Slide 15 1 Chapter 8 Negotiating Internationally 1

Slide 15. 1 Chapter 8 Negotiating Internationally 1 Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 2 This chapter focuses on Approaches to negotiating in an international context Three topics: – The nature of negotiating: Western and non-Western perspectives – Facets of negotiation in an international business – The issue of strategy adaptation when negotiating with counterparts from other cultures Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 3 The Nature of Negotiation The ‘Western’ approach: • Negotiating is a problem-solving exercise • Tactics and strategies can be applied universally • Implicit is the assumption that the participants in negotiations share similar approaches, attitudes and principles • Focus is on what happens between parties • Two types of negotiation strategy predominate: – the distributive (win–lose) – the integrative (win–win strategy) Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 4 Cont’d In an international context: • The assumptions and expectations of the west may not be shared • Even if behaviour displayed by both parties is similar in nature, it may reflect different motives • The very act of negotiating can be a concept, which is fundamentally alien to other cultures, e. g. for Japanese negotiators Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 5 Key Facets of Negotiation facet Behavioural the parties predispositions of Elements Concepts Interpersonal orientation Harmony, self-interest Power orientation Formal power, (informal) influence Willingness to take risks Negotiating party’s degree of delegated decision-making, and (lack of) uncertainty Negotiation strategies Trust or mistrust as basis Strategic time-frame Logical, finite process or ongoing dialogue Styles of negotiation Work towards specific, concrete goals, or more towards principles, concepts Outcome orientations Iron-cast deal or less explicit agreement Underlying concept of negotiation Negotiation process Table 15. 1 Facets of negotiation Source: Usunier, 2003 (adapted) Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 6 Cross-Cultural Negotiation in Practice: The USA and China Interpersonal orientation: fundamental opposition • For the Chinese, a negotiation is just • The US sees the deal as the main part of developing a life-long objective of any negotiation relationship • Very focussed bottom-line approach • Need to establish a good rapport before talking of a deal Americans might feel that the wish by their Chinese counterparts to establish friendship is one way to get a better deal later on in the negotiation(s). Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 7 Cont’d Power orientation • Clear hierarchy in US team • Deference shown, even if the language used informal • The boss will probably be given much leeway – already discussed with HQ • Risk-taking seen as inherent to getting the best deal possible • Often difficult to know who the Chinese team leader is • The consensus-building process occurs also within the Chinese team (parties both from within as well as outside company) • Will resist pressure from the American side until all Chinese parties satisfied • Any risk-taking must be carefully orchestrated Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 8 Cont’d Underlying concept of negotiation Negotiation strategies: Both US approaches (win–win & win–lose) should lead to a definitive contract to which both sides are expected to adhere. The Chinese finds it difficult to take this linear approach. For them, the negotiation is just one of many encounters. The principle is to build a business partnership. Strategic time-frame: For the Chinese a deal made at the end of a negotiation remains negotiable in the long term. Agreements are based on trust and goodwill. This can be frustrating for Americans since for them time is of the essence – and a deal’s a deal! Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 9 Cont’d Style of negotiation • US negotiators concerned with • For the Chinese, gaining trust + specifics, the information which allows confidence is more important than facts them to pursue their way of and figures negotiating • May not have information asked for • Need to gain a clearer idea of the (possible face loss). However, collection other party’s concerns and interests to of information is becoming more establish or modify their goals systematic • Ready to give a lot of information if • NB: younger managers more in tune this is part of an exchange with western behaviour norms Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 10 Cont’d Outcome orientations • For US negotiators, a detailed contract is the ideal conclusion to a negotiation: signed, sealed and delivered • In the final phase detailed points are hammered out: – Implementation – Legal aspects • Chinese tend to avoid legalistic details • Prefer short contracts that show commitment to project • A contract is only a formal moment in development of a relationship • Further negotiations will happen using the goodwill and friendship established Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 11 Cont’d • The Chinese and American negotiators therefore face innumerable potential difficulties • The opposition in expectations and attitudes is clear, the expected frustrations and irritations evident • How can both sides resolve this dilemma? One possible way to deal with apparently conflicting cultural values is to use Weiss’s strategic framework Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 12 Background to Weiss’ framework When in Rome, do as the Romans do? • To what extent should a negotiator adapt to the cultural values of the other party. Are international negotiators expected to adapt totally? • This is a simplistic approach – It does not account for the dominant role of one or the other partner – Is it ever possible to ‘do as’ the Romans? – It wrongly assumes that a ‘Roman’ will always act as a Roman with a non. Roman in Rome! Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 13 Cultural Approach of Negotiating • Stephen Weiss (1994) considers a ‘one-size-fits-all’ approach to be inappropriate • Weiss proposes instead a range of strategies which are – culturally responsive – reflect the skills of the individuals involved – take account of the circumstances in which they are working Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 14 Negotiation as Communicative Event • One basic aim in any communicative event: to make sense of the interaction • In negotiations this means that the least both parties must be able to do is (Weiss, 1994): – recognize each other’s ideas and the types of behaviour evident – detect common and differing standpoints as well as changes made to these during the negotiating process – ensure that communication is maintained as the negotiation proceeds Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 15 Negotiating Process • However, the knowledge and skills required to perform these crucial acts is often limited • What needed, Weiss says, is a strategic framework which allows the parties to – make sense of the negotiating process as best they can – use their own attributes – (where necessary) the skills of others Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 16 Weiss’ Strategic Framework Figure 15. 1 Strategic frame for negotiating nd Source: Weiss (1994 a, Figure 2, p. 54‘Culturally responsive strategies and their feasibility’) Browaeys & Price, Understanding Cross-Cultural Management, 2 Edition © Pearson Education Limited 2011

Slide 15. 17 Which Strategies to Use? The strategy which is: • the most feasible, i. e. the extent to which it will fit with the counterpart’s possible approach • the most appropriate in terms of the relationship and circumstances surrounding the interaction • the most acceptable in terms of the manager’s own values Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 18 Choosing the Strategy Choosing the strategy therefore involves: • considerable reflection on one’s own culture as well as careful investigation into the counterpart’s culture • both parties considering their relationship as individuals as well as members of different cultures Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 19 The Five Steps The five steps which Weiss proposes for selecting a negotiating strategy take account of these complexities 1. Reflect on your culture’s negotiation script 2. Learn the negotiation script of the counterpart’s culture 3. Consider the relationship and circumstances 4. Predict and influence the counterpart’s approach 5. Choose your strategy Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011

Slide 15. 20 Conclusion to Chapter 8 Cultural differences in international negotiations: One key facet of negotiating: what do participants consider important in the negotiating process? • Is it basically seen as a question of problem- solving? • Is it seen as just one aspect of beginning or continuing a harmonious, mutually beneficial relationship? Browaeys & Price, Understanding Cross-Cultural Management, 2 nd Edition © Pearson Education Limited 2011