International Negotiations: Managing Cultural Differences and Maximizing Success

1. Welcome to Class ofInternational NegotiationsbyDr. Satyendra SinghUniversity of Winnipeg

2. Objectives • How differences in values and thinking processes affect international negotiations • The important factors in selecting a negotiation team • How to prepare for international negotiations • Managing all aspects of the negotiation process • The importance of follow-up communications and procedures

3. “There is no such thing as international business. There’s only interpersonal business.” Personal selling involves negotiation Its main purpose remains to achieve sales through promotion—to promote through communication Likewise, many negotiation situations involve selling

4. Cultural differences cause 4 kinds of problems in international business negotiations Language Nonverbal behaviours Values Thinking and decision-making processes

5. Language & Nonverbal Behaviours Break in side conversation Translation problem rude? Aggressive vs. polite Facial gazing Use of “no” and “you” Silent Periods Facial expressions Touching arms

6. Differences in Values Separate people from problem Punctuality and the concept of time Making concession at the end vs. beginning Problem solving Relationship building Bow head

7. Differences in Thinking and Decision-Making Processes Sequential approach  In particular order Divide tasks  price, warranty, delivery… Get to the point In hurry Western Holistic approach  No particular order Eastern Relationship  Need to know you more more time to study the issue

8. 4 Steps in Business Negotiations Selection of the appropriate negotiation team Management of preliminaries, including training, preparations, and manipulation of negotiation settings Management of the process of negotiations, that is, what happens at the negotiation table Appropriate follow-up procedures and practices.

9. Negotiation Teams… Maturity, emotional stability, breadth of knowledge, optimism, flexibility, empathy, and stamina are all important Willingness to use team assistance, listening skill, and influence at headquarters Willingness to use team assistance is particularly important for Canadian (and American) negotiators # of people and their rank

10. The Single Most Important Activity of Negotiation Team ...is listening collect information goal is to enhance creativity one team member the sole responsibility of taking careful notes and not worrying about speaking during the meetings. This may also mean that knowing the language of clients and partners will be crucial for the most complete understanding of their needs and preferences

11. Negotiation Preliminaries… Assessment of the situation and the people Info about markets – demand… Facts to confirm during the negotiation Agenda Best alternative to a negotiated agreement Concession strategies Beginning vs. end Team assignments Good guy, bad guy, note taker, observer

12. 7 Aspects Of The Negotiation Setting to Be Manipulated Ahead of Time Location Neutral, reduce jet lag Physical arrangements collective participation Number of parties buyer, seller… Number of participants outnumbered? Audiences (news media, competitors, fellow vendors, etc.) Internet, video conferencing? Communications channels Dinner, Golf course? Time limit How much?

13. At the Negotiation Table: Negotiations Proceed Through 4 Stages Nontask sounding Task-related exchange of information Persuasion Concessions and agreement

14. Nontask Sounding In the West – 5-10 minutes  weather, family… It provides client’s background and interests and important cues about appropriate communication styles. Similar people’s backgrounds  more efficient communication Engineers can use technical jargon when talking to other engineers, sports enthusiasts can use sports analogies, and those with children can compare the cost of “putting a kid through college.” Viewed from the opposite side, if one is an astute observer one quickly learns of themes the other party would rather not discuss, of language one would rather not use, and so on

15. Task-Related Information Exchange… When nontask sounding is complete; i.e., trust and personal relationship is established. North American executives are advised to let the foreign counterpart decide when such substantive negotiations should begin, that is, to let them bring up business

16. Task-Related Information Exchange Observations suggest that when Canadians meet executives from some cultures across the negotiation table, the information flow is unidirectional. Japanese, Chinese, and Russian negotiators all appear to ask “thousands” of questions and to give little feedback. The barrage of questions severely tests Canadian negotiators’ patience and the lack of feedback causes great anxiety. Many of these discussions often take place outside business premises and after normal business hours in relationship-oriented cultures.

17. Concessions and AgreementAfter Negotiations Canadians often make concessions early, expecting foreign counterparts to reciprocate. However, in many cultures no concessions are made until the end of the negotiations Contracts between Canadian firms are often longer than 100 pages (vs. < 5 pages in Japan) and include carefully worded clauses regarding every aspect of the agreement Long contracts: Planning divorce before marriage In the relationship-oriented ones, legal systems are not depended upon to settle disputes. Indeed, the term “dispute” does not reflect how a business relationship should work

18. Important Signals of Progress Higher-level foreigners being included in the discussions. Their questions beginning to focus on specific areas of the deal Softening of their attitudes and position on some of the issues—“Let us take some time to study this issue.” Increased talk among themselves in their own language, which may often mean they’re trying to decide something. Increased bargaining and use of the lower-level, informal, and other channels of communication.

19. Negotiating Styles: Japan Their style of interaction is among the least aggressive (or most polite). Threats, commands, and warnings appear to be de-emphasized in favour of the more positive promises recommendations, and commitments. Infrequent use of “no” and “you” and facial gazing, as well as more frequent silent periods

20. Negotiating Styles: South Korea South Korean negotiators used considerably more punishments and commands than did the Japanese. No silent periods occurred between them, and they used “no” and interrupted more than three times as frequently as the Japanese

21. Negotiating Styles: China (Northern, i.e., in and around Tianjin). Their behaviours are most remarkable in the emphasis on asking questions. Statements made by the Chinese negotiators are classified as information-exchange tactics. Other aspects of their behaviour are quite similar to the Japanese, particularly the use of “no” and “you” and silent periods

22. Negotiating Styles: Taiwan The behaviour of the businesspeople in Taiwan is similar to that in South Korea. The Chinese in Taiwan are exceptional in facial gazing—20 of 30 minutes. They asked fewer questions and provided more information (self-disclosures) than did any of the other Asian groups

23. Negotiating Styles: Russia The Russians’ style are quite similar in many respects to the style of the Japanese. They use “no” and “you” infrequently and use the most silent periods of any group. Only Japanese do less facial gazing, and only the Chinese ask a greater percentage of questions

24. Negotiating Styles: Spain The Spanish use a high percentage of commands of any of the groups Give comparatively little information; i.e., self-disclosures They interrupt one another more frequently than any other group, and they use the terms “no” and “you” very frequently

25. Negotiating Styles: France French negotiators are the most aggressive of all the groups. They use a high percentage of threats and warnings. They also use interruptions, facial gazing, and “no” and “you” very frequently compared with the other groups. May touch arms.

26. Negotiating Styles: Brazil Brazilian businesspeople, like the French and Spanish, are quite aggressive. Brazilians frequently say “no” or “you” and touch arm frequently. Facial gazing is also high

27. Negotiating Styles: Mexico Both verbal and nonverbal behaviours aree quite different than those of their Latin American (Brazilian) or continental (Spanish) cousins. In many respects, the Mexican behaviour is very similar to that of the negotiators from the United States

28. English-speaking Canada Canadians who speak English as their first language use the lowest percentage of aggressive persuasive tactics (threats, warnings, and punishments). With respect to international negotiations, the English-speaking Canadians use noticeably more interruptions and “no’s” than negotiators from either of Canada’s major trading partners, the United States and Japan.