International Business Negotiations

1. International Business Negotiations Conducting Negotiations and Managing Conflict

2. Learning Objectives Appreciate that miscommunication can create conflict across cultures Diagnose and explain causes of cross-cultural conflict Understand the positive role of negotiations as well as ways to manage cross-cultural conflict and the Explain the main stages of international negotiations and the impact of cultural values on negotiations

3. Overview Cultural causes of conflict Managing conflict Understanding international negotiations Process of international negotiations

4. Conflict When disagreements and friction arise in the course of interaction because of opposing interests or cultural differences

5. Conflict is Common Many chances for distorted, confused, or missed messages Negotiation and diplomatic skills increasingly important American managers spend 20% of time on conflict issues Higher for international environment

6. Common Tasks That Produce Conflict Foreign labor strikes Negotiate with overseas vendors, clients, & partners Lobby governments Mediate relations with outside pressure groups Managing diverse employees

7. Conflict and Business Not always bad Can be productive exchange Key is to understand role of culture

8. Causes of Conflict Language Poor translation or limited skills Lack of understanding cultural norms Inappropriate behavior Decision-making Centralized or Decentralized Culture�s propensity for conflict Avoid or accept

9. Types of Conflict Resolution Avoidance�ignore altogether Accommodation Compromise Collaboration Competition�face head-on

10. A Typology of Conflict Styles

11. Conflict Preferences Culture influences styles Collectivists & high uncertainty cultures prefer avoidance Individualistic culture prefers competitive Cultural tendencies vary with WHO Peers vs.. subordinates Individuals tend to stick with a style

12. Conflict Preferences (Cont�d) Equity norm To each according to what they deserve Equality norm Each group member gets about the same share

13. Response to Conflict After negative action or conflict occurs, generally there is a direct or indirect request for repair Account giving is an explanation for the conflict Consideration for saving face

14. International Conflict Management: Linking Culture and Face to the Account-giving Process

15. Account Giving Mitigating�lower tensions Concessions�acknowledge & take responsibility Justification�acknowledge but unavoidable Ideological�acknowledge but necessary Refusal�resist acknowledgment Aggravating�increase tensions

16. The Use of and Reactions to Accounts in International Conflict: The Impact of Culture and Face

17. International Negotiation Process of communicating with another person or group to make a joint decision or reach an agreement

18. Key Elements of Negotiations Multiple parties Mixed motives Disagreements & common interests Movement of parties Shifting of positions over time Reaching agreement as a goal

19. Approaches to International Negotiation Macrostrategic Focus on relative bargaining power of parties Power can shift throughout process Comparative Focus on interactions during negotiations Consideration of cultural factors

20. Setting Up Shop in Developing Countries: How Negotiating Strength May Shift over Time

21. Preparing for Negotiations Never underestimate complexity Gain in-depth cultural understanding Seek outside help where needed Ensure inside negotiator(s) have language skills Consider team approach Spend time necessary to prepare

22. Framework for International Negotiations Basic model used by negotiators Perspectives on individual negotiators Dispositions affecting interactions Views about the interaction process Outcomes

23. I. Basic Model Used by Negotiators How the negotiation process might be conceived A bargaining effort Joint problem solving or exploration A debate

24. II. Perspectives on Individual Negotiators How negotiators are chosen Knowledge/experience Personal characteristics/status Aspirations of individuals Individual vs. Community goals Group decision making Authoritarian vs. Consensual

25. III. Dispositions Affecting Interactions Time orientation Monochronic vs. polychronic Risk-taking orientation High vs. low How trust is determined Intuition Common experience Reputation Threat of sanctions Basic model used by negotiators

26. IV. Views About the Interaction Process Important of protocol Formal vs. informal Complexity of communication High vs. low Tactics for persuasion Logic/facts/experience Dogma/tradition Emotion/intuition

27. V. Outcomes Agreement preferences Contractual vs. implicit

28. Successful Negotiations Preparation does not ensure success Negotiation style still plays significant role Training and preparation still best method

29. Stages in the International Negotiation Process

30. International Negotiation Process Nontask sounding�establish rapport Task-related exchange�exchange of background, needs and preferences Persuasion�negotiation, attempts to modify positions Agreement�conclusion and accord is reached

31. Stage 1: Nontask Sounding Time needed to establish relationships Entertaining Establishing trust Status of negotiators Variations in importance across cultures

32. Stage 2: Task-Related Exchange of Information Most important in some cultures Explanations of initial bargaining positions Differences in bargaining room across cultures

33. Stage 3: Persuasion Attempts to modify other party�s position Most important step for U.S. negotiators Tactics used to persuade Direct/honest � Threats Bluffing � Misrepresentations Timing of concessions Throughout or at end

34. Stage 4: Agreement Concessions and persuasion culminating in agreement Importance of follow-through Final outcome Use of formal written Informal handshake Differences in notion of contracts

35. Types of Behavior During Negotiation Process Substantive behavior�facilitates the negotiation process such as initiation, acceptance, rejection, accommodation, and retraction. Strategic behavior�influences the expectation and the actions of the other side such as commitment, exchange, demands, treat, ingratiation. Persuasive behavior�supports arguments and presents evidence in support of claims a negotiator makes such as the use of statistical information or expressive language.

36. Types of Behavior During Negotiation Process Task behavior�promotes focus on the issue such as providing and requesting information, or clarification. Affective behavior�shows expression of feelings such as humor, irritability, or social correctness. Procedural behavior�moves the discussion along such as references to procedure or time.

37. Behavior in the Stages of Negotiation: Differences Across Low- and High-Context Cultures