Chapter 5

Cross-Cultural Negotiation
and Decision Making

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Negotiation
Managements ability to negotiate
productively effects their ability to
implement strategies
Negotiation is the process of discussion by
which two or more parties aim to reach a
mutually acceptable agreement
Negotiating across borders is more complex
because of the number of stakeholders
involved

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The Negotiation Process

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Stage One Preparation
Negotiator must familiarize themselves with
The entire context and background of their
counterparts
To the specific subjects to be negotiated
Differences in culture, language, and
environment
Managers must have an understanding of
their own negotiating style

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Stage One - Preparation
Managers should find out as much as
possible about
The kinds of demands that might be made
The composition of the opposing team
The relative authority that the members possess
Develop a profile of their counterparts
They consider different variables during this
process as well

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The Negotiation Process
Relationship building taking time to build
mutual trust before starting business
discussions
Exchanging task related information
during this stage each side makes a
presentation and states its position,
normally followed by a question-and-
answer session

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The Negotiation Process
Persuasion during this stage both parties
try to persuade the other to accept more of
their position while giving up some of their
own; there are recognizable tactics for this
stage
Concessions and Agreements at this point
each side will make various concessions so
that an agreement can be reached and
signed

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Understanding Negotiation Styles

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Understanding Negotiation Styles
For North Americans, negotiations are
businesslike; their factual appeals are based on
what they believe is objective information,
presented with the assumption that it is understood
by the other side on a logical basis.
Arabs use affective appeals based on emotions
and subjective feelings.
Russians employ axiomatic appeals that is,
their appeals are based on the ideals generally
accepted in their society.
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Profile of an American Negotiator
Knows when to compromise
Takes a firm stand at the beginning of the negotiation
Refuses to make concessions beforehand
Keeps his or her cards close to his or her chest
Accepts compromises only when the negotiation is
deadlocked
Sets up the general principles and delegates the detail work
to associates
Keeps a maximum of options open before negotiation
Operates in good faith

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Profile of an American Negotiator
Respects the opponents
States his or her position as clearly as possible
Knows when he or she wishes a negotiation to
move on
Is fully briefed about the negotiated issues
Has a good sense of timing and is consistent
Makes the other party reveal his or her position
while keeping his or her own position hidden as
long as possible
Lets the other negotiator come forward first and
looks for the best deal
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Profile of an Indian Negotiator
Looks for and says the truth
Is not afraid of speaking up and has no fears
Exercises self-control
Seeks solutions that will please all the parties involved
Respects the other party
Neither uses violence nor insults
Is ready to change his or her mind and differ with himself
or herself at the risk of being seen as inconsistent and
unpredictable

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Profile of an Indian Negotiator
Puts things into perspective and switches easily from the
small picture to the big one
Is humble and trusts the opponent
Is able to withdraw, use silence, and learn from within
Relies on himself or herself, his or her own resources and
strengths
Appeals to the other partys spiritual identity
Is tenacious, patient, and persistent
Learns from the opponent and avoids the use of secrets
Goes beyond logical reasoning and trusts his or her instinct
as well as faith
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Profile of an Arab Negotiator
Protects all the parties honor, self-respect, and dignity
Avoids direct confrontation between opponents
Is respected and trusted by all
Does not put the parties involved in a situation where they
have to show weakness or admit defeat
Has the necessary prestige to be listened to
Is creative enough to come up with honorable solutions for
all parties
Is impartial and can understand the positions of the various
parties without leaning toward one or the other

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Profile of an Arab Negotiator
Is able to resist any kind of pressure that the opponents
could try to exercise on him
Uses references to people who are highly respected by the
opponents to persuade them to change their minds on some
issues
Can keep secrets and in so doing gains the confidence of
the negotiating parties
Controls his temper and emotions
Can use conference as mediating devices
Knows that the opponent will have problems in carrying
out the decisions made during the negotiation
Is able to cope with the Arab disregard for time
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Managing Negotiation

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Managing Negotiation
Successful management of intercultural
negotiations requires the manager
To gain specific knowledge of the parties in the
upcoming meeting
To prepare accordingly to adjust to and control
the situation
To be innovative

