Faculty of Business & Law

International Business Negotiations

STRM060

Student Name: Mohamed Fahad Rahim

Student ID: 20417768

Lecturer: Mr. Jayantha Fernando

Word Count: 3541

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Table of Contents
Abstract......................................................................................................................................3
Introduction................................................................................................................................4
Dimensions of culture................................................................................................................5
The role of communication........................................................................................................7
Negotiation Skills needed to succeed.........................................................................................7
Negotiation styles.......................................................................................................................8
The DO’s and Dont’s in Negotiation.........................................................................................9
Conclusions..............................................................................................................................12
References................................................................................................................................12

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 Abstract

Global businesses are profoundly dependent for their sustainability and success on the
efficacy of business negotiations. International business negotiations over the last decade
have received significant interest among researchers as a significant business feature for
establishing and sustaining good partnerships. While these research efforts have focused on
many dimensions of international business negotiations, neither a detailed review of the skills
needed nor an examination of the problems that arise are left unexplored. The aim of this
essay is to provide a comprehensive overview of the publications provided in the last decade
on international business negotiations, to identify and critically analyse the range of skills a
negotiator needs to draw upon, including styles, in the process of conducting effective
negotiations across different cultures.

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 Introduction

The corporate world of today is continually evolving and organizations continue to do this
upgrade every day, or the rivals would take the lead immediately. In order to retain a
sustainable advantage in the international market sector, it is important that organizations
know how to negotiate successfully in order to accomplish what they want. The same type of
negotiating cannot operate in different scenarios (Acuff, 2008).

The negotiating techniques we strive to learn are those we have mastered in several aspects as
children, but when we become older, negotiation becomes more sophisticated. In a regular
basis, all who have a small child are well aware of this. Kids are great negotiators and they
are consistent. The nature of the universe is not revealed to infants. They know that when
grown-ups say no, they also imply maybe (Fatehi, 2008). The most unpredictable thing is that
kids also interpret parents differently than parents do to themselves. One of the most
demanding and significant challenges facing multinational organizations is negotiating.
Governmental negotiation is very confusing and daunting and it is very complicated because
it covers numerous legislation, rules, guidelines, best standards and, business practices and
above all cultural differences. It is costly to reach international markets and the need to learn
more about the subject was one justification for understanding this topic and the entire
method of negotiation. It is important to possess strong communication skills in order
to succeed in life.

In today’s business, managers

increasingly engage in
international atmospheres and
international business
negotiations due to economic

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openness and globalization (Tu,
2013; Ribbink &
Grimm, 2014). The associated
international trade is a large
part of the world total trade
and
increases annually (Simintiras
& Thomas, 1998). When this
occurs borders are crossed, as
well as
cultures. As organizations are
driven or sometimes forced to
negotiate with foreign partners,
they
should realize that differences in
cultures may lead to unexpected
events or outcomes. Many
authors

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recognize culture as one of the
most important factors
incorporated in cross-cultural
negotiations
(Chang, 2002). Compared to
negotiations of organizations
within one culture (intra-
culture),
negotiations with business
associates from different
cultures (inter-culture) are
highly complex
(Weiss, 2006), have more at
stake (Mintu-Wimsatt &
Calantone, 1991) and have
staggering failure
rates (Tung, 1988). The
consequences of failure in inter-

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cultural business negotiations
are related
with higher sunk costs and a
stagnant profit and scope
potential (Reynolds et al., 2003).
To cope with
this increasingly important facet,
academia tried to accumulate the
differences in terms of culture in
an overarching model. The
impact of cultural differences on
international business (IB)
negotiations
is widely recognized, but the
models that describe this
phenomenon did not found
general
acceptance (Weiss, 2006).
Nevertheless, the models or
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model dimensions are often
utilized in inter-
cultural comparative studies. The
objective of this paper is to use
these models to explain how and
why countries with dissimilar
cultures negotiate differently
and to review the literature for
these
inter-cultural negotiations. It
reveals the complexity of the
impact of culture on IB
negotiations by
addressing two ‘’opposites’’ of
the cultural continuum with the
support of empirical evidence.
The

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United States and Japan have
two distinct cultures and the
cultural friction impacts the IB
negotiations in multiple ways.
Furthermore, some guidelines
are drawn from existing
literature to
reduce the cultural friction to
obtain more successful
negotiations for this particular
negotiation
setting.
What is Negotiation?

