TUNGHAI UNIVERSITYDepartment of International Business - Taichung

EMBA

(Culture discussions are often generalizations, and are not always true – they are used for discussion/comparison)

Negotiating with Americans

Roots of American Culture

Geography

• Western Ancestors developed social systems based on the environment– Greece 500 B.C.– 1000’s of Islands– Islands foster Individualism

– Independence, Individuality,

America

• Nation of immigrants– New comers have to work

hard to succeed; look after themselves/family

– Independence, self achievement, rewards through personal effort

– Vast, open country, self survival

Difficult for individuals to be interdependent negotiators

American Negotiating Evolution

Vast USA Geography

• Fewer negotiations owing to self reliance

• Shorter negotiations owing to long distance travel on horse to store or market

• Need to return by nightfall.

• Give me a straight up, Yes or No answer (e.g. present Obama strategy in Congress)

• Candor. “Show us your cards.”

Social and Business Scholar

Adam smith “Wealth of Nations”, 1776

“By promoting his own interest he frequently promotes that of the society…more effectually then when he really intends to promote it”

Clear divergence between Group and individual interests.

Hofstede’s E-W Research

0102030405060708090100 Asian

Western• Collectivist/Individualist

(concern for group)

• Time Orientation (short versus long term outlook)

Negotiating with American’s

US can be complex to foreign business people…

Each region has a cultural identity,

Negotiators are known for different behavior even within the U.S.,

Broad diversity of American people drives this behavior…

Also produces tolerance so long as values are not jeopardized.

Regional Differences

Competitiveness / Aggressiveness / Narrow Thinkers

Competitive / Semi-Aggressive /

Open Minded

Leisurely, Indirect, Face Saving

Style Differences greater between Urban / Rural

Big cities generally more tolerant of style differences

Cultural Background -65% White -15% Hispanic -13% African American -4% Asian

Honest / Wholesome~Naive

Corporate Cultures Vary within Industries

Check specifics for risk aversion, formality and tradition vs. fast, action oriented firms

American Cultural Diversity

• Cross-cultural competence is limited

• An estimated 27% of Americans hold a passport

• Like many, American’s suffer from Ethnocentricity (SRC)

US Passport’s by State-->

http://awesome.goodmagazine.com/transparency/web/youarefreetoleave.html

Negotiating & Relationships

• Individualistic & Personal Initiative

• Relationships are only moderately important– Not necessary for appointments

• US negotiators will get to know you as your business evolves

• Friendly and collaborative; provided trust is established – otherwise quickly aggressive

• Cooperate and Compete at the same time.

Business Relationships

• Close relationships ≠ loyalty– Focus on near term

benefits (LTO)– Willing to drop a long term

partner is a better deal is available elsewhere• “Just business”• Fair warning.

• Company to Company vs. People to People– Efficient, transparent

Money is a key Priority – Financial success is admired

Respect earned from: Achievements then Education,then Age and Rank.

Communications

• American’s prefer direct and confident speakers– Louder then most other cultures– Emotions show through words

• Dislike vague statements– Openly share their

opinions/differences• Esp. Northern and Californians• Southerners will soften bad

news; highlight the positives first.

– Careful to avoid “negativism” due to strong achievement orientation.

Silence is very rare; makes Americans feel uncomfortable.

-conveys rejection.

Respect is earned from: Achievements then Education,

then Age and Rank.

Meetings

• Local contact may be an advantage but not required.

• Decisions mostly made by individuals– Teams can help improve

deals or hurt a “unified” front. Opponents can play one side against the other.

• Scheduling in advance is required, but can be last minute (punctuality expected)

• First names ok to use just after introductions; will usually tell you.– Hello Dr. Smith– Hi, please call me Stanley

1. Start with Small talk to establish rapport :- Discuss work background

-Nothing personal

-Humor OK, don’t be negative

2. Proceed directly to business agenda:

-Should be well prepared

-Delivered in advance

-Structured to the audience and purpose

Questions???

Negotiation Styles

• American’s view Negotiation as a joint problem solving activity– Buyer has the upper hand

typically– Each need to reach agreement

• “Win-Win” is talked about; but “win-more” is a result of the competitive culture– During negotiations aggressive

competition will occur, but they know that both sides have to benefit.

• It’s best to remain calm and persistent; with a positive and constructive attitudes.

