Chapter 5

Negotiation F Negotiation is the process in which at least two partners with different needs and viewpoints try to reach an agreement on matters of mutual interest. F A negotiation becomes cross-cultural when the parties involved belong to different cultures and therefore do not share the same ways of thinking, feeling, and behaving.

INTERNATIONAL NEGOTIATION F More complex than domestic negotiations F Differences in national cultures and differences in political, legal, and economic systems often separate potential business partners

Cross-Cultural Negotiation Variables (Exhibit 5-6) Culture Goals National/corporate Principles versus specific details Negotiating styles objective/subjective/axiomatic Negotiating behavior defense/attack/trust deception/pressure/concessions Verbal and nonverbal behavior Attitudes toward time/scheduling Composition of teams Level of preparation Culture Task versus interpersonal relationships Trust level and duration relations

STEP 1: PREPARATION STEP 2: RELATIONSHIP BUILDING STEP 3: EXCHANGING INFORMATION STEP 5: CONCESSIONS and AGREEMENT STEP 4: PERSUASION Steps in the International Negotiation Process

STEP 1: PREPARATION F Is the negotiation possible? F Know what your company wants F Know the other side F Send the proper team F Agenda F Prepare for a long negotiation F Environment F Strategy

DIFFERENCES IN CULTURES IN KEY NEGOTIATING PROCESSES F Negotiation goal - signing the contract or forming a relationship F Personal style - formal or informal F Communication styles - direct or indirect F Sensitivity to time - low or high F Forms of agreement - specific or general F Team organization - a team or one leader

STEP 2: RELATIONSHIP BUILDING F No focus on business F Partners get to know each other F Social and interpersonal matters F Duration and importance vary by culture

STEP 3: EXCHANGING INFORMATION F Task-related information is exchanged F First offer

STEP 4: PERSUASION F Heart of the negotiation process F Attempting to get other side to agree to a position F Numerous tactics can be used

VERBAL AND NONVERBAL NEGOTIATION TACTICS F Promise F Threat F Recommendation F Warning F Reward F Punishment F Normative appeal

OTHER NEGOTIATION TACTICS F Commitment F Self disclosure F Question F Command F Refusal F Interrupting

FREQUENCIES OF VERBAL NEGOTIATION BEHAVIORS

“DIRTY TRICKS” IN INTERNATIONAL NEGOTIATIONS Dirty tricks are negotiation tactics that pressure opponents to accept unfair or undesirable agreements or concessions Dirty tricks are negotiation tactics that pressure opponents to accept unfair or undesirable agreements or concessions

PLOYS/DIRTY TRICKS - POSSIBLE RESPONSES F Deliberate deception - point out what is happening F Stalling - do not reveal when you plan to leave F Escalating authority - clarify decision making authority

F Good guy, bad buy routine - do not make any concessions F You are wealthy and we are poor - ignore the ploy F Old friends - keep a psychological distance

GENERAL RESPONSES TO DIRTY TRICKS F Avoid using the tricks yourself. F Point out the dirty tricks when they are used. F Be ready to walk out of the negotiation if the other side fails to play fairly F Realize that ethical systems differ by culture and understand that...

STEPS 5: CONCESSIONS AND AGREEMENT F Final agreement: The signed contract, agreeable to all sides F Concession making requires that each side relax some of its demands

STYLES OF CONCESSION F Sequential approach - consider each issue as a separate point. Each side reciprocates concessions F Holistic approach - more common in Asia. Concession making begins after all issues are discussed

BASIC NEGOTIATION STRATEGIES F Competitive – The negotiation as a win-lose game F Problem solving – Search for possible win-win situations

BASIC NEGOTIATION STRATEGIES F Cultural norms and values may predispose some negotiators to one strategy F Most experts recommend a problem solving negotiation strategy

The Successful International Negotiator: PERSONAL CHARACTERISTICS F Tolerance of ambiguous situations F Flexibility and creativity F Humor F Stamina F Empathy F Curiosity F Bilingual

Successful negotiators F Understand the negotiation steps F Build cross-cultural communication skills F Understand nonverbal communication F Avoid attribution errors

Profile of a Successful American Negotiator F Knows when to compromise F Takes a firm stand at the beginning of the negotiation F Refuses to make concessions beforehand F Keeps his or her cards close to his or her chest F Accepts compromises only when the negotiation is deadlocked F Sets up the general principles and delegates the detail work to associates F Keeps a maximum of options open before negotiation F Operates in good faith

