1. Welcome to Class of International Negotiations by Dr. Satyendra Singh University of Winnipeg

2. Cultural differences cause 4 kinds of problems in international business negotiations 1.Language 2.Nonverbal behaviours 3.Values 4.Decision-making processes

3. Language & Nonverbal Behaviours Break in side conversation –Translation problem  rude? Aggressive 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

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

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.

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

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

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

9. 7 Aspects of the Negotiation Settings to be Manipulated ahead of time 1.Location  Neutral, reduce jet lag 2.Physical arrangements  collective participation 3.Number of parties  buyer, seller… 4.Number of participants  outnumbered? 5.Audiences (news media, competitors, fellow vendors, etc.)  Internet, video conferencing? 6.Communications channels  Dinner, Golf course? 7.Time limit  How much/long?

10. At the Negotiation Table: Negotiations Proceed through 4 Stages 1.Nontask sounding 2.Task-related exchange of information 3.Persuasion 4.Concessions and agreement

11. Nontask 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 –those with children can talk about their kids If one is an astute observer, one quickly learns what not to discuss… When nontask is complete  trust is established

12. 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. 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. 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. 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. Negotiating Styles: Japan Their style of interaction is among the least aggressive (or most polite). Threats, commands, and warnings appear to be de-emphasized in favour of the more positive promises recommendations, and commitments. Infrequent use of “no” and “you” and facial gazing, as well as more frequent silent periods

17. Negotiating Styles: South Korea South Korean negotiators used considerably more punishments and commands than did the Japanese. No silent periods occurred between them, and they used “no” and interrupted more than three times as frequently as the Japanese

18. Negotiating Styles: China (Northern, i.e., in and around Tianjin). Their behaviours are most remarkable in the emphasis on asking questions. Statements made by the Chinese negotiators are classified as information-exchange tactics. Other aspects of their behaviour are quite similar to the Japanese, particularly the use of “no” and “you” and silent periods

19. Negotiating Styles: Taiwan The behaviour of the businesspeople in Taiwan is similar to that in South Korea. The Chinese in Taiwan are exceptional in facial gazing—20 of 30 minutes. They asked fewer questions and provided more information (self- disclosures) than did any of the other Asian groups

20. Negotiating Styles: Russia The Russians’ style are quite similar in many respects to the style of the Japanese. They use “no” and “you” infrequently and use the most silent periods of any group. Only Japanese do less facial gazing, and only the Chinese ask a greater percentage of questions

21. Negotiating Styles: Spain The Spanish use a high percentage of commands of any of the groups Give comparatively little information; i.e., self-disclosures They interrupt one another more frequently than any other group, and they use the terms “no” and “you” very frequently

22. Negotiating Styles: France French negotiators are the most aggressive of all the groups. They use a high percentage of threats and warnings. They also use interruptions, facial gazing, and “no” and “you” very frequently compared with the other groups. May touch arms.

23. Negotiating Styles: Brazil Brazilian businesspeople, like the French and Spanish, are quite aggressive. Brazilians frequently say “no” or “you” and touch arm frequently. Facial gazing is also high

24. Negotiating Styles: Mexico Both verbal and nonverbal behaviours aree quite different than those of their Latin American (Brazilian) or continental (Spanish) cousins. In many respects, the Mexican behaviour is very similar to that of the negotiators from the United States

25. English-speaking Canada Canadians who speak English as their first language use the lowest percentage of aggressive persuasive tactics (threats, warnings, and punishments). With respect to international negotiations, the English- speaking Canadians use noticeably more interruptions and “no’s” than negotiators from either of Canada’s major trading partners, the United States and Japan.