International Business Negotiation

International business negotiation 1 Introduction Sensitivity to cultural differences is very important in today’s international business arena. Culture profoundly influences how people thinking, communication and behave. Nowadays, business executives are finding themselves in precarious situations due to culturally rooted differences in business protocol, language and value system. Therefore, being aware of the influence of culture on international business negotiations and the proper ways to deal with problems encountered in international dealings is badly needed for persons involved in cross-cultural transactions.

The remainder of this paper is divided into seven parts.

First, the concept and principles of business negotiations are presented. Second, the concept of culture is explained in details. Next, the relationship between culture and international business negotiations is discussed. Fourth, the influence of culture on international business negotiations, especially the negotiating styles, which involve ten factors each consisted of two extremities is described. Fifth, points worth noting for cross-cultural negotiations are listed.

To make the whole argumentation more rigorous, a section for discussion is added.

The last part is the conclusion. 2 Concept and Principles of Business Negotiation 1. 2. 1 Concept of Business Negotiation Negotiation is a basic human activity and it is also a process through which people exchange information and experience everyday to manage their relationship. Because of mutual contact, conflict and divergence in viewpoints, needs, interests, both sides try to persuade the other party to understand and accept their viewpoints and to satisfy their own needs.

Business negotiation refers to the negotiating activities over the issues of transaction conditions for both parties to accomplish the exchange of commodities or services.

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As a useful means for the enterprises to achieve their economic goals, as an important channel to acquire market information, and as a strong power to explore the sales markets, business negotiation is some kind of complicated and comprehensive business activity, which often involves the knowledge in the fields of politics, economics, laws, literature, psychology and so on.

Though it is one part of the operation and management of an enterprise, business negotiation distinguishes itself from the common production, operation and management. And these differences are as follows: (1) The objects for exchange in business negotiations have the property of uncertainty and variability. (2) Business negotiation is the unity of magnetism and persuasion. (3) It is also the unity of concession and aggression. (4) It requires the consistency between your verbal expression and your true ideas 1. . 2 Characteristics of Business Negotiation Having a correct understanding of what it is, we conclude some of the characteristics of business negotiation. Negotiation is a cooperate enterprise; common interests must be sought. Negotiation is a behavioral process In a good negotiation, everybody wins something. (4) The size of the play field may vary from venture to venture. One must bear in mind that success isn’t winning everything but winning enough. 1. 2. 3 The Basic Principles of Negotiation

According to the characteristics of negotiation and the correct understanding of what it is, we can figure out the following basic principles of a successful negotiation. (1) Equality principle—-Both parties are equal in law status. They have equal rights and obligations. They do business for their own needs and they enjoy mutual benefits. (2) Sincere cooperation—-Both parties are making concessions. The purpose of this is to seek a win-win situation. It is through sincere cooperation that this win-win result can be made. 3. 3)Keep it flexible and fluid—-Any negotiation is a process of constant thinking, exchanging of information and concession of both parties. Besides sticking to principles one should also master in a flexible way. 3 The Concept of Culture 1. 3. 1 Definition of Culture Definitions of culture, which differ from one group to another, are as vague as that of negotiation itself. The following is the list of these varied definitions. Culture is a set of shared and enduring meanings, values, and beliefs that characterize national, ethnic, and other groups and orient their behavior.

Herskovits considers it as the “human-made” part of the environment, where man left its print on nature. Triandis distinguishes between “subject culture” made of categories, norms, roles and values and “objective culture”, regrouping human products such as tools, chairs, jet planes. For the purpose of this paper, culture is defined as the socially transmitted behavior, norms, beliefs and values of a community, which is in accordance with the theory given by Salacuse. Persons from that community use the element of their culture to explain their surroundings and guide their interactions. As Jeswald W.

Salacuse mentioned in his paper “Intercultural Negotiation in International Business”, one may find the four cultural elements forming a series of special circles, like the layers of an onion. The outer-most layer is behavior, the words and actions of one’s counterpart, which is first perceived in an intercultural negotiation. The second layer is the attitudes of persons from that culture towards specific events and phenomena, like the attitudes about beginning meetings punctually or the appropriate format of presentations. Only after protracted discussions may the attitudes become obvious to a counterpart.