Negotiation is a procedure by which parties resolve conflicts. It is a mechanism by which

agreement or resolution is achieved while eliminating disagreement and contention (Rao,
2010).

Individuals naturally seek to obtain the best possible result for their position (or even an
entity they represent) in every conflict. The concept of fairness, the quest for shared gain and
the continuation of a relationship, however, are the keys to a good result.

In certain cases, particular ways of negotiating are used: foreign policy, the legal system,
legislation, trade disputes or domestic relations as examples. In a wide variety of tasks,
nevertheless, basic negotiating techniques can be learned and incorporated. In addressing the

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conflicts that exist between both parties, negotiating skills will be of immense value (Czinkota
et al.2005).

Dimensions of culture

The Cultural Aspects Theory of Hofstede, developed by Geert Hofstede, is a method used to
explain cultural distinctions between nations and to distinguish the ways in which business is
carried out across various societies. In other words, the structure is used to differentiate the
aspects of culture between various national cultures and to determine their effect on a market
environment (Irfan, 2016).

Power distance

This factor reflects the degree to which a society's less dominant members agree and
anticipate power to be unequally distributed: assumptions about the proper allocation of
power in society. The underlying challenge here is how a culture treats people's disparities.
People showing a large degree of Power Distance in communities acknowledge a hierarchical
structure in which each has a position and no further argument is required. In low-power-
distance communities, people aim to equalize power sharing and seek explanation for power
inequality. The countries with a high Power Distance index are China and Saudi Arabia.

Individualism / Collectivism

The factor of Individualism / Collectivism is about the relative importance of the desires of
people against groups. The high side of this factor, called individualism, can be characterized
as a desire for a loosely-knit social system in which only they and their immediate families
are supposed to be taken care of by individuals. Collectivism, on the other hand, is a desire
for a tightly-knit system of society where people might trust their families or members of a
specific community to look after them in return for unquestioned loyalty. The status of a
culture on this level is expressed in whether the self-image of individuals is defined in terms
of "I" or "we." The USA is perceived to be one of the world's most individualistic nations.

Masculinity / Femininity

The factor of Masculinity / Femininity is about what principles in a culture are considered
more essential. The masculine side of this component is a desire for excellence, heroism,
assertiveness and material benefits for success in society. Society became more competitive
at large. The contrary, femininity, stands for collaboration, modesty, caring for the poor, and
quality of life desire. Society became more consensus-oriented at large. Masculinity versus

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femininity is also often linked to "tough and tender" ideologies in the company sense. Japan
is considered to be a rather masculine country, whereas Scandinavian countries are
considered to be incredibly feminine, such as Norway and Sweden.

Uncertainty Avoidance

The factor of Uncertainty Avoidance represents the degree to which a society's participants
feel frustrated with confusion and complexity. In addition, its impact on the making of laws is
also taken into account. How a community deals with the idea that the future can never be
predicted is the central dilemma here: do we try to predict the future or just let it happen?
Countries with a high degree of uncertainty avoidance maintain strict standards of behaviour
and actions and are intolerant to unorthodox behaviour and views. To minimize confusion,
these countries also need a lot of laws. Countries with a low Uncertainty Avoidance Index
maintain a more comfortable mentality in which more than values count in reality, respect for
complexity is recognized, and there is little need for laws to restrict confusion. South
American countries such as Chile, Peru and Argentina avoid countries with high levels of
instability.

Time Orientation

When grappling with the problems of the present and the future, every society has to retain
certain ties with its own history. These two existential aims are prioritized differently by
cultures. For example, countries that rank low on this dimension choose to uphold time-
honoured customs and values while approaching cultural transition with suspicion. They are
customs and societal duties of past and present cantered and valued. In the other hand,
countries with societies that rank high on this level have a more realistic approach: they are
forward-oriented and promote thrift and progressive education activities as a means of
planning for the future. Asian countries are notable for their long-term outlook, such as China
and Japan. Morocco is a country that is geared for the short term.

Indulgence

A comparatively recent component of the paradigm is the Indulgence factor. Based on the
way they were raised, this dimension is described as the degree to which people attempt to
regulate their emotions and impulses. Reasonably weak control is called indulgence, and
discipline is called relatively tight control. Therefore, societies may be categorized as
indulgent or restrained. Indulgence stands for a culture that encourages simple and normal
human needs related to loving life and having fun to be gratified reasonably easily. Restraint
describes a society that, by rigid social rules, suppresses and governs the fulfilment of needs.

