Negotiations—means by which a company may initiate, conduct, or terminate operations in a

foreign country

Government-Company

Company-CompanyGovernment-Government

International Business Negotiations

• Face-to-face negotiations are an omnipresent activity in international commerce.

• Used to establish terms for direct investment and other operating arrangements

• Home- and host-country governments may negotiate loans, investment guarantees, and overall economic and political relationships

• In international business, business plans are almost always implemented through face-to-face negotiations with business partners and customers from foreign countries.

Ex: A Japanese Aisatsu

Importance

Impact of Culture on Negotiation Behavior

• Regional generalizations usually are not correct. (e.g., Japan vs. Korea)

• Japan is an exceptional place with most distinct styles.

• Cultural differences cause four kinds of problems in international business negotiations - at the levels of:

1. Language

2. Nonverbal behaviors

3. Values

4. Thinking and decision-making processes

Differences in Values-Objectivity, Competitiveness, Equality, and Punctuality

• Objectivity

- “Business is business”.

- Substance vs. Personality.

- US, Germany and other countries.

• Competitiveness and Equality

• Time/Punctuality

- No one places more value on time, no one has less patience when things slow down, and no one looks at their wristwatches more than Americans do.

(P-time vs. M-time)

Differences in Thinking and Decision-Making Processes

• Sequential Approach

• Holistic approach

When negotiating with partners from Asia, important signals of progress can be:

• Higher-level foreigners being included in the discussions.

• Their questions beginning to focus on specific areas of the deal.

• A softening of their attitudes and positions on some of the issues – “Let us take some time to study this issue.”

• At the negotiation table, 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.

Differences in Thinking and Decision-Making Processes (cont’)

Implications for Managers and Negotiators

• Negotiation Teams

- Language ability

- Personality (e.g., maturity, emotional stability, optimism, flexibility, cooperation)

- Listening

- Gender should not be an issue. Women might have special advantages.

• Negotiation Preliminaries

- Training

- Assessment of the situation and the people

- Facts to confirm during the negotiation

- Agenda

- Best alternative to a negotiated agreement (BATNA)

- Concession strategies

- Team assignments

Implications for Managers and Negotiators (cont’)

• At the Negotiation Table

- Nontask sounding

- Task-related exchange of information

- Persuasion

- Concessions and agreement

Implications for Managers and Negotiators (cont’)

• After Negotiations

- American likes long and complete contract “book” while high-context people focus on relationship, thus contracts are often short (e.g., 2-3 pages)

- Japanese point of view, the American emphasis on tight contract is tantamount to planning divorce before the wedding.

- In US, contracts are often mailed for signature, while in many countries, a ceremony is expected to celebrate the contract.

- Follow-up communication and relationship maintenance.

Implications for Managers and Negotiators (cont’)

Low Medium High

High

Medium

Low

1. Induce counterpart to follow one’s own script

5. Improvise an approach (effect symphony)

4. Adapt to the counterpart’s script (coordinate adjustment of both parties)

3. Employ agent or advisor (involve mediator)

2. Follow counterpart’s script

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Negotiator’s familiarity withcounterpart’s culture

Culturally Responsive Strategies and Their Feasibility