Cross cultural negotiation

Cross-cultural Negotiation, Steven Tolliver

Cross-culturalNegotiation

Steven Tolliver


Outline:

• Components of negotiation

• Individual negotiation styles

• Negotiation tactics

• Cultural differences in negotiation


Negotiation:

= the use of dialogue to resolve disputes, produce agreements or achieve goals.

• Make a sale of goods or services

• Open new market /create a partnership

• Secure supply

• Maintain / expand an existing business


Components of negotiation:

• Strategies > the goals

• Process > who, where, how

• Behavior > the tactics used

• Substance > the details


Prior to negotiation: making contact

How do parties (a buyer and a seller) discover each other?

Their companies have already been doing business before current negotiators become involved.

Cold-calling

Advertising and web site

Mutual associations or intermediaries


Focus on interests not positions

Aspire to joint opportunity finding

Negotiation is primarily a process, not an event

Information is power

Framing is a strong determinant of a negotiation outcome

Preparing for negotiation



1.Establish goals:

a.Aspirational base

b.Real base

Determine the other side’s goals:

a.What are their aspirations?

b.What is their real base?



2. Process:

a.Who will participate?

b.What will happen if the expected parties are

not there or new one are present?

c. Determine the setting

d.Means: in person, video-conference,

telephone, e-mail.



3. Tactics:

a.What stance will be taken?

b.How flexible is it?

c. What is the tone?

d.Specific ploys to be used?



4. Substance:

a.Prepare materials:

i. Draft documents

ii. Product and price details

iii. Terms

iv. Additional information


Individual negotiation styles:

Shell identified five styles/responses to negotiation.[11]

Individuals can often have strong dispositions towards

numerous styles; the style used during a negotiation

depends on the context and the interests of the other party,

among other factors. In addition, styles can change over

time:•Accommodating•Avoiding•Collaborating•Competing•Compromising


Accommodating:

Individuals who enjoy solving the other’s problems and preserving

personal relationships; sensitive to the emotional states, body

language, and verbal signals of the other parties. They can, however,

feel taken advantage of in situations when the other party places little

emphasis on the relationship.

Avoiding:

Individuals who do not like to negotiate and don’t do it unless they

must; they tend to defer and dodge confrontation; however, they may

be perceived as tactful and diplomatic.



Collaborating:

Individuals who enjoy negotiations that involve solving tough problems

in creative ways. Collaborators are good at using negotiations to

understand the concerns and interests of the other parties. They can,

however, create problems by transforming simple situations into more

complex ones.



Competing:

Individuals who enjoy negotiations because they present an

opportunity to win something. Competitive negotiators have strong

instincts for all aspects of negotiating and are often strategic. Because

their style can dominate the bargaining process, competitive

negotiators often neglect the importance of relationships.



Compromising:

Individuals who are eager to close the deal by doing what is fair and

equal for all parties involved in the negotiation. Compromisers can be

useful when there is limited time to complete the deal; however,

compromisers often unnecessarily rush the negotiation process and

make concessions too quickly.



Negotiation Tips and Tricks1. The Nibble Technique

Customer expresses surprise when price or terms are presented. Salesman might then added extras to his offer. If the customer does not flinch again, salesman can assume he has found the customer’s real base.

Buyer can counteract this by referring to a competitor’s offer.

2. The Flinch

Salesman proposes adding additional cost items after initial deal has been reached.

Buyer can preempt this tactic by clarifying all aspects of the product, service, delivery and other terms before discussing the price.


3. Deferring to Higher Authority

4. Good Guy, Bad Guy

Either side can respond to requests by saying that they must consult with their team or their boss.

Cannot be used too much or the other side might wish to stop present contact and negotiate with the real decision maker.

In a negotiating team, one person projects inflexibility and opposition giving concessions while the other member of the team creates the opposite impression and that they sympathize with the needs of the other side. The goal is to have the other side give either concessions or give up key information.


5. Set Aside

Buyer begins discussion with major demand that the seller must agree to before further items are discussed. If successful, the salesman will surrender key positions or drop prices to continue further negotiations, which can then be pressed further.

Salesman’s response should be to suggest that the demand be set aside in order to focus on the key features of their product or service.

6. Hot Potato Technique

Make one side’s limitation or problem the other side’s problem, too. For example, “I have a budget of X amount”, “I need to get Y”

Response: present a solution that is comes closer to solving the problem to test to see if the problem is real.


7. Splitting the Difference (Twice)

Establish a gap in positions and get the other party to suggest that you split the difference and then do it again.

Buyer: Your price is 10,000, but my limit is 9,000. What can we do?

Seller: Well, we are 1,000 apart, so lets split the difference.

Buyer: So the price would be 9,500? I must check with my company.

Buyer consults and says he has tried but the company cannot accept it adding its too bad because we are only 500 apart (Now 1,000 difference is forgotten)

If seller needs to make the sale, he might offer to split the difference again, making the final price only 250 above buyer’s original position.


