Download - S-3 - Negotiation & Decision Making
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Chapter Learning Goals
1. Learn how to prepare for cross-culturalbusiness negotiations.
2. Recognize the need to build trusting
relationships as a prerequisite forsuccessful negotiations and long-termcommitments.
3. Be aware of culturally-based
behavioral differences, values, andagendas of the negotiating parties.
4. Learn the complexities.
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Chapter Learning Goals
5. Appreciate the variables in thedecision-making process andunderstand the influence of culture on
decision making.6. Become familiar with the Japanese
decision-making process and how it isinfluenced by their cultural norms.
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Opening Profile: BPs Troubled
Joint Venture (JV) in Russia
In August 2003, the British Petroleum (BP)formed a $6.7 billion JV called TNK-BP.
At the time of signing, the JV was hailed as amajor project because it brought tangible
FDI to Russia.
However, between 2007 and 2009, BP wasasked to negotiate and surrender its controland ownership of oil and gas fields in
Russia. In 2006 and 2007 BP started to witness state
interference in the TNK-BP project and TNK-BP ended up losing its control to a state-
controlled gas company.5-4Copyright 2011 Pearson Education, Inc.publishing as Prentice Hall
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Opening Profile: BPs Troubled
Joint Venture (JV) in Russia
In early 2008, state interventions,investigations, and other allegationssurfaced regarding labor and employment-related inquiries that pressured BP to hire
more Russian staff. As of April 2009, TNK-BP continued to
struggle with its boards appointments and
selection of a CEO.
The relationship-building and cooperationbetween BP and Russian partners is far fromhealthy.
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Negotiation
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The process ofdiscussion by which twoor more parties aim for
mutually acceptableagreement
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Stakeholders inCross-Cultural Negotiation
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The Negotiation Process
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Stage One: Preparation
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Develop profile ofcounterparts.
Find out likely demands, teamcomposition, and counterpart
authority.Uzbekistan had to learn
from scratchChoose a negotiation site.
British/French Chunnelnegotiations
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Stage Two: Relationship Building
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Getting to know ones
contactsand building mutual trust
Non-task sounding
(nemawashi)
Use an intermediary.
I have come as a
mediator
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Stage Three: ExchangingTask-Related Information
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Cultural differences remainan issue.The French enjoy debate andconflict.Mexicans can be suspicious and
indirect.The Chinese ask many questions,but provide ambiguousinformation in return.
Show understanding of theother viewpoint.
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Stage Four: Persuasion
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Dirty tricks are in theeye of the beholder
False information
Ambiguousauthority
UncomfortableroomsRudeness, threats
Calculated delays
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Stage Five: Concessionsand Agreement
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Russians and theChinese start withextreme positionsSwedes start with what
they will acceptStarting with extremesmay be most effective
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Management Focus: CulturalMisunderstandingJoint Venture in
China Sino-French joint venture was formed in
March 1995 by Group Danone andHangzhou Wahaha Group Co. and took thetrade mark name of Wahaha.
Between 1996 and 2006, a number ofissues and disputes took place within theJV.
Public rows erupted between the twocompanies when they kept on blaming each
other for breach of contract. The DanoneWHH case became so much
embroiled that Chinese and Frenchgovernments asked the companies tonegotiate an amicable resolution.
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Management Focus: Joint Venture inChina
A Few Lessons We Learn Cross-cultural misunderstandings and
unfamiliarity with the JV partners were atthe heart of the dispute.
Both companies used media and PR
companies instead of having opennegotiations.
Relationship building and exchange ofinformation is critical in any JV.
There was lack of open communication inday-to-day management of the JV.
In JVs, relationship building takes timeand a good amount of interaction betweenthe partners.
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Comparison of Negotiation Styles
JapaneseNorth
AmericanLatin
American
Hide
emotions
Deal
impersonally
Emotionally
passionateSubtle powerplays
Litigation, notconciliation
Great powerplays
Step-by-step
approach
Methodologic
alorganization
Impulsive,
spontaneous
Group goodis the aim
Profit is theaim
Group/individ-ual good is aim
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Successful Negotiators: Americans
Knows when to compromise, but standsfirm at the beginning. Acceptscompromises only when there is adeadlock.
Refuses to make concessions beforehandand keeps his/hers cards close to chest.
