Global Marketing Management Multinational Negotiations

1. Global Marketing ManagementMultinational Negotiations MKTG 3215-001 Spring 2013 Mrs. Tamara L. Cohen Class #4

2. Case #1: Starbucksdue Feb.4 HARD COPY of write-up due at beginningof class (no folders please) Requirements for each Partnership Case Write-up: 4 - 6 pages, typed and double-spaced Exhibits / Appendices / Resources in addition to 4-6 pages You and your partner should submit one write-up together. Use the article (reading #11 in Course Pack), PLUS use other sources that you will find yourselves. Your Case Write-up must include: Executive Summary (1 paragraph on 1st page) Background (brief summary of case as you see it) Problems (be incisive & comprehensive) Courses of action (address every problem identified) Recommendations (most important problem(s) & its/their solutions) Conclusions (short & sweet) Exhibits / Appendices / Resources e.g. web sites, books, charts. Remember to acknowledge all sources, including reading #11. Use headings. Pay attention to weighting of each section.

3. Reading for this class: Course Pack reading #2: excerpt from the art of woo Homework: Summary of reading #2 the art of woo by G. Richard Shell & Mario Moussa Multinational Negotiations

4. KEY TERMS • Non-task sounding = part of negotiation process in which conversation topics do not include business; typically a preliminary phase of negotiations • Cultural stereotypes = commonly held public beliefs about specific social groups (cultures), based on simplified prior assumptions • Non-verbal communication (NVC) = communicating without language; e.g. gestures, touch, body language, facial expression, voice, intonation, symbols, emotion, architecture, dance, handwriting style

5. KEY CONCEPTS • Impact of cultural STEREOTYPES • “You get what you negotiate” • “Use what you have” • Single most important activity of negotiating is LISTENING

7. Dangers of Stereotypes • Negotiations • conducted between people, not national stereotypes • Cultural factors often make huge differences • Negotiation behaviors are different • across regions, genders, types of industry • Age & experience make important differences • Consider culture of customers & business partners, but treat them as individuals

8. Cultural differences [4 common problems: • Language - use interpreter - learn languages 2. Non Verbal Communication - almost always hidden / below radar • Values - objectivity (“business is business”) - competitiveness - equality - time • Thinking & Decision-making processes - Western sequential approach vs Eastern holistic approach

9. Differences in Language & Nonverbal Behaviors • Americans have poor languages skills • Americans don’t like side conversations by foreigners in native language • Variation across cultures increases when including linguistic aspects of language & nonverbal behaviors

10. Differences in Thinking & Decision-Making Processes • Western approach – sequential • Americans – business negotiation is a problem-solving activity • Eastern approach – holistic • Japanese – business negotiation is time to develop business relationship with goal of long-term mutual benefit French

11. All business negotiations involve 4 steps: • Non-task sounding • Task-related information exchange • Persuasion • Concession & agreement TIME spent on each step varies considerably.

12. the art of wooRichard Shell & Mario Moussa • WOO is Winning Others Over (Marcus Buckingham & Donald Clifton: Now, Discover Your Strengths) • Relationship-based, emotionally intelligent persuasion • Without coercion e.g. Nelson Mandela won over guards in prison and reinvented a nation • “You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere …” Lee Iacocca, former Chrysler Chairman & CEO

13. Confront the 5 Barriersas adapted from Richard Shell • What characterizes my relationship to the person/company I am trying to influence? • What is the basis for my/my company’s credibility with this person/company? • What channels of communication should I use (authority, rationality, vision, relationships, interest, politics)? Do I need to adjust my style? • What beliefs & valuesdoes this person/company hold that could block or support my case? • What are the other party’s interests and how can I address them?

14. Cultural Orientation = model for understanding & predicting results of intercultural encounters, i.e. how people in different cultures will speak, act, negotiate & make decisions Cognitive style: • how we organize & process info. • thought patterns • people are open-minded or closed-minded • how people process info (associative or abstractive) – influenced by education • how thinking & behavior are focused (particular vs universal thinkers)

15. Negotiation Strategies Value system basis for behavior • Value of individualism vs collectivism (decision-making) • Source of Anxiety Reduction • Interpersonal relationships • Religion • Technology • Law • Equality / Inequality

16. DO YOUR HOMEWORK before you travel! Prepare Listen • Columbus may have been the best-known traveler who didn’t know where he was going, but he wasn’t the last.