Next are norms, the rules to be followed in specific situations. For example, a negotiator may come to realize that his or her counterpart’s seemly rigid insistence on punctuality is more than a firm rule rooted in his or her culture. The inner-most layer consists of values—-most difficult for negotiators to detect. The parties to an international negotiation may realize their value differences only after they have signed the contract and begun to work together. Either from the onion picture or from the explanations to each element, one can easily figure out that value is the core of each culture.

Without it the organism of a specific culture cannot be normally operated. All the different performances and interactions affected by the other three elements are determined by the values, or we can say the values have their supreme authority to influence negotiations. 1. 3. 2 The Nature of Culture Culture is transmitted through socialization and education from one generation to the next. In the short-term perspective, culture can be conceived as a structural component of any society that conditions human thinking and behavior, operating in a deterministic way.

In the long-term perspective, it is a dynamic social dimension that induces changes over time through modification of value scale. Then should the nature of culture be seen as a process or as a product? It is a process in the sense that culture elicits actions and orients them. It brings about specific actions in specific situations and, thus, could be understood as something equal to instinct. On the other hand, it is a product, an outcome of the process which is expressed in visible ways. 4 Culture and International Business Negotiations

Culture and international business negotiations can never be separated from each other. Culture, as a conscious or unconscious value, is controlling and guiding our behavior every minute. Negotiation, as a verbal behavior, takes the task of bridging two kinds of cultures. To some extent, nowadays the apparent trends of globalization makes us to realize that the process of negotiation equals to the process of getting access to the counterpart’s culture, since culture has infiltrated into every step of negotiations.

And the research of culture involves most vital variables which worth noting in the development of negotiations. In turn, negotiation provides a platform for the communication of two different cultures. People meet together, then discuss, conflict, negotiate and finally reach an agreement. In the whole process, varied cultures walk out of their boundaries, meet or challenge each other. The result is that while still maintaining their own essence, different cultures have melted with or infiltrated into others, which makes them get improved and enriched. Impact of Culture on Negotiating Styles 5. 1 Negotiating Goal People who are contract-oriented are concerned entirely with achieving a business goal. They are not concerned about the effect their determination may have on the people whom they contact with. Traditionally, American business culture is very task-oriented. People don’t want to waste time with the social niceties; they want to get down to business. People from this kind of culture would rather focus on specific issues—this means time is saved and all the work goes on effectively.

But dangers also exist in this approach—large pictures and personal issues, which may make or break the deal, may be missed. People who are relationship-oriented are highly concerned about people who work for them, alongside them or above them. The vast majority of the world’s market is relationship-oriented: the Arab world, the Asia region, and most of Africa. People there prefer to deal with friends and persons who are well known to them. And it is said that these people often consider the goal of a negotiation is not a signed contract but the creation of relationship of the two sides. 5. 2 Negotiating Attitudes

Win/win negotiators see deal making as a collaborative and problem-solving process, while win/lose negotiators see it as confrontation. In this aspect, the values of national superiority and national inferiority can be in tension. For instance, due to the long-term colonial history, the sense of being enslaved and exploited by big powers has deeply rooted in the cultures of developing countries, which makes people from those countries often regard negotiations with multi-national corporations as win/lose competition, in which profits are earned by the investors while the host country owns losses.

The result is that they may make their efforts in negotiations to limit investors’ profits, create conflicts instead of seeking methods which will benefit both parties. 5. 3 Personal Styles Personal styles mean the way a negotiator talks to others, uses titles, speaks and interacts with others. Culture strongly influences the personal styles. Formal business culture is about status, hierarchies, power and respect, whereas informal cultures are about status equality. Ignorance of this distinction can cause serious problems. For an American or an Australian, calling someone by his or her first name is an act of friendship nd therefore a good thing. For a Japanese or an Egyptian, the use of the first name at a first meeting is an act of disrespect and therefore a bad thing, which may impede a negotiation. 5. 4 Communication In terms of communication, the differences can be reflected on the negotiators’ choice of words. Some place emphasis on direct and simple methods of communication; others focus on indirect and complex methods. It is observed that the American style, as well as the German, is very direct and they try to demand the same from their counterparts.

Generally speaking, Americans openly disagree and use aggressive persuasive tactics. And the Germans usually apply a just-the-facts approach to conduct their business. While the Chinese and the Japanese tend to have business negotiation in a rather indirect manner, as opposed to the direct manner of American and German businessmen. Chinese would like to take time to see their prospective business contacts are really reliable by inviting them to a party and socializing with them. And the Japanese are famous for their ambiguous behavior. They regard vagueness as a method of protection from “lose of face.