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The role of communication

In negotiating, communication plays a significant part. Communication is the definition of

the secret to a profitable organization and it's all with strong communication planned,
accurately carried out and smoothly run (Fatehi, 2008). In business, communication should
not just take place between the company and their customers, but also with their vendors,
within themselves and with all of the market partners concerned. This comprises all of the
existing external clients as well.

Without communication, no commercial activity can be performed. The use of words, signs,
and signals that are all intended to communicate arise from culture. Good communication
requires awareness of cultural factors. Communication has a big influence on the person,
group, and success in organisation Robbins (2005).

Having said that, the accomplishment of a shared understanding is not mean that parties have
to agree with each other. This suggests that people ought to have a reasonably precise
understanding of what a person or organization is trying to tell them and miscommunication
can have fatal repercussions in the worst case scenario.

Communication is the mechanism and therefore the main product of negotiating. The first
criterion for successful negotiation is consistent and clear communication. In their meetings,
individuals, especially negotiators, should improve their objectives in communication. They
should know what they think their audience is going to get. Different forms of
communication exist to fit multiple goals of communication (Forsyth, 2009).. It's better for
people to pre-prepare and train for negotiation. They should know what subjects they are
interested in, want to talk and what details they want to learn or convey. Being prepared will
make individuals more confident and more professional.

Negotiation Skills needed to succeed

Listening

You have the opportunity to listen very closely to the other side participating in the course of
negotiation as a negotiator. During the discussion, mention the key points that will bring you
to a good result (Chebet et al, 2015). As a successful negotiator, one can have great diplomatic

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ability and invest more time speaking to the other person than arguing problems that actually
can't get anything.

Communicating

The negotiator should have good communication skills, both verbal and written, to be
effective in the negotiating process. Any misconception or ambiguity will stop the whole
process of negotiation. In conversation, the negotiator should be good enough to express the
case very strongly to the other side involved in the agreement to obtain the desired result.

Patience

As a professional negotiator, one should be vigilant to achieve the desired result in an

amicable manner during the whole negotiating process. Discuss each component or point to
the successful result during the agreement with maturity so that there can be no
misunderstanding later on.

Interpersonal Skills

Successful negotiators have effective interpersonal skills. In order to make tough negotiations
very convenient, they ensure a strong working relationship with all those participating in the
negotiating process. As a good negotiator, one should have the courage to reassure rather than
exploit to achieve the desired result (Indeed, 2020).

Solving Issues

Good negotiators have strong skills for problem solving. In an objective and pragmatic
approach that comes into the negotiating phase, they address any problem. One have the
potential to concentrate and address the lingering dilemma as a professional negotiation,
which would help all parties involved rather than relying on the end target.

Negotiation styles

Competing

Negotiators who show this style are optimistic, self-confident, and concentrated on the
negotiation and performance. These people prefer to follow their own issues, often at the
detriment of their counterparts, and may become violent and powerful in the extreme. This
form is stronger in assertiveness and lower in cooperativeness. Competing negotiators prefer
to be more focused on the material than the partnership (Negotiation Experts, 2019).

Avoiding

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Generally, negotiators expressing this approach are less assertive and apprehensive. They try
not to jump in or cause friction. They remain unbiased, impartial or excluded from the
situation or leave their subordinates to be accountable. The person does not follow his or her
own interests or those of the other person automatically and there is an element of self-
sacrifice in this mode. In terms of assertiveness and cooperativeness, this style is weak and
does not reflect on either the content of the arrangement or the partnership.

Accommodating

Negotiators who demonstrate this style concentrate on establishing ties with the other side.
They strive to smooth out conflicts, reduce variations, and are more concerned with
maintaining a healthy relationship and fulfilling the other party 's needs. In assertiveness, this
type is lower and cooperative is higher. Such negotiators prefer to stress the partnership as
more significant than the agreement's content.

Compromising

Negotiators who demonstrate this style frequently break the gap, and aim for a fast middle-
ground solution that appears to result in mild fulfilment of the needs of both sides. In
assertiveness and cooperativeness, this style is moderate and more oriented on establishing a
respectable arrangement reasonably quickly while retaining any communication (Harvey,
2008).