17. Do your homework before negotiations!

18. USA Negotiators state what they want Lay cards on table Explanations if necessary Questions should be asked once Only ask questions that can be answered Value directness and efficiency of time in negotiation Use of English preferred Japan Extensive warming up time and effort Long explanations, foll. by request, foll. by expressions of sorrow/regret Consensus-based decision-making Understand/expect that some questions can’t be answered Use native language of bargaining partner

19. Japanese question… question… question… • Long explanations must be expected, so come with appropriate technical details/experts. • Extensive questioning is normal and necessary (consensus). Several people may ask same question. • Use patience and detailed preparation. • Explanations under close scrutiny; consistency. • Offer to write down required info. • If question repeated 2nd time, answer < 3 min. • If question repeated 3rd time, answer < 1 min. • If question repeated 4th time, probably persuasive tactic, not info-gathering; response: silence / change subject

20. “Tricks of the Trade” - Bargaining with Japanese companies • Formal communication at negotiating table • Informal communication after hours • Include lower level management on team • Behind scenes negotiations MUST remain behind scenes • Take notes at / record meetings • Keep tally of topics of questions arelative importance of topics • Persuasive tactics - subtle bluff vs. direct threat

21. Non-Verbal Communication (NVC) • “… happens in the limbic system of the brain that predates human speech. Understanding these non-verbal clues can be crucial to international dealings”Paul Thorne • Much NVC works across boundaries of language; some is subject to culture • “Those who master NVC are likely to function more effectively in the cross-cultural arena, for NVC very quickly gives us what we need to establish--whether the other person likes us, trusts us, and whether we should feel optimistic about the outcome of the encounter. All this happens without a word being said.” • NVC includes the way we use speech; facial & body expressions & hand gestures are major elements; 250,000 facial expressions alone • NVC covers all senses: 1. Appearance (occulesics) 4. Smell (olfatics) 2. Movement (kinesics) 5. Space (proxemics) 3. Touch (haptics) 6. Time (chronemics)

22. The Silent Language of International Business • Concepts of space & time are tools all humans use to transmit messages • Space is outgrowth of animal's instinctive defense of his lair; reflected in human society by office worker's jealous defense of his desk, or guarded, walled patio of a Latin-American home. • Time varies from Western precision to Eastern vagueness; revealed by businessman who pointedly keeps client waiting, or South Pacific islander who murders his neighbor for injustice suffered 20 years ago • 60% communication is non-verbal • Daniel Goleman, (‘emotional intelligence’) 90% communicable emotion is expressed non-verbally.

23. Body Language • ProximityUSA & N.Europe: 18in - 3ft S.Europe, Latin America, Middle East: 0 - 18 in most Asians: > 3ft • Eye contactUSA & N.Europe: moderate S.Europe, Latin America, Middle East: minimal most Asians: very direct • TouchingSome cultures comfortable with some touching for building rapport. • Interpretation; lethal combinations; time to acclimate/ learn

24. Eat, drink and be wary! Acceptance of what’s on your plate tantamount to acceptance of host, company & country Tastiness is in the eye of the beholder – squeamishness from unfamiliarity Slice thinly / swallow quickly / “tastes just like chicken” Find out local customs about refills Drinks customs Which hand to use for eating FOOD

25. FOOD choices ? OR

26. Egalitarian in USA • Viva la Difference • Southern Europe • Middle East • Japan • China • Africa • Latin America • After hours conduct

27. Communication Breakdowns • 80% of misinterpretations & breakdowns are caused by inefficient communication • 20% of time or less it is likely that your counterpart is being difficult. Stephen Covey in ‘7 Habits of Highly Effective People’ - "Seek first to understand before being understood."

28. The single most useful universal form of communication? 6easy 6transcends language 6unequivocal SMILE huh?

29. What do we know about Multinational Negotiations? • Impact of culture on negotiating behaviors. Culture [ 4 common problems: • Language • NVC • Values • Thinking & decision-making • Selection of negotiating team • Follow-up after negotiation Orange case simulation exercise

30. Next class: Culture and Management Style Preparation: Course Pack - Reading #3 Homework: #3 Poorly Made in China