To maintain surface harmony and avoid losing face, they often use circumlocutions, vague allusions, figurative forms of speech, or facial expressions to express themselves. In a direct culture, one can receive a clear and definite response to proposals and questions; in an indirect culture, one must first interpret the indefinite comments, gestures and other signs before they figure out the deep level meaning of their counterparts. 5. 5 Sensitivity to Time People look at time and arrange their affairs differently in different parts of the world. Punctuality is dependent on specific cultural variables.

So negotiators should clearly understand how people in each culture view time and value punctuality. In fluid-time cultures, like Latin American one, people don’t view time as a constraint. Delays of thirty minutes or more are not surprising. With such knowledge born in mind, the negotiator should arrange appropriate time for a negotiation. For example, most businessmen in the west try to be punctual. But when negotiating with middle-east businessmen, one should plan longer and less formal sessions. Conflict is produced because some rigid-time negotiators regard their fluid-time ounterparts as lazy, undisciplined and rude. 5. 6 Emotionalism Cultural factors also influence negotiators’ emotion expression. According to the stereotype, people from the Mediterranean region, Latin Europe and Latin America, belong to the expressive group. They communicate in radically different ways from their reserved counterparts. They would be uncomfortable with more than a second or two of silence during a conversation. On the contrary, people from reserved cultures, like East and Southeast Asia, Nordic and Germanic Europe, feel at ease with much longer silence. . 7 Form of Agreement Nobody can ignore the influence of culture on the form of agreement. Due to the linear logical thinking pattern, the Americans are accustomed to attaching more attention to the details rather than the general things. So they prefer very detailed contracts which include specific items concerning with all possible circumstances and eventualities, no matter how unlikely. Other cultures, such as the Chinese one, prefer a contract in the form of general principles rather than detailed rules.

This is because the Chinese thinking pattern is curvilinear and the special thinking patterns dominate their behavioral manner, from big to small or from general to specific. 5. 8 Team Organization This describes the extent to which a society emphasizes the individual or the group. Individualistic societies encourage their members to be independent and look out for themselves. Collectivistic societies emphasize the group’s responsibility for each individual. The United States is considered to be an individualistic society. While Japan, for example, is collectivistic.

Negotiators from a collectivistic society are likely to spend more time on long-term goals, to make realistic offers and to be cooperative. On the other hand, negotiators from individualistic societies are more likely to focus on the short term, make extreme offers. Furthermore, they are likely to be more competitive. So when two such parties sit down for negotiation, both of them will be frustrated. The critical factor in such negotiation is that each party should know the other’s main interests rather than just focusing merely on their own. 5. 9 Decision-making

In any international business negotiation, it is important to know how the other side makes their decision, who has the authority to make commitment. Culture is one important factor that affects these issues. Some culture emphasizes the individual while others stress the group. In the first type, the characteristic is the whole team owns a supreme leader who has complete authority to decide all matters, while the Japanese culture can well illustrate the latter. In the first type, the negotiating team is usually small; in the second it is often large.

For example, it would not be uncommon for the Americans to arrive at the table with three persons and for the Chinese to show up with ten. 1. 5. 10 Risk Taking In deal making, the culture of the negotiators can affect the willingness of one side to take “risk” in the negotiation—-to try new approaches, be prepared for all the uncertainties and so on. The Japanese, with their emphasis on requiring large information and their intricate group decision-making process, tend to be risk averse. The Americans, by comparison, considered themselves to be risk takers. 6 Points Worth Noting for Cross-cultural Business Negotiations . 1 To Establish the Awareness of Cross-cultural Negotiations Nowadays, the rapid development of globalization and internet technique have led to international businessmen’s ever-increasing sensitivity to the negotiations between different cultures and their tolerance and understanding of varied cultural values. However, there are still some people paying little attention to the cultural issues due to their limited knowledge about the importance of culture. In international business negotiations, one should at any time enhance his awareness of these cultural differences.

To have a knowledge about the other side’s culture enables the negotiator to get a whole range of benefits: to understand better the way the other thinks and acts; to grasp for instance his way to conceive problems; to perceive situations; to become more familiar with his value system, his preference and what he dislikes; to realize the issues that may rise from cultural encounters. With the correct guidance of negotiating awareness, negotiators should be flexible enough to make their negotiating styles and strategies adapted in different cultural environment.