Keeps a maximum of options open beforenegotiation, operates in good faith.
States his/her position as clearly aspossible, respects the opponents.
Is fully briefed about the negotiatedissues, has a good sense of timing and is
consistent.5-17Copyright 2011 Pearson Education, Inc.
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Successful Negotiators: Indians
Look for and say the truth, not afraid tospeak up.
Exercise self-control.
Respect other party, look for solutions
acceptable to all parties.Will change their minds, even at risk of
seeming inconsistent and unpredictable.
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Successful Negotiators: Arabs
Protect honor, self-respect, dignity, and,thus, are trusted and respected.
Avoid direct confrontation.
Come up with creative, honorable solutions.Are impartial and can resist pressure.
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Successful Negotiators: Swedes
Quiet, thoughtful, polite, straightforward
Overcautious, but flexible
Slow to react to new proposals, but eager tobe productive and efficient
Able to hide emotions, afraid ofconfrontation
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Successful Negotiators: Italians
Have a sense of drama, do not hideemotions
Good at reading facial expressions andgestures
Want to make a good impression and useflattery, but are distrusting
Handle confrontation with subtlety and tact
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Managing Negotiation
Examples
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Avoid person-relatedconflicts.
Low-contextAmericans appear
impatient, cold, and
blunt to Mexicans.
Americans mustapproach negotiations
with Mexicans with
patience; refrain fromattacking ideas.
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Cross-Cultural Negotiation Variables
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EXHIBIT 5-5 Cross-cultural Negotiation Variables
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Using the Internet toSupport Negotiations
Negotiation SupportSystem (NSS)
Web Application
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Increase likelihoodof agreement
Decrease direct andindirect costs
Maximize optimaloutcomes
Provide support forphases and
dimensions such as: Multiple-issue, multiple-
party businesstransactions of a buy-sell nature
International disputeresolution
Internal companynegotiations andcommunicationsCopyright 2011 Pearson Education, Inc.
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E-Negotiations
Advantages Disadvantages
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Speed
Less travel
Laying out muchobjectiveinformation overtime
Not being able tobuild trust and
interpersonalrelationships
Nonverbal nuances arelost
Video conferencing may bea good compromise
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Comparative Management in Focus:Negotiating with Chinese
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EXHIBIT 5-6 Influence on Western-Chinese Business Negotiations
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Comparative Management in Focus:Negotiating with Chinese
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Two problems: Chinese desire for
details
Apparent insincerity
Saving face:
Lien
Mien-tzu
Importance ofharmony Guanxi
Guanxihu networks
Two stages ofChinese negotiation
Technical
Commercial
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Comparative Management in Focus:Negotiating with Chinese
Some recommendations:
Practice patience.
Accept prolonged stalemate.
Refrain from exaggerated expectations. Expect shaming.
Resist blaming for difficulties.
Understand Chinese cultural traits.
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Managing the Conflict Resolution
To negotiate on the basis offactual information andlogical analysis
Instrumental-OrientedConflict
To handle a situationindirectly and implicitly,without clear delineation ofthe situation by the personhandling it
Expressive-OrientedConflict
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Low-Context, High-ContextSources of Conflict
Low-Context High-Context
Why Analytic, linear logicSynthetic, spirallogic
WhenIndividualistic-
oriented violationsGroup-oriented
violations
WhatRevealment,
confrontational
Concealment, non-
confrontational
HowExplicit, open,
directImplicit, ambiguous,
indirect
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The Influence of Culture onDecision Making
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Individualism VSCollectivism
Objective VS
Subjective
Risk Tolerance VS RiskAvoidance
Uncertainty VS Familiarity
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Approaches to Decision Making
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Utilitarianism VS MoralIdealism
Autocratic VSParticipative
Slow Pace VS Fast
Pace
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Cultural Variables inDecision-Making Process
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EXHIBIT 5-8 Cultural Variables in the Decision-Making Process
Comparative Management in Focus
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Comparative Management in Focus:Decision Making in Japanese
Companies
Wa
Amae
Shinyo
Ringi
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Comparative Management in Focus:
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Comparative Management in Focus:Decision Making in Japanese
Companies
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EXHIBIT 5-9 Decision Making Procedure in Japanese Companies