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Copyright ©2014 Pearson Education, Inc.
5-1
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Chapter Learning GoalsChapter Learning Goals
1. Learn how to prepare for cross-cultural business negotiations.
2. Recognize the need to build trusting relationships as a prerequisite for successful negotiations and long-term commitments.
3. Be aware of culturally-based behavioral differences, values, and agendas of the negotiating parties.
4. Learn the complexities of negotiating with the Chinese
1. Learn how to prepare for cross-cultural business negotiations.
2. Recognize the need to build trusting relationships as a prerequisite for successful negotiations and long-term commitments.
3. Be aware of culturally-based behavioral differences, values, and agendas of the negotiating parties.
4. Learn the complexities of negotiating with the Chinese
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Chapter Learning GoalsChapter Learning Goals
5. Appreciate the variables in the decision-making process and understand the influence of culture on decision making.
6. Become familiar with the Japanese decision-making process and how it is influenced by their cultural norms.
5. Appreciate the variables in the decision-making process and understand the influence of culture on decision making.
6. Become familiar with the Japanese decision-making process and how it is influenced by their cultural norms.
5-3 Copyright ©2014 Pearson Education, Inc.
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Opening Profile: Shiseido and Bare Escentuals – Cultural Conflicts in
Negotiations
Opening Profile: Shiseido and Bare Escentuals – Cultural Conflicts in
Negotiations 2010 Shiseido was dealing with
declining demand in Japan, yen appreciated announced purchase of Bare Escentuals
Bare Escentuals = casual, blue jeans Shiseido: formal
Language barrier and general miscommunication; required executive visits on both sides
Launched Bare Minerals skincare in March 2012
2010 Shiseido was dealing with declining demand in Japan, yen appreciated announced purchase of Bare Escentuals
Bare Escentuals = casual, blue jeans Shiseido: formal
Language barrier and general miscommunication; required executive visits on both sides
Launched Bare Minerals skincare in March 2012
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Chapter Learning GoalsChapter Learning Goals
Learn how to prepare for cross-cultural business negotiations.
Learn how to prepare for cross-cultural business negotiations.
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Negotiations by Global Managers
Negotiations by Global Managers
Specific plans for strategies and for continuing operations
May also be faced with negotiating with government-owned companies
Managers must prepare; operational details must be negotiated: staffing, raw materials, profits, etc.
Decision-making processes are key
Specific plans for strategies and for continuing operations
May also be faced with negotiating with government-owned companies
Managers must prepare; operational details must be negotiated: staffing, raw materials, profits, etc.
Decision-making processes are key
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NegotiationNegotiation
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The process of discussion by which two or more
parties aim for mutually acceptable agreement
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Important DifferencesImportant Differences
1. Amount and type of preparation
2. Tasks vs. interpersonal relationships
3. General principles vs. specific issues
4. Number of people present and their influence
1. Amount and type of preparation
2. Tasks vs. interpersonal relationships
3. General principles vs. specific issues
4. Number of people present and their influence
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Stakeholders in Cross-Cultural Negotiation
Stakeholders in Cross-Cultural Negotiation
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Chapter Learning GoalsChapter Learning Goals
Recognize the need to build trusting relationships as a prerequisite for successful negotiations and long-term commitments.
Recognize the need to build trusting relationships as a prerequisite for successful negotiations and long-term commitments.
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The Negotiation ProcessThe Negotiation Process
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Stage One: PreparationStage One: Preparation
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•Develop profile of counterparts.
•Find out likely demands, team composition, and counterpart authority.
•Choose a negotiation site.
•British/French Chunnel negotiations
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Stage Two: Relationship Building
Stage Two: Relationship Building
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•Getting to know one’s contacts and building mutual trust
•Non-task sounding
•Use an intermediary.
•“I have come as a mediator…”
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Stage Three: Exchanging Task-Related InformationStage Three: Exchanging Task-Related Information
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•Cultural differences remain an issue.•The French enjoy debate and conflict.•Mexicans can be suspicious and indirect.•The Chinese ask many questions, but provide ambiguous information in return.
