Cross-Cultural Negotiation and Decision MakingChapter 5

Chapter 5 - OverviewNegotiationThe negotiation processUnderstanding negotiation stylesManaging negotiationDecision making

Important Differences in the Negotiation Process The amount and type of preparation for a negotiationThe relative emphasis on tasks versus interpersonal relationshipsThe reliance on general principles rather than specific issuesThe number of people present and the extent of their influence

What is Negotiation?Negotiation describes the process of discussion between two or more parties aimed at reaching a mutually acceptable agreement

The Negotiation ProcessPreparation

Relationship building

Exchange of task-related information

Persuasion

Concessions and agreement

Stakeholders in Cross-Cultural NegotiationsHome (HQ)CountryFirmNegotiatorsHost countryHome consumersAll citizensSpecial interest groupsHost local employeesHost consumersHQ employeesSuppliersHome governmentInvestorsAlliance partnersContractorsHost governmentDistributorsExpatriate employees

Variables in the Negotiation Process(Exhibit 5-3)Basic conception of negotiation process: Is it a competitive process or a problem-solving approach?Negotiator selection criteria: Is selection based on experience, status, expertise, personal attributes, or some other characteristic?Significance of type of issues: Is it specific, such as price, or is the focus on relationships or the format of talks?Concern with protocol: What is the importance of procedures, social behaviors, and so forth in the negotiation process?Complexity of communicative context: What degree of reliance is placed on nonverbal cues to interpret information?Nature of persuasive arguments: How do the parties attempt to influence each other? Do they rely on rational arguments, or accepted tradition, or on emotion?

Variables in the Negotiation Process(contd.)Role of individuals aspirations: Are motivations based on individual, company, or community goals?Bases of trust: Is trust based on past experience, intuition, or rules?Risk-taking propensity: How much do the parties try to avoid uncertainty in trading information or making a contract?Value of time: What is each partys attitude toward time? How fast should negotiations proceed, and what degree of flexibility is there?Decision-making system: How does each team reach decisions by individual determination, by majority opinion, or by group consensus?Form of satisfactory agreement: Is agreement based on trust (perhaps just a handshake), the credibility of parties, commitment, or a legally binding contract?

Negotiation StylesFor 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.

Profile of a Successful American NegotiatorKnows when to compromiseTakes a firm stand at the beginning of the negotiationRefuses to make concessions beforehandKeeps his or her cards close to his or her chestAccepts compromises only when the negotiation is deadlockedSets up the general principles and delegates the detail work to associatesKeeps a maximum of options open before negotiationOperates in good faith

Profile of a Successful American Negotiator(contd.)Respects the opponentsStates his or her position as clearly as possibleKnows when he or she wishes a negotiation to move onIs fully briefed about the negotiated issuesHas a good sense of timing and is consistentMakes the other party reveal his or her position while keeping his or her own position hidden as long as possibleLets the other negotiator come forward first and looks for the best deal

Profile of a Successful Indian NegotiatorLooks for and says the truthIs not afraid of speaking up and has no fearsExercises self-controlSeeks solutions that will please all the parties involvedRespects the other partyNeither uses violence nor insultsIs 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.)Puts things into perspective and switches easily from the small picture to the big oneIs humble and trusts the opponentIs able to withdraw, use silence, and learn from withinRelies on himself or herself, his or her own resources and strengthsAppeals to the other partys spiritual identityIs tenacious, patient, and persistentLearns from the opponent and avoids the use of secretsGoes beyond logical reasoning and trusts his or her instinct as well as faith

Profile of a Successful Arab NegotiatorProtects all the parties honor, self-respect, and dignityAvoids direct confrontation between opponentsIs respected and trusted by allDoes not put the parties involved in a situation where they have to show weakness or admit defeatHas the necessary prestige to be listened toIs creative enough to come up with honorable solutions for all partiesIs impartial and can understand the positions of the various parties without leaning toward one or the other

Profile of a Successful Arab Negotiator(contd.)Is able to resist any kind of pressure that the opponents could try to exercise on himUses references to people who are highly respected by the opponents to persuade them to change their minds on some issuesCan keep secrets and in so doing gains the confidence of the negotiating partiesControls his temper and emotionsCan use conference as mediating devicesKnows that the opponent will have problems in carrying out the decisions made during the negotiationIs able to cope with the Arab disregard for time

Profile of a Successful Swedish NegotiatorVery quiet and thoughtfulPunctual (concerned with time)Extremely politeStraightforward (they get straight down to business)Eager to be productive and efficientHeavy-goingDown-to-earth and overcautiousRather flexibleAble to and quite good at holding emotions and feelings

Profile of a Successful Swedish Negotiator(contd.)Slow at reacting to new (unexpected) proposalsInformal and familiarConceitedPerfectionistAfraid of confrontationsVery private

Profile of a Successful Italian NegotiatorHas a sense of drama (acting is a main part of the culture)Does not hide his or her emotions (which are partly sincere and partly feigned)Reads facial expressions and gestures very wellHas a feeling for historyDoes not trust anybodyIs concerned about the bella figura, or the good impression, he or she can create among those who watch his or her behaviorBelieves in the individuals initiatives, not so much in teamworkIs good at being obliging and simpatico at all times

Profile of a Successful Italian Negotiator(contd.)Is always on the qui vive, the lookoutNever embraces definite opinionsIs able to come up with new ways to immobilize and eventually destroy his or her opponentsHandles confrontation of power with subtlety and tactHas a flair for intrigueKnows how to use flatteryCan involve other negotiators in complex combinations

Managing NegotiationThe software of negotiation that is, the nature and the appearance of the relationship between the people pursuing common goals need to be carefully addressed in the negotiation process.

Tse, Francis, and Walls

Cross-Cultural Negotiation Variables(Exhibit 5-8)Culture

Goals

National/corporatePrinciples versus specific detailsNegotiating styles objective/subjective/axiomatic Negotiating behaviordefense/attack/trustdeception/pressure/concessionsVerbal and nonverbal behaviorAttitudes toward time/schedulingComposition of teamsLevel of preparation

CultureTask versusinterpersonalrelationshipsTrust leveland durationrelations

Negotiation Support SystemsNegotiation 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 othersMaximizing the chances for optimal outcomes

Influences on Western-Chinese Business Negotiations(Exhibit 5-9)Antecedent Factors

EtiquetteHarmonyFaceEconomic conditionsPolitics pervasivenessConstituent shadowNegotiators Profile

CognitionPersonalityTeam commitmentOpen-mindednessAdaptive orientationInternationalBusinessNegotiations

BehaviorProcessOutcomes

Stages in the Rational Decision-Making ProcessDefining the problemGathering and analyzing relevant dataConsidering alternative solutionsDeciding on the best solutionImplementing the decision

Cultural Variables Affecting Decision-MakingObjective (basing decisions on rationality) versus subjective (basing decisions on emotions) approachRisk toleranceLocus of control internal (managers in control of events), or external (managers have little control over events)

Cultural Variables in the Decision-Making Process(Exhibit 5-11)Problem Data Consideration of DecisionImplementationDefinition gathering alternative solutionsObjective/subjectiveperspectiveInternal/externallocus of controlRisk tolerancePast/future orientationIndividualism/collectivismLocus of decision makingUtilitarianism/moral idealsCulture