Collaborating

In addition, the "I win, you win" model is accompanied by a collective negotiating style.
Collaborative negotiations work on ensuring that in a negotiation both parties have their
needs addressed. Without risking the best interests of their business, they prioritize
improving, developing, and building relationships.

Collaborative negotiators also evolve from others into this type of negotiating. They feel
more comfortable lobbying for their interests as time goes by and delegate loses confidence
in forming agreements. They have become eligible to strike a balance between their interests
and those of the other group that is mutually beneficial.

In most business discussions, a collective negotiating style is successful. However, it is

essential to be careful regarding working with successful negotiators because this negotiating
style focuses on winning the best for their company, they may not be involved in establishing
a constructive partnership (Negotiation Experts, 2019).

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The DO’s and Dont’s in Negotiation

Do conceal your emotions

The more feelings one convey, the more they give up. Noticeable emotions are in reserved
societies, such as those of Asia, and are signs of immaturity. Successful negotiator may not
imply greatness, so disappointment would be produced. It's going to mean that one party won
and the opposition lost. There is a possibility in these cases that the opposition will be able to
look for a way out and lament the offer.

Do use experts

It may be useful to use experts in cases where stakes are high. Not only can it save time, but
also money. When there is a professional of a certain sort, there is a possibility of receiving a
bigger deal.

Always maintain the initiative

The initiative needs to be sustained since, a negotiator will sacrifice three items without
protecting them. The negotiator will lose first, Cash. In order to be in the situation he is at
that moment, he invested money. The work is tossed away and cash is also lost. Secondly, he
is going to lose control. Negotiator must maintain power such that the agreement goes in his
own way. The third and most detrimental factor that he would fail.

If the negotiator is not an initiative, the negotiations will not be completed and he will fail the
organization. The initiative needs to be maintained by a negotiator and predetermined the
next step and take responsibility for it.

Learn to use high authority

Understand the negotiating balance of force. Power at the level of the negotiation table is not
something that anyone would offer. Control and trust are anything which comes from a
person's within.

Don’t expect to win them all

In talks, a negotiator must be sharp all the time since some errors or other needless remarks
may establish a circumstance of failure. Negotiators need to be positive and they're not
necessarily going to get what they want all the time.

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Don’t dig your heels in

It is important to note that concentrating on the general interest is important and not digging
the on one particular aspect. The entire plan is maintained by successful negotiators and
remembered all the time that the good or service itself requires, distribution, costs, benefit
and the future vision of the enterprise.

Do not attack your counterpart – attack the problem

Separate the issue from the people. Usually, the negotiation parties become emotional and
instead of attacking the issue, they attack one another. People need to hide their feelings and
develop successful working relationships to maximize their chances of success. Individuals
will need to convey thoughts without treating them personally. For individuals, it is wise not
to attempt to find who caused the problem, rather than using the ability to come up with an
idea about how to fix the problem (Nicholas, 2011).

Don’t be afraid to break off negotiation

When needed, call a break. If the negotiations turn out to be difficult, it might be a smart idea
to have a quick break. The break will give people the opportunity to calm down and they will
come back for some better suggestions, to the table.

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Conclusions

International business negotiations are more complicated, not only because of cultural
variances, but also linked to linguistic distinctions. Efficiently negotiating is one of the most
significant international business skills in a cross-cultural context.

In short, culture in several ways affects multinational market agreements. As for the
negotiation styles, the basic negotiation features are influenced by culture a lot. Through this
awareness, a business negotiator will be able to foresee future misunderstandings and strive
to compromise effectively. It is important to point out, though, that culture is just one of the
variables that can shape negotiation styles.

The case will be much more difficult in practical negotiations. One can never necessarily
assume that the understanding of the cultural context of both sides will solve all the
difficulties faced in all negotiating processes. Many considerations listed above should be
taken into account when dealing with international business negotiations, such that both
parties will gain. It can be finally concluded and agreed that “Negotiation is not a process
reserved only for the skilled diplomat, top salesperson, or ardent advocate for an organized
lobby, it is something that everyone does, almost daily”.

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Edition. AMACOM Books.
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Excellence In The 21st Century? European Journal of Research and Reflection in
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Publications, Inc
Forsyth, P. (2009). Negotiation Skills for Rookies. Singapore, SGP: Marshall Cavendish.
Harvey, B. (2008). T and G’s Guide to Effective Negotiations. Marshall Cavendish.
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