People are advised to observe some key rules of etiquette when they negotiate with French, Japanese and English businessmen. Germans feel more comfortable doing business with men whose shoes are brightly polished. Also please watch out for cultural-specific taboos. Avoid presenting sharp gifts such as knives; in some cultures they symbolize the ending of a relationship. 6. 2 To be Neutral in Terms of Cultural Conflicts In international business negotiations, some business cultures would be distinctively different. Certain principles and customs that the counterpart insists would be totally impossible for us to accept.

But what we should do is not to blindly make any comments on their cultural values and codes and at the same time we should also defend our own culture from any degrading comments. Or that would bring about thorny confrontations. So at negotiating table, we should learn to respect the other side’s values, codes, and custom, no matter how tiny the aspect is. That is to say, negotiations need some flexibility to keep it fluid in the process as to how to seek the consistency of both parties to achieve the holistic objectives as long as you don’t give up some important principles. 6. 3 To Find Ways to Bridge the Cultural Gaps

How will you view the cultural differences, as an obstacle or a weapon or even something else? The conventional view is that cultural differences are an obstacle to agreement and effective action. But in a different culture they can be weapons, especially when a dominant party tries to impose its will on the other side. For example, their foreign counterparts may regard American lawyers’ insistence on structuring a transaction “the way we do it in America” as the use of American culture as a weapon. In such situations, differences of cultures tend to impede the process of the negotiations.

In short, cultural differences create a gap between persons and organizations. Therefore, effective international business negotiators should seek to find ways to bridge the gap caused by cultural differences and try to turn all the adverse factors into contributors of a successful negotiation. a. Bridge the gap with the other side’s culture. In international business, negotiators often try to use the other side’s culture in order to build a relationship, which can be illustrated by an old saying “when you are in Roman, do as the Romans”. b. Bridge the gap with your own culture.

A second way to bridge the gap is to persuade or induce the other side to adopt your culture, which may require time and education. For example, in order to give a common culture to a joint venture, an American partner sent executives of its foreign partner to schools and executive training programs in the United States and then assigned them for short periods to the U. S. partner’s own operations. c. Bridge the gap with the combination of both sides’ cultures . In fact, cultural bridging takes place on both sides of the gap and results in the construction of an integrated structure.

The challenge of this approach is to identify the most important elements of each culture and to find ways to bind them together that allow business goes smoothly. d. Bridge the gap with the help of a third culture. The fourth method of dealing with the cultural gap is to build a bridge based on a third bridge that belongs to neither of the parties. For example, in a difficult negotiation between an American executive and a Chinese manager, both discovered they appreciated the French culture. So they began to talk in French.

And the result is they built a strong relationship which stimulated the success of that difficult negotiation. 7 Discussion The examination of the influence of culture on international business negotiations reveals that differences in culture can create barriers that impede the negotiating process. But to make this paper rigorous, it should be pointed out that there are many other obstacles which can also stymie negotiations. Culture is not the only determiner, which can be easily proved by the following example. Accuracy of translation sometimes can be vital in the process of negotiations.

In one Sino-American business negotiation, the Chinese party took a proud tone to introduce their company like this “Our company is the national top-second company”, while the translator translated the status of the incorporation into “a second-class enterprise”. As a result, the US company quickly cooled down because they were not interested in such kind of company. Therefore, in international communication, careful consideration should be taken before choosing a translator. What’s more, professional knowledge can also help to make the process of negotiation go smoothly.

Your quality knowledge in the business field will leave a good impression on your counterpart, who will be willing to trust you and cooperate with you. Conclusion In short, culture influences international business negotiations in many ways. As for the negotiating styles, culture affects the ten specific negotiating traits a lot. With that knowledge, an international business negotiator may be able to anticipate possible misunderstandings and seek a successful negotiation. However, it is necessary to point out that culture is only one of the factors that can affect negotiating styles.

In practical negotiations, the situation would be much more complicated. One should never simply conclude that perception of both parties’ cultural background can solve all the problems encountered in the process of negotiations. When dealing with international business negotiations, many subjective or objective factors mentioned above should be taken into consideration so that both you and your counterpart can win enough in transactions.

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