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International Management

International Ninth Edition Luthans | Doh

Fred Luthans

Management Jonathan P. Doh

Ninth Edition

Chapter 7

Cross-Cultural Communication
and Negotiation
International Management Ninth Edition Luthans | Doh

Managing Cross-Cultural Negotiations

• Negotiation (Bargaining)
– The process of bargaining with one or more
parties to at arrive solution acceptable to all OR
– Exchange goods or services and attempt to agree
on the exchange rate for them.
– Used in creating joint ventures, then for
expansion, local managers, imports/exports of
materials and finished goods, recapture of profits
International Management Ninth Edition Luthans | Doh

Negotiation Approaches
– Distributive Bargaining
• Negotiation that seeks to divide up a fixed amount of resources; a
win-lose situation. OR
• Two parties with opposing goals compete over a set value.
– Integrative Bargaining
• Negotiation that seeks one or more settlements that can create a
win-win solution
• two groups integrate interests, create value, invest in the
agreement (win-win scenario).
International Management Ninth Edition Luthans | Doh

Distributive versus Integrative Bargaining

Bargaining Characteristic Distributive
Integrative Bargaining
Goal Get all the pie you can Expand the pie
Motivation Win-Lose Win-Win
Focus Positions Interests
Information Sharing Low High
Duration of Relationships Short-Term Long-Term
Source: Based on R. J. Lewicki and J. A. Litterer, Negotiation (Homewood, IL: Irwin, 1985), p. 280.
International Management Ninth Edition Luthans | Doh

The Negotiation Process

1. Planning
– Identify objectives; adapt strategy, find common ground.
2. Interpersonal relationship building
– Get to know people on the other side.
3. Exchanging task-related information
– Each side sets forth its position on critical issues.
4. Persuasion
– Willingness to give some concessions
5. Agreement
– The granting of concessions and hammering out of a final
International Management Ninth Edition Luthans | Doh

The Negotiation Process

– The Best Alternative To a
Negotiated Agreement
– The lowest acceptable
value (outcome) to an
individual for a
negotiated agreement
• The “Bottom Line” for
International Management Ninth Edition Luthans | Doh

Individual Differences in Negotiation Effectiveness

• Personality Traits
– Extroverts and agreeable people weaker at distributive
negotiation – disagreeable introvert is best
– Intelligence is a weak indicator of effectiveness
• Mood and Emotion
– Ability to show anger helps in distributive bargaining
– Positive moods and emotions help integrative bargaining
• Gender
– Men and women negotiate the same way, but may
experience different outcomes
– Women and men take on gender stereotypes in
negotiations: tender and tough
– Women are less likely to negotiate
International Management Ninth Edition Luthans | Doh

Global Implications
• Conflict and Culture
– Japanese and U.S. managers view conflict differently
– U.S. managers more likely to use competing tactics
while Japanese managers are likely to use compromise
and avoidance
• Cultural Differences in Negotiations
– Multiple cross-cultural studies on negotiation styles, for
• American negotiators are more likely than Japanese bargainers
to make a first offer
• North Americans use facts to persuade, Arabs use emotion,
and Russians used asserted ideals
• Brazilians say “no” more often than Americans or Japanese
International Management Ninth Edition Luthans | Doh

Cultural Differences Affecting Negotiations

• When negotiating
– Don’t identify the counterpart’s home culture too quickly;
common cues (name, appearance, language, accent, location)
may be unreliable.
– Beware of Western bias toward “doing.” Ways of being, feeling,
thinking, and talking can shape relationships more powerfully
than doing.
– Counteract the tendency to formulate simple, consistent, stable
– Don’t assume all aspects of the culture are equally significant.
– Recognize that norms for interactions involving outsiders may
differ from those for interactions between compatriots.
– Don’t overestimate familiarity with counterpart’s culture.
International Management Ninth Edition Luthans | Doh

Negotiation Tactics
• Location
– Most businesses will choose a neutral site.
• Time limits
– An important negotiation tactic when one party is
under a time constraint.
• Buyer-seller relationship
– Some trade favors, others expect buyer to get all.
International Management Ninth Edition Luthans | Doh

Negotiation Tactics
• Five general principles
1. Separate the people from the problem: see other’s side,
avoid blame, stay positive; recognize emotions.
2. Focus on interests over positions: gives insight into the
motivation behind why a particular position was chosen.
3. Generate a variety of options before settling on an
agreement: better for everyone to have many options.
4. Insist that the agreement be based on objective
criteria: emphasize the communal nature of the process.
5. Stand your ground: neither side should agree to terms
that will leave it worse off than its best alternative to a
negotiated agreement, or BATNA.
International Management Ninth Edition Luthans | Doh

Bargaining Behaviors
• Bargaining behaviors are both verbal and
– Use of extreme behaviors: Some begin with an
extreme offer or request.
– Promises, threats, and other behaviors: often
greatly influenced by the culture
– Nonverbal behaviors: silent language (silent
period, facial gazing, touching, conversational
International Management Ninth Edition Luthans | Doh