•Show understanding of the other viewpoint.
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Stage Four: PersuasionStage Four: Persuasion
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•Dirty tricks are in the eye of the beholder
•False information•Ambiguous authority•Non-verbal messages•Individualism vs. Collectivism
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Stage Five: Concessions and Agreement
Stage Five: Concessions and Agreement
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•Russians and the Chinese start with extreme positions•Swedes start with what they will accept•Starting with extremes may be most effective•Linear vs. holistic•Importance of contracts
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Management Focus: Cultural Misunderstanding—Joint
Venture in China
Management Focus: Cultural Misunderstanding—Joint
Venture in China Sino-French joint venture was formed
in March 1996 by Group Danone and Hangzhou Wahaha Group Co. and took the trade mark name of Wahaha.
Between 1996 and 2009, a number of issues and disputes took place within the JV.
Public rows erupted between the two companies when they kept on blaming each other for breach of contract.
The Danone–WHH case became so much embroiled that Chinese and French governments asked the companies to negotiate an “amicable” resolution.
Sino-French joint venture was formed in March 1996 by Group Danone and Hangzhou Wahaha Group Co. and took the trade mark name of Wahaha.
Between 1996 and 2009, a number of issues and disputes took place within the JV.
Public rows erupted between the two companies when they kept on blaming each other for breach of contract.
The Danone–WHH case became so much embroiled that Chinese and French governments asked the companies to negotiate an “amicable” resolution.
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Management Focus: Joint Venture in China
A Few Lessons We Learn
Management Focus: Joint Venture in China
A Few Lessons We Learn Cross-cultural misunderstandings and
unfamiliarity with the JV partners were at the heart of the dispute.
Both companies used media and PR companies instead of having open negotiations.
Relationship building and exchange of information is critical in any JV.
There was lack of open communication in day-to-day management of the JV.
In JVs, relationship building takes time and a good amount of interaction between the partners.
Cross-cultural misunderstandings and unfamiliarity with the JV partners were at the heart of the dispute.
Both companies used media and PR companies instead of having open negotiations.
Relationship building and exchange of information is critical in any JV.
There was lack of open communication in day-to-day management of the JV.
In JVs, relationship building takes time and a good amount of interaction between the partners.
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Comparison of Negotiation Styles
Comparison of Negotiation Styles
JapaneseNorth
AmericanLatin
AmericanHide
emotionsDeal impersonally
Emotionally passionate
Subtle power plays
Litigation, not conciliation
Great power plays
Step-by-step approach
Methodological organization
Impulsive, spontaneous
Group good is the aim
Profit is the aim
Group/individual good is aim
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Successful Negotiators: Americans
Successful Negotiators: Americans
Knows when to compromise, but stands firm at the beginning. Accept compromises only when there is a deadlock.
Refuses to make concessions beforehand and keeps his/hers cards close to chest.
Keeps a maximum of options open before negotiation, operate in good faith.
States his/her position as clearly as possible, respects the “opponents”.
Is fully briefed about the negotiated issues, has a good sense of timing and is consistent.
Knows when to compromise, but stands firm at the beginning. Accept compromises only when there is a deadlock.
Refuses to make concessions beforehand and keeps his/hers cards close to chest.
Keeps a maximum of options open before negotiation, operate in good faith.
States his/her position as clearly as possible, respects the “opponents”.
Is fully briefed about the negotiated issues, has a good sense of timing and is consistent.
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Successful Negotiators: IndiansSuccessful Negotiators: Indians
Look for and say the truth, not afraid to speak 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.
Humble and trusts the opponent
Look for and say the truth, not afraid to speak 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.
