Welcome to Class ofInternational Negotiations

by

Dr. Satyendra SinghUniversity of Winnipeg

Cultural differences cause 4 kinds of problems in international business negotiations

1. Language

2. Nonverbal behaviours

3. Values

4. Decision-making processes

Language & Nonverbal Behaviours

• Break in side conversation– Translation problem rude?

• Aggressive vs. polite• Facial gazing/expressions/animation• Use of “no” and “you”• Silent Periods• Touching arms• Punctuality and the concept of time • Making concession at the end vs. beginning• Problem solving and Relationship building

Differences in Decision-Making Processes

• Sequential approach In particular order– Divide tasks price, warranty, delivery,…– Get to the point– In hurry– Western

• Holistic approach No particular order– Eastern– Relationship Need to know you more more time to study the issue

4 Steps in Business Negotiations

1. Selection of the appropriate negotiation team

2. Management of preliminaries, including training, preparations, and manipulation of negotiation

settings

3. Management of the process of negotiations, that is, what happens at the negotiation table

4. Appropriate follow-up procedures and practices.

Negotiation Teams…• Maturity, emotional stability, breadth of knowledge,

optimism, flexibility, empathy, and stamina are all important

• Willingness to use team assistance, listening skill, and influence at headquarters

• Willingness to use team assistance is particularly important for Canadian (and American) negotiators

• # of people and their rank

The Single Most Important Activity of Negotiation Team

• ...is listening collect information– goal is to enhance creativity

• One member takes notes only, and not worrying about speaking during the meetings.

• Members should know the language of clients and partners to understand their needs and preferences

Negotiation Preliminaries…• Assessment of the situation and the people

– Info about markets – demand…

• Facts to confirm during the negotiation

• Best Alternative To a Negotiated Agreement – BATNA (You should have 2-3 BATNAs)

• Concession strategies– Beginning vs. end

• Team assignments– Good guy, bad guy, note taker, observer

7 Aspects of the Negotiation Settingsto be Manipulated ahead of time

1. Location Neutral, reduce jet lag

2. Physical arrangements collective participation

3. Number of parties buyer, seller…

4. Number of participants outnumbered?

5. Audiences (news media, competitors, fellow vendors, etc.) Internet, video conferencing?

6. Communications channels Dinner, Golf course?

7. Time limit How much/long?

At the Negotiation Table: Negotiations Proceed through 4 Stages

1. Nontask sounding

2. Task-related exchange of information

3. Persuasion

4. Concessions and agreement

Nontask Sounding• In the West – 5-10 minutes weather, family…

– It provides client’s background and interests and important cues about appropriate communication styles.

• Similar people’s backgrounds more efficient communication– engineers can use technical jargon– sports enthusiasts can use sports analogies– those with children can talk about their kids

• If one is an astute observer, one quickly learns what not to discuss…

• When nontask is complete trust is established

Task-Related Information Exchange

• Let foreign counterpart decide when to negotiate the business

• Japanese, Chinese, and Russian ask a lot of questions and give little feedback.

• Canadians are not used to this; it causes anxiety.

• Many negotiations take place outside business premises and after normal business hours in relationship-oriented cultures Japan.

Concessions/agreement at negotiations• Canadians often make concessions early, expecting foreign

counterparts to reciprocate.

• In many cultures no concessions are made until the end of the negotiations

• Canadian contracts (100 pages vs. Japanese < 5 pages)– Canadian include carefully worded clauses regarding every aspect of

the agreement

• Long contracts: Planning divorce before marriage

• Relationship-oriented culture legal systems is the last resort

Important Signals of Progress• Higher-level foreigners are included in the discussions.

• Their questions beginning to focus on specific areas of the deal

• Softening of their attitudes and position on some of the issues—“Let us take some time to study this issue.”

• Increased talk among themselves in their own language, which may often mean they’re trying to decide something.

• Increased bargaining and use of the lower-level, informal, and other channels of communication.

Negotiations at Sat-Mart• Store location: Size of the city in which Sat-Mart will be located.

• Size of Foreign Direct Investment: In facilities such as warehouse, distribution, refrigeration and storage

• Insourcing: What percent of Sat-Mart’s total no of products will be sourced from within India.

• Supplier size: The size of the insourcing supplier is determined by its investment in machine and factory. Larger size supplier will give more options to Sat-Mart for sourcing.

• Management Control: Taking management control (ie > 50% of the Indian share) means the rights to appoint a majority of Sat-Mart’s directors or control the management/policy decision.

• Remittance of US $ to Head Office: The percentage of Sat-Mart’s net profit will be sent to its HO after meeting all its tax obligations in India.

Negotiating Styles: Japan

• Their style of interaction is among the least aggressive (or most polite).

• Threats, commands, and warnings appear to be de-emphasized in favour of the more positive promises recommendations, and commitments.

• Infrequent use of “no” and “you” and facial gazing, as well as more frequent silent periods

Negotiating Styles: South Korea

• South Korean negotiators used considerably more punishments and commands than did the Japanese.

• No silent periods occurred between them, and they used “no” and interrupted more than three times as frequently as the Japanese

Negotiating Styles: China

• (Northern, i.e., in and around Tianjin). Their behaviours are most remarkable in the emphasis on asking questions.

• Statements made by the Chinese negotiators are classified as information-exchange tactics.

• Other aspects of their behaviour are quite similar to the Japanese, particularly the use of “no” and “you” and silent periods

Negotiating Styles: Taiwan• The behaviour of the businesspeople in Taiwan is

similar to that in South Korea. • The Chinese in Taiwan are exceptional in facial gazing

—20 of 30 minutes. • They asked fewer questions and provided more

information (self-disclosures) than did any of the other Asian groups

Negotiating Styles: Russia

• The Russians’ style are quite similar in many respects to the style of the Japanese.

• They use “no” and “you” infrequently and use the most silent periods of any group.

• Only Japanese do less facial gazing, and only the Chinese ask a greater percentage of questions

Negotiating Styles: Spain

• The Spanish use a high percentage of commands of any of the groups

• Give comparatively little information; i.e., self-disclosures

• They interrupt one another more frequently than any other group, and they use the terms “no” and “you” very frequently

Negotiating Styles: France

• French negotiators are the most aggressive of all the groups.

• They use a high percentage of threats and warnings.

• They also use interruptions, facial gazing, and “no” and “you” very frequently compared with the other groups. May touch arms.

Negotiating Styles: Brazil

• Brazilian businesspeople, like the French and Spanish, are quite aggressive.

• Brazilians frequently say “no” or “you” and touch arm frequently.

• Facial gazing is also high

Negotiating Styles: Mexico

• Both verbal and nonverbal behaviours aree quite different than those of their Latin American (Brazilian) or continental (Spanish) cousins.

• In many respects, the Mexican behaviour is very similar to that of the negotiators from the United States

English-speaking Canada

• Canadians who speak English as their first language use the lowest percentage of aggressive persuasive tactics (threats, warnings, and punishments).

• With respect to international negotiations, the English-speaking Canadians use noticeably more interruptions and “no’s” than negotiators from either of Canada’s major trading partners, the United States and Japan.