OKBIT22 Managing International Relations

6. International business negotiations: Cross-cultural

considerations

A bit of repetition again

The Process of Negotiation Pre-negotiation The actual negotiation Post-negotiation

Approaches to Negotiation Adversarial (distributive, win-lose) Partnership (integrative, win-win)

The Content of Negotiation Substance goals Relationship goals

Business negotiations skills

When negotiating, you need many skills You need to know about negotiating a

sales contract, licensing agreement, partnership agreement etc. = the substance of negotiations

General negotiating skillsPeople skills

In cross-cultural negotiations you need… But in international negotiations you also need

to know how to deal with different kinds of people from different cultures

You need more than empathy!

Language in business negotiations

In international business negotiations it is important to have: A knowledge of the language of the country in which

the other party to the negotiation is located

“You can buy in any language, but to sell you have to speak their language”

An important part of culture is language, but in international negotiations mastering a language is not enough

Cultural knowledge in business negotiations

Knowledge of the other side’s culture, habits, taboos, values, allows a negotiator to communicate, understand, plan and to anticipate more effectively

So you also need a recognition of cultural influences on the negotiation process

Culture influences business

Culture has a strong influence on business negotiations

In negotiations cultural differences influence, e.g.,: The behavioural dispositions of the parties Their concept of what is a negotiation and

what should be an appropriate strategy Their attitudes during the process Differences in outcome orientation

Major stumbling blocks

So cultural differences cause problems in international negotiations: 1. Language 2. Nonverbal Behavior 3. Values 4. Thinking and decision-making processes

Language in business negotiations

To speak the language of your business partners gives you an enormous advantage

However, little knowledge is not enoughUsing interpreters is one option

Pros and cons?

Verbal and nonverbal communication

In addition to verbal communication it is also important to talk about nonverbal communication

Nonverbal aspects of communication may include a more important message than verbal

When the messages received through verbal and nonverbal channel are in conflict, trust the nonverbal! It is difficult to lie “with your body”

Nonverbal communication

Body postureHand gesturesFacial expressionsGazeProxemicsBodily contact

Cross-cultural scenarios

Basics of culture

Culture is everything that people have, think, and do as members of their society

Culture is thus made up of: Material objects Ideas, values and attitudes Normative or expected patterns of behaviour

Basics of culture

Culture is learned Culture influences biological processes All cultures face a number of common problems

and share a number of common features Economic systems Marriage and family systems Educational systems Social control systems Supernatural belief systems

Basics of culture

All cultures experience continual changeAll cultures - to one degree or another –

display ethnocentrismAny cultural item, an idea or an object,

should be viewed as a component of the total cultural system

Culture influences…

RelationshipsEconomicsEducationPoliticsEthics

AestheticsValuesCeremoniesCommunication/

LanguageTime orientation

Distinguishing cultures

There are certain components/orientations of culture, which help us to distinguish a culture from another and to compare different cultures

These components help us to understand e.g. different values and what is behind decision-making logic

National culture differences (Hofsteede 1994)

Power distanceIndividualismMasculinityUncertainty avoidance

National culture differences (Hofsteede 1994)

Power distance The extent to which the less powerful members of

organizations expect and accept that power is distributed unequally

Emotional distance Dependence vs. Interdependence relationship Large in France and Portugal In work place → Centralization

National culture differences (Hofsteede 1994)

Individualism Describes the degree to which the individuals are

integrated into groups Collectivism prevails individualism in Portugal and

Greece → Group rewards & family enterprises

National culture differences (Hofsteede 1994)

Masculinity Distribution of roles between sexes Austria and Italy very masculine → Competition,

survival of the fittest Sweden and the Netherlands very feminine →

Solidarity, sympathy

National culture differences (Hofsteede 1994)

Uncertainty avoidance Indicates to what extent a culture programs its

members to feel either uncomfortable or comfortable in unstructured situations

Belgium and France uncertainty-avoiding → Strict rules & principles

Denmark & USA accept uncertainty → Opportunism

Components of culture

According to Trompenaars (1994) every culture distinguishes itself from others by the specific solutions it chooses to certain problems 1. Those that arise from our relationships with

other people 2. Those that come from the passage of time 3. Those that relate to environment

Relationships with people

Universalism vs. Particularism Rules vs. relationships

Individualism vs. Collectivism The group vs. the individual

Neutral vs. Emotional The range of feelings expressed

Specific vs. Diffuse The range of involvement

Achievement vs. Ascription How status is accorded

Attitudes towards time

Past, present or future-orientedJapanese/French vs. AmericansSequential vs. synchronic

Straight line or a circle

Sequential cultures cherish efficiency Punctuality

Relationship with the environment

Inner-directed or outer-directed cultures Acting against or with the environment

Controlling or going along with the environment

Harmony seeking cultures vs. self-centred cultures

So what causes problems

In international business negotiations?

Cultural clashes during negotiations

What are we negotiating for? Price? Relationships? Delivery?

Why haven’t they responded to the price proposal I gave them last week?

Why is he asking me to sit beside him?We have only two people in our team.

Why did they bring seven?

