Prentice Hall 2003 Chapter 5 1

Cross-Cultural Negotiation and Decision Making

Prentice Hall 2003 Chapter 5 2

Important elements in the Negotiation Process

The amount and type of preparation for a negotiation

The relative emphasis on tasks versus interpersonal relationships

The reliance on general principles rather than specific issues

The number of people present and the extent of their influence

Prentice Hall 2003 Chapter 5 3

What is Negotiation?

Negotiation describes the process of discussion between two or more parties aimed at reaching a mutually acceptable agreement

Prentice Hall 2003 Chapter 5 4

Negotiation Defined

“Negotiation is a discussion between two or more people with a goal of reaching agreement on issues separating the parties when neither side has the power--or the desire to use its power--to get its own way.”

Byrne 1987

Prentice Hall 2003 Chapter 5 5

An Expert Negotiator

An expert negotiator is one who has committed every conceivable mistake in the area of negotiations.

Prentice Hall 2003 Chapter 5 6

Common Negotiation Mistakes

Failure to negotiate Inadequate preparation

90% of negotiation success comes from preparation

Accepting the first offer Not leaving enough room for concessions Making concessions too quickly Failure to consider the other side’s needs Negotiating too much – pyrrhic victories

Prentice Hall 2003 Chapter 5 7

Common Negotiation Mistakes

Focusing too much on your weaknesses Failure to consider intangibles Forgetting your best alternative to a negotiated

agreement (BATNA) Failure to recognize other side's tactics

– e.g. the good guy - bad guy, exploding offer, 1st one who accepts, short fuse, “We don’t negotiate,” etc.

Failure to ask enough questions Failure to use an integrative approach when

appropriate

Prentice Hall 2003 Chapter 5 8

Beginning with a distributive style or hard ball style Inadequate face saving opportunities for the other

side Displaying too much interest:

“You should not convey to an opponent, either by word or action, that you want whatever the opponent has.”

John Ilich, professional negotiator Power Negotiating

Common Negotiation Mistakes

Prentice Hall 2003 Chapter 5 9

Failure to limit information:

“Have more than thou showest,

Speak less than thou knowest.”

William Shakespeare, 1564-1616

Common Negotiation Mistakes

Prentice Hall 2003 Chapter 5 10

Responding with anger:

“…whatever accounts for the person’s bluster,

nothing can be gained by you reacting in anger…

and if it’s a personality trait you’re dealing with,

an emotional response on your part isn’t going

to cure it…seeing you respond in anger

will just convince him that the tactic is working.”

Fuller, Manager’s Negotiating Answer Book

Common Negotiation Mistakes

Prentice Hall 2003 Chapter 5 11

A Matter of Perspective

“A dog will look up to you, A cat will look down on you, But a pig, A pig will look you in the eye and see an equal.”

Sir Winston Churchill

Pigs don’t care don’t care about what you deserve and neither do some at the top of the food chain. You get what you negotiate – not what you deserve!

Prentice Hall 2003 Chapter 5 12

The Negotiation Process

Preparation

Relationship building

Exchange of task-related information

Persuasion

Concessions and

agreement

Prentice Hall 2003 Chapter 5 13

Stakeholders in Cross-Cultural Negotiations

Home (HQ)Country

FirmNegotiators

Host country

Home consumers All citizensSpecial interest groups

Host local employeesHost consumers

HQ employeesSuppliersHome government

InvestorsAlliance partnersContractors

Host governmentDistributorsExpatriate employees

Prentice Hall 2003 Chapter 5 14

Variables in the Negotiation Process(Exhibit 5-3)

Basic conception of negotiation process: Is it a competitive process or a problem-solving approach?

Negotiator selection criteria: Is selection based on experience, status, expertise, personal attributes, or some other characteristic?

Significance of type of issues: Is it specific, such as price, or is the focus on relationships or the format of talks?

Concern with protocol: What is the importance of procedures, social behaviors, and so forth in the negotiation process?

Complexity of communicative context: What degree of reliance is placed on nonverbal cues to interpret information?

Nature of persuasive arguments: How do the parties attempt to influence each other? Do they rely on rational arguments, or accepted tradition, or on emotion?

Prentice Hall 2003 Chapter 5 15

Variables in the Negotiation Process(contd.)

Role of individuals’ aspirations: Are motivations based on individual, company, or community goals?

Bases of trust: Is trust based on past experience, intuition, or rules?

Risk-taking propensity: How much do the parties try to avoid uncertainty in trading information or making a contract?

Value of time: What is each party’s attitude toward time? How fast should negotiations proceed, and what degree of flexibility is there?

Decision-making system: How does each team reach decisions – by individual determination, by majority opinion, or by group consensus?

Form of satisfactory agreement: Is agreement based on trust (perhaps just a handshake), the credibility of parties, commitment, or a legally binding contract?

Prentice Hall 2003 Chapter 5 16

Negotiation Styles

For North Americans, negotiations are businesslike; their factual appeals are based on what they believe is objective information, presented with the assumption that it is understood by the other side on a logical basis.

Arabs use affective appeals based on emotions and subjective feelings.

Russians employ axiomatic appeals – that is, their appeals are based on the ideals generally accepted in their society.

Prentice Hall 2003 Chapter 5 17

Profile of a Successful American Negotiator

Knows when to compromise Takes a firm stand at the beginning of the negotiation Refuses to make concessions beforehand Keeps his or her cards close to his or her chest Accepts compromises only when the negotiation is

deadlocked Sets up the general principles and delegates the detail

work to associates Keeps a maximum of options open before negotiation Operates in good faith

Prentice Hall 2003 Chapter 5 18

Profile of a Successful American Negotiator(contd.)

Respects the “opponents” States his or her position as clearly as possible Knows when he or she wishes a negotiation to move on Is fully briefed about the negotiated issues Has a good sense of timing and is consistent Makes the other party reveal his or her position while

keeping his or her own position hidden as long as possible

Lets the other negotiator come forward first and looks for the best deal

Prentice Hall 2003 Chapter 5 19

Profile of a Successful Indian Negotiator

Looks for and says the truth Is not afraid of speaking up and has no fears Exercises self-control Seeks solutions that will please all the parties involved Respects the other party Neither uses violence nor insults Is ready to change his or her mind and differ with himself

or herself at the risk of being seen as inconsistent and unpredictable

Prentice Hall 2003 Chapter 5 20

Profile of a Successful Indian Negotiator(contd.)

Puts things into perspective and switches easily from the small picture to the big one

Is humble and trusts the opponent Is able to withdraw, use silence, and learn from within Relies on himself or herself, his or her own resources and strengths Appeals to the other party’s spiritual identity Is tenacious, patient, and persistent Learns from the opponent and avoids the use of secrets Goes beyond logical reasoning and trusts his or her instinct as well

as faith