8. The Trade Off Technique

When one side presents a problem or obstacle, for example “the order will be ready one month later that expected” this presents the other side with a chance to extract concessions. This could include extra goods, a discount on future or past orders, etc. but it is important not to appear willing to accept the problem as explained.

9. The Walk Away TechniqueIf one side decides that they must have something, they lose the a great deal of power in a relationship. Try to preserve the ability to stop the negotiation if the terms are not what is desired.

Announcing that negotiations are cancelled may cause the other side to drop their position.


10. Attacking Techniques

The use of criticism (of the other side’s country, company or them personally) may be a tactic to throw them off balance and lose control emotionally.

The other side should try to not get upset and see it as a tactic. Keep smiling and focus on the real issue


Cultural differences cause four kinds of problems in

international business negotiations. These differences

are manifested in:

•Language

•Nonverbal behaviors

•Values

•Thinking and decision-making processes

Cultural differences


Problems of comprehension / use of “false friends” words, especial in high-context cultures

Language

Misuse of language or using commands


High-context vs. Low-context

Edward T. Hall, Beyond Culture, New York: Anchor Books,1976.

High context: communication draws on shared culture, fewer words need to suggest meaning.

Low-context: communication is more direct and explicit


Translators:

Use to communicate with the other side

Use to gain time in making responses

Use to study the non-verbal communications of

the other side

Internal group conversations should be allowed and followed.


Anthropologist Ray L. Birdwhistell: less than 35% of the message in conversations is conveyed by the spoken word while the other 65% is communicated nonverbally.

Albert Mehrabian: where meaning in face-to-face interactions comes from.• 7% from the words used•38% from speaking style: tone of voice, loudness, etc.•55% from facial expressions

Nonverbal behaviors


Facial expressions

Eye contact

Personal space

Physical contact

Silence

Sounds

Gestures

Nonverbal behaviors or body language

Cross-cultural Negotiation, Steven TolliverJohn L. Graham, Professor, Marketing and International Business, University of California, IrvineThe Paul Merage School of Business


The Hofstede culture matrix

Geert Hofstede, sociologist

Framework for Assessing Culture:

•Small vs. large power distance

•Individualism vs. Collectivism

•Masculinity vs. Femininity (Achievement vs. Quality of Life)

•Weak vs. strong uncertainty avoidance

•Long vs. short term orientation


“Negotiating: The top ten ways that culture can affect your negotiation”, - Jeswald W. Salacuse


1.Negotiating goal: Contract or relationship?

74 percent of Spanish respondents claimed their goal is a contract, vs. 33 percent of Indian executives.

Relationship is goal: requires investment in getting to know each other and building trust.

Contract is goal: efforts are focus on developing the contract terms.


2. Win – Lose or Win – Win

Zero-sum: a winner and a loser vs.

Mutual gains bargaining

“100 percent of the Japanese respondents claimed that they approached negotiations as a win-win process, only 33% of the Spanish executives took that view.”


3. Formality vs. informality

Perceived lack of proper repect

Appearance of coldness

Too close, too soon


4. Direct or indirect communication

Difficulty in saying “no”

Considered rude to argue

Or

Arguments are considered to be sign of engagement


5. Time

Punctuality

Pacing and preliminaries (understanding the other side and building relationship or specifying contract terms and details)

“Time is money”


6. Emotion

Appropriate display of emotion varies by culture

Spain & South America > England, Germany


7. Agreements: general or specific

U.S.: Specific agreements to cover all anticipated cases and act as guide to behavior.

China: Agreement on general principals and use the relationship to work out any difficulties.

Could also be reflective of power dynamic of the companies, not just nationality


8. Top-down or bottom-up negotiation

Start with general principals and move to the details?

OR start with specifics and general principals emerge from details?

France: Basic principals guide later detailsU.S.: Specific details form the basis of general terms.


9. One leader vs. group consensus

One key decision maker: Complete authority to negotiate

Group: representatives or specialists from various internal departments.

One leader: may reach agreements faster

Group: may anticipate and solve problems before they become emergencies


10. Dealing with risk

Share information, try new methods, tolerate uncertainty.

Japan > United States

Avoid moving too fastFocus on mechanisms to lessen risks Provide information (on market, company, proceedures, etc.)Build relationship and trustMove step-by-step not all-at-once


Seek out creative outcomes

Understand cultures, especially your own.

Don’t just adjust to cultural differences, exploit them.

Gather intelligence and know the terrain.

Design the information flow and process of meetings.

Invest in personal relationships.

Seek information and understanding.

Make no concessions until the end.William Hernandez Requejo and John L. Graham,

Global Negotiation: The New Rules, New York: Palgrave Macmillan, 2008

Creative negotiation:


Steven Tolliver

[email protected]

Cross cultural negotiation

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