Differences in cross-cultural negotiations

Basic concepts Criteria for selecting

negotiators Issues stressed Protocol Communications Nature of persuasive

arguments

Role of the individual Basis for trust Risk-taking propensity View of time Decision-making

systems Form of agreement

OKBIT22 Managing International Relations

7. International business negotiations: Country-specific

examples

Greetings and introductions

Kiss, bow, or shake hands? In Germany, always shake hands, firmly but

briefly In Japan you may greet with a hand shake,

but the bow is the traditional Japanese greeting

Forms of address Never use first names and don’t suggest to be

called by yours

Business cards

In Japan business cards are extremely important

Present your card with both handsWhen you receive a business card spend

several seconds studying it and do not write on it or put in your pocket in the presence of the giver

Business cards

In many parts of the Middle East, you should never use your left hand when giving your business card

Print your business card in English on one side, and in the language of your host on the other

Learn the protocol of giving business cards!

Doing business in Germany

German business culture is extremely hierarchical, so be sure that you learn and use the professional titles of those you expect to encounter

Professionals of any kind will expect to be referred to as "Herr" or "Frau", followed by the correct occupational title An individual with a Ph.D. should be addressed as "Herr (or

Frau) Doctor Professor.“ First names are reserved for family members and close

friends It's not uncommon for colleagues who have worked together for

years not to know of each other's first name

Doing business in France

When speaking French, use the “Vous" form until you are asked to use "tu"

French business culture is intensely hierarchical, so be sure to learn and use the titles of everyone you plan to encounter In many offices, first names are not used

"Madame" is a basic title of courtesy for all women, as is "Monsieur" for men

French business etiquette

Making first impressions A handshake is the common first greeting Not appropriate to call them by their first names initially The way a person communicates is often determined

by their social status and education level

Typical business attire Business dress is formal and stylish, but understated

(nothing flashy) It is always safer to dress up than dress down

French Business Methods

Conducting Business In French business, details are important Business may be conducted slowly because

every detail of a deal or proposal will be carefully analyzed

Use logic and intelligence to debate your position

The French are resistant to high pressure tactics and over-the-top claims

Business writing is almost always formal

Doing business in Japan

First names are reserved for family and close friends

Don't invite others to call you by your first name

Even if you are on a first name basis with a Japanese colleague, it may be appropriate to use his or her last name in the presence of colleagues, to avoid causing any embarrassment

In Japan

Use courtesy titles such as "Mr.", "Ms.", or the suffix "san", in addition to last names

The Japanese often use professional titles in the place of actual names, as an acknowledgment of a person's status.

Japanese Business Etiquette

Making First Impressions Always introduce with full name followed by title Bowing is used often to show respect & compassion Business cards

Present yours and accept others’ with two hands

Be aware of hierarchy Definite status differences based on age, employment, family

background, etc..

Focus on respect It is conveyed through body language, etiquette, and other subtle

forms of non-verbal communication

Japanese Business Methods

Conducting Business It is assumed that the listener is always well-

informed on the subject Business Meetings

Always deal with a team & not an individualJapanese are very detail-oriented and will ask a

variety a questions during negotiationsDo not disagree openly or put anyone on the spotSilence is a virtue in Japan, people may even

close their eyes during meetings.

United Kingdom Business Etiquette

Making first impressions Shake hands on first meetings Titles and last names are used in formal

situations or to show respect Punctuality and courtesy are very important

Typical business attire Business attire similar to the US, although it is

stricter for men

United Kingdom Business Methods

Conducting Business Renowned for their politeness and courtesy Negotiations and decisions are usually open

and flexible What has been discussed at a meeting should

be considered as confidential When socializing after work hours do not

bring up the subject of work

Conclusions

Remember that in addition to being a member of certain culture, people should always be treated as individuals also

Regional generalizations are often times incorrect

Stereotyping based upon what people say a “culture” is can be dangerous in the negotiation process

Consider culture, but focus on the individual Their personalities and backgrounds Treat others as business partners

Some general guidelines for negotiating International Business

Preparing for the negotiations Be prepared to prepare Gather factual information Assess intercultural obstacles as early as

possible Prepare for the type of deal that will be

negotiated Empathy is not enough

Some general guidelines for negotiating International Business

Strategy formulation Define your basic interest Prepare walk-away options Prepare for tough strategies on the other side

Some general guidelines for negotiating International Business

Face to face negotiations: Control location and tactics Change negotiation style when needed Control your concessions Allow yourself plenty of time Be flexible with the negotiation agenda Manage the communication process Check non-verbal communication

Some general guidelines for negotiating International Business

Negotiate beyond negotiation Be prepared to negotiate beyond negotiation The agreement should be clear Avoid the threat of litigation

What makes a Successful Negotiator

Sufficient time to prepareClear objectivesKnowledge of the subject matterInformation about the other parties

involved and their organization

What makes a Successful Negotiator

A clear negotiating strategy or planAppropriate use of negotiating tactics

e.g. when to release informationAll parties treating each other with respect

throughoutEffective communicating skill, such as

listening

What makes a Successful Negotiator

A willingness to be open by all parties involved

Conflicts raised and handled in a constructive manner

Movement of both sides from their initial starting position to a win/win outcome

Agreements being implemented

In your presentations you could talk about… Making Appointments Guidelines for Business Dress Conversation First Name or Title? Selecting and Presenting an Appropriate

Business Gift What You Should Know Before Negotiating Entertaining for Business Success Acceptable Public Conduct