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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