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Using the Web to Support
Negotiations
Negotiation Support Systems (NSS) can provide
support for the negotiation process by:
Increasing the likelihood that an agreement is
reached when a zone of agreement exists
(solutions that both parties would accept)
Decreasing the direct and indirect costs of
negotiations, such as costs caused by time delays
(strikes, violence), and attorneys fees, among
others
Maximizing the chances for optimal outcomes
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Comparative Management in Focus:
Negotiating with the Chinese
The Chinese think in terms of process that has
no culmination. Americans think in terms of
concrete solutions to specific problems. . . .
The Chinese approach is impersonal,
patient and aloof . . .To Americans, Chinese
leaders seem polite but aloof and
condescending. To the Chinese, Americans
appear erratic and somewhat frivolous.
Henry Kissinger,
Newsweek, May, 2001

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Comparative Management in Focus:
Negotiating with the Chinese
Business people have two major areas of conflict
when negotiating with the Chinese
Amount of detail about product characteristics
Apparent insincerity about reaching an agreement
Chinese negotiation process is affected by three
cultural norms
Politeness and emotional restraint
Emphasis on social obligations
Belief in the interconnection of work, family, and
friendship

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Comparative Management in Focus:
Negotiating with the Chinese
Tips to foreigners conducting business in China
Practice patience
Accept prolonged periods of stalemate
Refrain from exaggerated expectations
Discount Chinese rhetoric about future prospects
Expect the Chinese to try to manipulate by shaming
Resist the temptation to believe that difficulties are your
fault
Try to understand Chinese cultural traits

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Managing Conflict

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Decision Making
Stages in the Rational Decision Making Model
Defining the problem
Gathering and analyzing relevant data
Considering alternative solutions
Deciding on the best solution
Implementing the decision

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Cultural Variables Affecting
Decision Making
Objective (basing decisions on rationality)
versus subjective (basing decisions on
emotions) approach
Risk tolerance
Locus of control internal (managers in
control of events), or external (managers
have little control over events)

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Cultural Variables Affecting
Decision Making

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Comparative Management in Focus:
Decision Making in Japan

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Negotiations across Cultures
Americans
- linear, fact driven and numbers oriented
- impatient and the contract is their central focus
Asians
- avoid conflict
- express opinions indirectly and maintain a face of surface harmony
when too direct can be seen as rude
French
- enjoy emphasising distinctions and differences
- blunt and logical approach to conflicting points of views that can
seem
antagonistic to people from other cultures
Middle Easterners and Latinos
- passionate expression of differences
- save face and preserve dignity
Russians
a great deal of posturing and theatrics

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Guidelines on Negotiation across Cultures
Check whether they think like you
Spend time on non-task sounding matters to establish
personal relationships
Know the differences between your opponents social,
political and economic systems and yours
Know how the above differences affect his thinking,
authority and negotiating methods
Know your opponents legal, technical and financial
systems
Know how the above will affect our choice of tactics
Know the effects of ethical standards (right, wrong,
reasonable)
Know the importance of face saving

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Guidelines on Negotiation across Cultures
Recognize the role of status
Understand the role of government in the affairs of your
opponent
Identify the levels of approval
Ask questions, but dont put pressure
Ensure there is a suitable communication system with Head
Office
Identify the right leader for the situation
Make sure when using an interpreter he is skilled in both
languages and negotiation.
Have a dummy run with him. Get him to translate gestures etc
Avoid using jargon
Confirm in writing and use words carefully to avoid ambiguity
Use team approach by using experts
Recognize differences in perceiving contractual differences and
agreements
Make concessions only after issues are discussed.

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 Behaviours of Successful Negotiators
Have greater flexibility - wider range of influence styles
Recognize that an agreement can only be reached through exchange
Label their behaviors
- I want to propose.....
- I want to give three reasons why..
Limit their reasons to two or three strongest points and repeat them if necessary
Evaluate behavior they like positively attributing it to themselves
Use incentives and find alternative currencies of value to the other party
Summarize and test understanding
Identify areas of agreement not on areas of conflict
Avoid provoking the other party
Use both verbal and nonverbal techniques to support ideas e.g. Use I
language to convey that the speaker accepts responsibility for what he or she is
saying
Maintain eye contact with others as eye contact communicates sincerity,
concern and involvement
Show a relaxed attitude towards time and do not place unnecessary pressure on
themselves by creating artificial deadlines
Have persistence and see a difficult task through its completion
Value organizational goals above and over their own

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Looking Ahead
Chapter 6 - Formulating Strategy
Reasons for going international
Strategic Formulation Process
Steps in Developing International and Global
Strategies

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Stakeholders

Return
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Twelve Variables in the Negotiation
Process

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Persuasion Tactics

Return
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