no concessions are made until the end of the negotiations
Canadian contracts (100 pages vs. Japanese < 5 pages)
Canadian include carefully worded clauses regarding every aspect of the agreement
Long contracts: Planning divorce before marriage
Relationship-oriented culture  legal systems is the last resort 14

15. Important Signals of Progress
Higher-level foreigners are included in the discussions.
Their questions beginning to focus on specific areas of the deal
Softening of their attitudes and position on some of the issues—“Let us take some time to study this issue.”
Increased talk among themselves in their own language, which may often mean they’re trying to decide something.
Increased bargaining and use of the lower-level, informal, and other channels of communication. 15

16. Case Study: Negotiations at Sat-Mart
Store location: Size of the city in which Sat-Mart will be located.
Size of Foreign Direct Investment: In facilities such as warehouse, distribution, refrigeration and storage
Insourcing: What percent of Sat-Mart’s total no of products will be sourced from within India.
Supplier size: The size of the insourcing supplier is determined by its investment in machine and factory. Larger size supplier will give more options to Sat-Mart for sourcing.
Management Control: Taking management control (ie > 50% of the Indian share) means the rights to appoint a majority of Sat-Mart’s directors or control the management/policy decision.
Remittance of US $ to Head Office: The percentage of Sat-Mart’s net profit will be sent to its HO after meeting all its tax obligations in India. 16

17. Questions?