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Cross Cultural Negotiation

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Cross Cultural Negotiation

Michal Zieba

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The impact of international business in domestic markets compels us to ask a question: “How can we survive in this global playing field, and what can we do to run our businesses more effectively?” Nowadays, businesses of all sizes search for suppliers and customers on a global level. International competition, foreign clients and suppliers may become a danger, but they may also create huge opportunities to develop our business. The increasingly global business environment requires managers to approach the negotiation process from the global business person’s point of view. This approach includes aspects which are usually unimportant in domestic negotiations. Some of the components of a cross cultural negotiation process are more complex and difficult, but will increase our success in avoiding barriers and failures in the international business arena.

When doing business internationally, we need to consider (Salacuse, 1991):

The negotiating environment

Cultural and sub-cultural differences

Ideological differences

Foreign bureaucracy

Foreign laws and governments

Financial insecurity due to international monetary factors

Political instability and economic changes

If we consider the fact that negotiating with our fellow citizen is not an easy task due to many individual differences, it would be reasonable to suggest that negotiating with foreigners may be even more difficult. The way we perceive and create our own reality may be completely different to our counterpart’s way of thinking, behaving and feeling. Unfortunately, knowledge of any foreign language is not enough to face and solve the problem. Language is a cluster of codes used in communication which, if not shared effectively, can act as a barrier to establish credibility and trust. We need more effective tools, and the most important is knowledge of all factors that can influence the proceedings. Nations tend to have a national character that influences the type of goals and process the society pursues in negotiations. This is why specifying and understanding cultural differences is vital in order to perform successfully in inter-cultural communication (Schuster-Copeland 1996, 33). As we better understand that our partners may see things differently, we will be less likely to make negative assumptions and more likely to make progress when negotiating.

Factors influencing cross-cultural negotiations

Negotiating Goal and Basic Concept: How is the negotiation being seen? Is mutual satisfaction the real purpose of the meeting? Do we have to compete? Do they want to win? Different cultures stress different aspects of negotiation. The goal of business negotiation may be a substantive outcome (Americans) or a long-lasting relationship (Japanese).

Protocol: There are as many kinds of business etiquette as there are nations in the world. Protocol factors that should be considered are dress codes, number of negotiators, entertainment, degree of formality, gift giving, meeting and greeting, etc.

Communications: Verbal and non-verbal communication is a key factor of persuasion. The way we express our needs and feelings using body language and tone of voice can determine the way the other side perceives us, and in fact positively or negatively contributes to our credibility.Another aspect of communication relevant to negotiation is the direct or indirect approach to exchanging information. Is the meaning of what is said exactly in the words themselves? Does “…it’s impossible” really mean impossible or just difficult to realise? Always use questions to identify the other side’s needs, otherwise assumptions may result in you never finding common interests.

Risk-Taking Propensity - Uncertainty Avoidance: There is always risk involved in negotiations. The final outcome is unknown when the negotiations commence. The most common dilemma is related to personal relations between counterparts: Should we trust them? Will they trust us? Certain cultures are more risk averse than others, e.g. Japan (Hofstede 1980). It means that less innovative and creative alternatives are available to pursue during the negotiation, unless there is a strong trust-based relationship between the counterparts.

View of Time: In some cultures time is money and something to be used wisely. Punctuality and agenda may be an important aspect of negotiation. In countries such as China or Japan, being late would be taken as an insult. Consider investing more time in the negotiating process in Japan. The main goal when negotiating with an oriental counterpart is to establish a firm relationship, which takes time. Another dimension of time relevant to negotiation is the focus on past, present or future. Sometimes the past or the distant future may be seen as part of the present, especially in Latin American countries .

Decision-Making System: The way members of the other negotiating team reach a decision may give us a hint: who we shall focus on providing our presentation. When negotiating with a team, it’s crucial to identify who is the leader and who has the authority to make a decision.

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