1. 1 Negotiation and Conflict Resolution Chapter 5

2. 2 Learning Objectives Define negotiation and understand the basic negotiation process Explain how culture influences the negotiation process Consider the impact of situational factors and negotiating tactics on negotiation outcomes

3. 3 Learning Objectives (cont.) Analyze the differences between intra- cultural and cross-cultural negotiations Discuss the role of culture in the conflict resolution process Appreciate how approaches to conflict influence negotiation Identify ways to become a better cross- cultural negotiator

4. 4 Negotiation The process of bargaining between two or more parties to reach a solution that is mutually acceptable Reggie’s Toy Store in South Africa vs. Toys “R” US in the U.S.

5. 5 The Negotiation Process The goal Win-lose Lose-lose Win-win solution Distributive outcome Determining the settlement range Integrative agreement A non-fixed piece of pie

6. 6 Stages in the Negotiation Process Preparation Relationship-Building Information Exchange Persuasion Agreement

7. 7 Culture and the Negotiation Process Interests and priorities Strategies Confrontational strategy Motivation strategy Influence strategy: BATNA as a power base Information strategy

8. 8 Culture and the Negotiation Strategy Cultural Characteristic Typical Behaviors Individualistic  Sets high person goals  Rejects acceptable but suboptimal agreements  Has high self-interest, little concern for other parties' interests Collectivistic  Cooperative with in-group members, willing to search for mutually satisfying agreement  With out-group members, may be more competitive Egalitarian  Refers to BATNA and other sources of power infrequently if negotiation is moving towards agreement  Prefers to focus on issues, sharing information on priorities and interests, noting similarities and differences Hierarchical  More likely to accept and use all types of power — status, BATNA, persuasion Low-context  Prefers direct information sharing High-context  Prefers indirect information sharing

9. 9 How Culture Influence the Negotiation Process? Degree of Consensus Bargaining ranges Concept of winning Perception of the negotiation process

10. 10 Japanese Style of Negotiation High emphasis on consensus Equal representation from the firm Take time to learn about others Agreement not a too restrictive contract Leave room for honorable breakout Harmony and long-term relationship between parties

11. 11 Situational Factors Geographical Location Room Arrangements Selection of Negotiators Time Limits

12. 12 Verbal Tactics Promises Threats Recommendations Warnings Rewards Punishments Normative appeals Commitments Self-disclosure Questions Commands  Initial Offer  Verbal Negotiating Behaviors:

13. 13 Cross-Cultural Negotiation at the Climate Change Conference of Industrial Countries, Kyoto, 1997 Issues of concern: Global warming Goal: To reduce emission by assigned percentage points by 2012: Japan - cut 6% below the 1996 level U.S. - 7% EU - 8% Japan’s limit: 5% Issues of concern: Global warming Goal: To reduce emission by assigned percentage points by 2012: Japan - cut 6% below the 1996 level U.S. - 7% EU - 8% Japan’s limit: 5% U.S. delegation called the White House to report the impasse U.S. Vice President Al Gore called Japan’s Prime Minister Ryutaro Al Gore’s cross- cultural communication worked! Hashimoto at 2 a.m. How? U.S. delegation called the White House to report the impasse U.S. Vice President Al Gore called Japan’s Prime Minister Ryutaro Al Gore’s cross- cultural communication worked! Hashimoto at 2 a.m. How?

14. IBUS 681, Dr. Yang Al Gore’s Cross-Cultural Communication First praised Hashimoto for Japan’s leadership in playing the host to the conference (hierarchical norms) Then pointed out how bad it would look for the host country to derail the agreement over a measly percentage point (used collectivism, hierarchy and face concept) That worked successfully!

15. 15 Nonverbal Tactics Silence Conversational Overlaps Facial Gazing Touching

16. 16 Conflict Characteristics of Low- and High- Context Cultures Key Questions Low-Context Conflict High-Context Conflict Why: e.g., Why do we need a contract or need to reach an agreement? When: e.g., When do conflicts occur? Analytic, linear logic; instrumental oriented; dichotomy between conflict and conflict parties Individualistic oriented; low collective normative expectations; violations of individual expectations create conflict potentials Synthetic, spiral logic; expressive oriented; integration of conflict and conflict parties Group oriented; high collective normative expectations; violations of collective expectations create conflict potentials

17. 17 Conflict Characteristics of Low- and High- Context Cultures Key Questions Low-Context Conflict High-Context Conflict What: e.g., What to say or not to say? How: e.g., How to express yourself or make a proposal? Revealment; direct, confrontational attitude; action and solution oriented Explicit communication codes; line-logic style; rational-factual rhetoric; open, direct strategies Concealment; indirect, non- confrontational attitude; “face” and relationship oriented Implicit communication codes, point-logic style: intuitive-affective rhetoric; ambiguous, indirect strategies

18. 18 Becoming a Better Cross-Cultural Negotiator Understand your negotiating partner Consider situational specifics Decide how to handle actual negotiations

19. 19 Cross-Cultural Etiquette and Behavior: The Basics Greetings How do people greet and address one another? What role do business cards play? Degree of formality Will my counterparts expect me to dress up and interact formally or informally? Gift giving Do business people exchange gifts? What gifts are appropriate? Are there taboos associated with gift giving? Touching What are the attitudes toward body contact? Eye contact Is direct eye contact polite? Is it expected? Deportment How should I carry myself? Conservative or contemporary? Formal or casual? Emotions Is it usual or unprofessional to express emotions? Silence Is silence awkward? Expected? Insulting? Respective? Eating What are the proper manners for dining? Are certain food taboo? Body language Are certain gestures or forms of body language rude? Punctuality Should I be punctual and expect my counterparts to be as well? Or are schedules and agendas fluid?

20. 20 Variables in the Negotiation Process Relationships Do relationships grow out of deals or deals arise from already developed relationships? Communication patterns Are communications direct and low-context or indirect and high- context? Do nonverbal cues play a significant role? Decision-making process Is it top-down or based on consensus? Are there any influential parties not appearing at the negotiation table? Approach to building agreement What level of detail is required? Is it appropriate to focus on specifics first, building up toward an overall deal or to seek agreement on general principles, later working through the details? Forms of agreement Is the agreement based on trust, the credibility of the parties, moral commitment, or a legally binding contract? Implementation of agreement Is the agreement just a starting point in what is expected to be an evolving relationship? Will renegotiations occur as warranted under the assumption that all contingencies cannot possibly be foreseen? Trust Is trust based on relationship, past experience, intuition, or detailed rules in which as many contingencies as possible are foreseen?

21. 21 Convergence or Divergence? Greater knowledge and understanding of culture If moderate adaptation proves effective Greater knowledge and understanding of culture If moderate adaptation proves effective Ingrained cultural patterns of behavior Perception that own culture helps to negotiate effectively Ingrained cultural patterns of behavior Perception that own culture helps to negotiate effectively

22. 22 Implications for Managers Cross-cultural negotiations constitute an important part of international manager’s job Understanding dynamics of negotiation process and the influence of culture can help improve negotiating outcomes Moderate adaptation may be most effective