NEGOTIATION AND

CULTURE

PRESENTED BY:
KAMAL PANDEY
RAVI SEMWAL
ANKIT SHARMA
RAVI KANT NAWANI
MOHIT DHINGRA
When negotiating in Russia, the slower you
go, the further you’ll get.

Don’t hurry to reply, but hurry to listen.

-- Traditional Russian proverbs
 When Arabs give a “yes” answer to a request,
they are not necessarily certain that the action
will or can be carried out. Etiquette demands
that your request have a positive response. A
positive response to a request is a declaration of
intention and an expression of goodwill—not
more than that. . . . If an action does not follow,
the other person cannot be held responsible for
failure.
-- Margaret Omar Nydell
University of Alexandria, Egypt
INTRODUCTION
At the height of foreign investment in Russia, BP PLC spent $484
million to buy 10 percent of Sidanko, one of the five largest Russian
oil companies. Eighteen months later, BP was enmeshed in a
bankruptcy proceeding and takeover fight that resulted in the loss of
BP’s investment.
What went wrong with this deal?
In the race to have a foothold in an emerging market, BP apparently
overlooked negotiating fundamentals and cultural issues.
Culture is often the culprit when deals that cross national borders,
like the one between BP and Sidanko, lead to disputes and
unanticipated costs.
Our presentation lays the groundwork for
understanding how culture affects negotiation.
It begins by describing:
Negotiation fundamentals.
Elements of negotiation that are the same
across cultures.
Culture and explains how culture affects
negotiations.
Negotiation Fundamentals
When you ask people all over the world what comes to mind
when you say negotiation, most describe some sort of a market
in which two people exchange a series of offers.
Negotiations are not limited to direct deal making over fixed
resources. In all cultures, people negotiate to resolve disputes
and to make decisions in teams.
When negotiators reach agreement, resources are always
distributed, but the amount of resources available for
distribution is not necessarily fixed.
Fundamental to negotiation are the circumstances in which
people negotiate and the types of agreements they reach.
Types of Negotiations
All types of negotiations occur because people
perceive that their goals are incompatible.
When people see themselves as interdependent (or
potentially so) but in conflict, they naturally negotiate
to try to deal with the conflict.
Negotiators from BP trying to buy Sidanko wanted to
pay as little as possible. Negotiators from Sidanko
trying to raise capital by selling a stake to a foreign
oil company wanted to gain as much as possible.
Distributive and Integrative Agreements

Negotiation is about claiming value: how much of a set of

resources you are going to get and how much the other party
gets. Successful value-claiming negotiation leads to a
distributive outcome that divides a fixed set of resources
such that your interests or the needs underlying your
positions are met.
Negotiation can also be about creating value: how you and
the other party can increase the resources available to divide.
Successful value-creating negotiation leads to an agreement
that is both integrative and distributive, one that divides an
enhanced set of resources.
Negotiation Fundamentals Affected by Culture:
Interests, Priorities, and Strategies

All negotiators have interests and priorities, and all

negotiators have strategies.
Interests are the needs or reasons underlying the
negotiator’s positions.
Priorities reflect the relative importance of various
interests or positions.
A negotiation strategy is an integrated set of behaviors
chosen because they are thought to be the means of
accomplishing the goal of negotiating.
 Negotiators’ interests, priorities, and use of
strategies are affected by culture. So it is
useful to have an understanding of culture
before considering how and why culture
affects interests, priorities, and strategies.
Culture and Negotiation
Culture is the unique character of a social group.
Cultures consist of psychological elements, the
values and norms shared by members of a group,
as well as social structural elements: the
economic, social, political, and religious
institutions that are the context for social
interaction.
Cultural values direct attention to what issues are
more and less important and influence negotiators’
interests and priorities.
Cultural norms define what behaviors are
appropriate and inappropriate in negotiation and
influence negotiators’ strategies.
Cultural institutions preserve and promote values
and norms.
Cultural values, norms, and ideologies serve as shared
standards for interpreting situations .
When two parties negotiate, both bring culture to the
table with their interests and priorities and their
negotiation strategies.
Exhibit 1.1 illustrates how culture affects negotiation.
EXHIBIT 1.1. How Culture Affects Negotiation
 The top ten ways that culture
can affect your negotiation
1. Negotiating goal: Contract or
relationship?
Negotiators from different cultures may tend to
view the purpose of a negotiation differently. For
deal makers from some cultures, the goal of a
business negotiation, first and foremost, is a
signed contract between the parties. Other
cultures tend to consider that the goal of a
negotiation is not a signed contract but rather the
creation of a relationship between the two sides.
2. Negotiating attitude: Win-
Lose or Win-Win?
Because of differences in culture, personality, or
both, business persons appear to approach deal
making with one of two basic attitudes: that a
negotiation is either a process in which both can
gain (win-win) or a struggle in which, of
necessity, one side wins and the other side loses
(win-lose).
3. Personal style: Informal or
formal?

Personal style concerns the way a negotiator talks

to others, uses titles, dresses, speaks, and interacts
with other persons. Culture strongly influences
the personal style of negotiators. It has been
observed, for example, that Germans have a more
formal style than Americans.
4. Communication: Direct or
indirect?

Methods of communication vary among cultures.

Some emphasize direct and simple methods of
communication; others rely heavily on indirect
and complex methods.
5. Sensitivity to time: High or
low?

Discussions of national negotiating styles

invariably treat a particular culture's attitudes
toward time. It is said that Germans are always
punctual, Latins are habitually late, Japanese
negotiate slowly, and Americans are quick to
make a deal.
6. Emotionalism: High or low?

Accounts of negotiating behavior in other

cultures almost always point to a particular
group's tendency to act emotionally. According to
the stereotype, Latin Americans show their
emotions at the negotiating table, while the
Japanese and many other Asians hide their
feelings.
7. Form of Agreement: General
or specific?
Cultural factors influence the form of the written
agreement that the parties make. Generally, Americans
prefer very detailed contracts that attempt to anticipate all
possible circumstances and eventualities, no matter how
unlikely.
Why? Because the deal is the contract itself, and one
must refer to the contract to handle new situations that
may arise.
8. Building an agreement: Bottom up or
top down?
Related to the form of the agreement is the question of
whether negotiating a business deal is an inductive or a
deductive process. Does it start from an agreement on
general principles and proceed to specific items, or does it
begin with an agreement on specifics, such as price,
delivery date, and product quality, the sum total of which
becomes the contract? Different cultures tend to
emphasize one approach over the other. Some observers
believe that the French prefer to begin with agreement on
general principles, while Americans tend to seek

agreement first on specifics .

9. Team organization: One leader or group
consensus?

In any negotiation, it is important to know how

the other side is organized, who has the authority
to make commitments, and how decisions are
made. Culture is one important factor that affects
how executives organize themselves to negotiate
a deal.
10. Risk taking: High or low?
In deal making, the negotiators' cultures can
affect the willingness of one side to take risks-- to
divulge information, try new approaches, and
tolerate uncertainties in a proposed course of
action. The Japanese, with their emphasis on
requiring large amount of information and their
intricate group decision-making process, tend to
be risk averse. Americans, by comparison, are risk
takers.
THANK YOU!