Task Orientation:– May not make

concessions for the sake of the “Relationship”

– Expect a tangible benefit

– Key Tip: Don’t mix business with personal feelings

Unfortunately…

• Americans are not commonly taught to:– Ask questions– Get information– Use questions as

a persuasive tactic

• Rather, they spend more time in law and business school learning how to– create powerful

arguments – present evidence

(planning)– Win disputes– (win-loose)

Negotiation Planning

• American’s spend a lot of time planning (80/20)– Discuss details / ideas– Before actual negotiations start

• Willing to share limited information– Value collaboration, expect

honesty– Not offended if sensitive

information requested (but will easily reject some requests)

• It’s best to remain calm and persistent; with a positive and constructive attitude.

Value Objective Dispute Resolution:– Emphasize common goals– Seek mutually acceptable

alternatives– Utilize fair standards

– Compromise is a last resort; it means giving up your values.

Negotiation Pace/Speed

• American’s negotiate fast!– Speed matters– Tim e is money

• Many expect to conclude a deal on first trip:– Seek to conclude negotiations &– Look to implement decisions quickly

• Follow-up can be conducted via email/phone– “Relationship” purposes are

accomplished on the first visit.

• Follow a “monochronic” process– Serial/Systematic “List Culture”– Dislike interruptions– Seek to save time, not “loose "it.

Piece Meal Negotiations:– Work down a list of issues– Bargain separately for each– Unwilling to “re-visit”

previously discussed issues.

– Value perceived “Efficiency” in their method. Not tolerant of polychronic approaches

Time Tactics

• Time is a touchy issue:– Rigid American style

evident and probably cause emotional reactions

– Perceived “Stalling” is poorly received

• Polychronic bargainers should be willing to adapt somewhat:– Condition your offer as

“contingent on the other items” in the negotiation.

American’s may give up if negotiations take too long; start to seriously consider alternatives (to save time)

On the other hand; no response in a long time signals a probable rejection

Bargaining

• Most American’s are comfortable bargaining:– Ambitious, tough, aggressive = “go

for it”– Confidence is prized and weak

opponents attract harder bargaining tactics.

• American’s often take Firm Positions…at the beginning.– After challenged; may seriously

consider price changes of 20-30% from first offer to final agreement.

• Frequently focus on areas of disagreement rather than commonalities.

American’s prefer to negotiate “in good faith”

- Deception can occur

- Fake signals, disinterest

- Misrepresentation of product

Responses should not directly challenge the lie:

-”Twisting the facts”

-“Bending the truth”

-”Leave out a few facts”

Saving Face is important for personal reputation/truth.

American Bargaining Tactics

American Hardball• Opening with best offer• Making final offers• Making decreasing offers• Expiring offers / Nibbles• Prepared Contract “Drafts”

• American’s will respond to your confrontation… but his does not help.

• Americans also may use a bad attitude, or make negative facial expressions

Your Responses

• Explain your offer basis• Avoid being aggressive (even if

they are – they will tire)

• Use Silence• Use written notes/drafts to

expedite “problem solving”

• Avoid unfriendly extreme offers – use timed offers carefully.

• Avoid emotion – ignore it, when American’s use it; it signals the end is near.

Decision Making

• Based on Company / Industry– Older/Traditional = Slow, hierarchical– Fast moving industries = flat structure, autonomy & self-

reliance

• Usually all have written policy/processes– May be individual (likely) or group decision (unlikely)– Managers must be personally accountable for decision– Decisions typically based on the size/amount of the deal

• After bargaining decisions come quickly (time is money)

• Decisions based on principles/goals/value rather than personal relationships or subjective feelings

Template: Shareholder Agreement (ITC)

37 Pages - Outline to be completed

Definitions of:

Purpose

Representatives

Liability

Investment/Profits

Contingencies:

Hardship

Death of a party

Relief from performance

Liability for early withdrawal

Resolution of disputes

Applicable law

Ancillary Agreements: IP / Know How /

Other Important Items

• Neat and Clean Business Dress Expected– More relaxed on West Coast

• Business lunch’s are more common than dinners– Engineering groups less likely to treat

• Social events are not as punctual (15-30 minutes is acceptable

• Gift giving is rare; makes Americans uncomfortable (no experience either)

• Political correctness is key; never disparage any group– You might wind up in court.– Watch the legality of all actions and decisions.

NEGOTIATING INTERNATIONAL BUSINESS - UNITED STATES

Based on the text by Lothar Katz (2007)

FREE ENTERPRISE COWBOYS: JOHN WAYNE STYLE

Based on Lozar Katz and Lam-Graham China Now Doing Business in the Worlds Most Dynamic Market