Profile of a Successful American Negotiator (contd.) F Respects the “opponents” F States his or her position as clearly as possible F Knows when he or she wishes a negotiation to move on F Is fully briefed about the negotiated issues F Has a good sense of timing and is consistent F Makes the other party reveal his or her position while keeping his or her own position hidden as long as possible F Lets the other negotiator come forward first and looks for the best deal

Profile of a Successful Indian Negotiator F Looks for and says the truth F Is not afraid of speaking up and has no fears F Exercises self-control F Seeks solutions that will please all the parties involved F Respects the other party F Neither uses violence nor insults F Is ready to change his or her mind and differ with himself or herself at the risk of being seen as inconsistent and unpredictable

Profile of a Successful Indian Negotiator (contd.) F Puts things into perspective and switches easily from the small picture to the big one F Is humble and trusts the opponent F Is able to withdraw, use silence, and learn from within F Relies on himself or herself, his or her own resources and strengths F Appeals to the other party’s spiritual identity F Is tenacious, patient, and persistent F Learns from the opponent and avoids the use of secrets F Goes beyond logical reasoning and trusts his or her instinct as well as faith

Profile of a Successful Arab Negotiator F Protects all the parties’ honor, self-respect, and dignity F Avoids direct confrontation between opponents F Is respected and trusted by all F Does not put the parties involved in a situation where they have to show weakness or admit defeat F Has the necessary prestige to be listened to F Is creative enough to come up with honorable solutions for all parties F Is impartial and can understand the positions of the various parties without leaning toward one or the other

Profile of a Successful Arab Negotiator (contd.) F Is able to resist any kind of pressure that the opponents could try to exercise on him F Uses references to people who are highly respected by the opponents to persuade them to change their minds on some issues F Can keep secrets and in so doing gains the confidence of the negotiating parties F Controls his temper and emotions F Can use conference as mediating devices F Knows that the opponent will have problems in carrying out the decisions made during the negotiation F Is able to cope with the Arab disregard for time

Profile of a Successful Swedish Negotiator F Very quiet and thoughtful F Punctual (concerned with time) F Extremely polite F Straightforward (they get straight down to business) F Eager to be productive and efficient F Heavy-going F Down-to-earth and overcautious F Rather flexible F Able to and quite good at holding emotions and feelings

Profile of a Successful Swedish Negotiator (contd.) F Slow at reacting to new (unexpected) proposals F Informal and familiar F Conceited F Perfectionist F Afraid of confrontations F Very private

Profile of a Successful Italian Negotiator F Has a sense of drama (acting is a main part of the culture) F Does not hide his or her emotions (which are partly sincere and partly feigned) F Reads facial expressions and gestures very well F Has a feeling for history F Does not trust anybody F Is concerned about the bella figura, or the “good impression,” he or she can create among those who watch his or her behavior F Believes in the individual’s initiatives, not so much in teamwork F Is good at being obliging and simpatico at all times

Profile of a Successful Italian Negotiator (contd.) F Is always on the qui vive, the “lookout” F Never embraces definite opinions F Is able to come up with new ways to immobilize and eventually destroy his or her opponents F Handles confrontation of power with subtlety and tact F Has a flair for intrigue F Knows how to use flattery F Can involve other negotiators in complex combinations

Decision- Making Process Decision- Making Process Analyze Alternatives Analyze Alternatives Implement and Evaluate Implement and Evaluate Define the Problem Define the Problem Specify objectives and Criteria /Gather and analyze relevant data Specify objectives and Criteria /Gather and analyze relevant data Select the best one Select the best one Develop alternatives Develop alternatives

Cultural Variables Affecting Decision-Making F Objective (basing decisions on rationality) versus subjective (basing decisions on emotions) approach F Risk tolerance F Locus of control – internal (managers in control of events), or external (managers have little control over events)

Cultural Variables in the Decision-Making Process (Exhibit 5-9) Problem Data Consideration of Decision Implementation Definition gathering alternative solutions Objective/subjective perspective Internal/external locus of control Risk tolerancePast/future orientation Individualism/collectivism Locus of decision making Utilitarianism/moral ideals Culture