Humble and trusts the opponent
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Successful Negotiators: ArabsSuccessful 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.Can keep secretsControls temper and emotions
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.Can keep secretsControls temper and emotions
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Successful Negotiators: SwedesSuccessful Negotiators: Swedes
Quiet, thoughtful, polite, straightforward
Overcautious, but flexible
Slow to react to new proposals, but eager to be productive and efficient
Able to hide emotions, afraid of confrontation
Quiet, thoughtful, polite, straightforward
Overcautious, but flexible
Slow to react to new proposals, but eager to be productive and efficient
Able to hide emotions, afraid of confrontation
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Successful Negotiators: ItaliansSuccessful Negotiators: Italians
Have a sense of drama, do not hide emotions
Good at reading facial expressions and gestures
Want to make a good impression and use flattery, but are distrusting
Handle confrontation with subtlety and tact
Have a sense of drama, do not hide emotions
Good at reading facial expressions and gestures
Want to make a good impression and use flattery, but are distrusting
Handle confrontation with subtlety and tact
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Managing NegotiationManaging Negotiation
ExamplesExamples
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Avoid person-related conflicts.
Low-context Americans appear impatient, cold,
and blunt to Mexicans.
Americans must approach
negotiations with Mexicans with
patience; refrain from attacking
ideas.
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Copyright ©2014 Pearson Education, Inc.5-26
Chapter Learning GoalsChapter Learning Goals
Be aware of culturally-based behavioral differences, values, and agendas of the negotiating parties.
Be aware of culturally-based behavioral differences, values, and agendas of the negotiating parties.
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Cross-Cultural Negotiation Variables
Cross-Cultural Negotiation Variables
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EXHIBIT 5-5 Cross-cultural Negotiation Variables
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Consider a wider range of options and pay greater attention to areas of common ground
Tend to make twice as many comments regarding long-term issues
More likely to set upper and lower limits regarding specific points
Make fewer irritating comments: “We’re making you a generous offer”
Make counter proposals less frequently and use fewer reasons to back up arguments
Actively listen
Consider a wider range of options and pay greater attention to areas of common ground
Tend to make twice as many comments regarding long-term issues
More likely to set upper and lower limits regarding specific points
Make fewer irritating comments: “We’re making you a generous offer”
Make counter proposals less frequently and use fewer reasons to back up arguments
Actively listen
Successful NegotiatorsSuccessful Negotiators
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Using the Internet to Support NegotiationsUsing the Internet to Support Negotiations
Negotiation Support System (NSS)
Negotiation Support System (NSS)
Web Application
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Increase likelihood of agreement
Decrease direct and indirect costs
Maximize optimal outcomes
Increase likelihood of agreement
Decrease direct and indirect costs
Maximize optimal outcomes
Provide support for phases and dimensions such as:Multiple-issue, multiple-
party business transactions of a buy-sell nature
International dispute resolution
Internal company negotiations and communications
Provide support for phases and dimensions such as:Multiple-issue, multiple-
party business transactions of a buy-sell nature
International dispute resolution
Internal company negotiations and communications
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E-NegotiationsE-Negotiations
AdvantagesAdvantages Disadvantages
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SpeedLess travelLaying out much
objective information over time
SpeedLess travelLaying out much
objective information over time
Not being able to build trust and interpersonal relationships
Nonverbal nuances are lostVideo conferencing
may be a good compromise
Not being able to build trust and interpersonal relationships
Nonverbal nuances are lostVideo conferencing
may be a good compromise
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Chapter Learning GoalsChapter Learning Goals
Learn the complexities of negotiating with the Chinese
Learn the complexities of negotiating with the Chinese
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Comparative Management in Focus: Negotiating with Chinese
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
Comparative Management in Focus: Negotiating with Chinese
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Two problems:Chinese desire
for detailsApparent
insincerity
Saving face:LienMien-tzu
Two problems:Chinese desire
for detailsApparent
insincerity
Saving face:LienMien-tzu
Importance of harmonyGuanxiGuanxihu
networks
Two stages of Chinese negotiationTechnicalCommercial
Importance of harmonyGuanxiGuanxihu
networks
Two stages of Chinese negotiationTechnicalCommercial
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Comparative Management in Focus: Negotiating with Chinese
Comparative Management in Focus: Negotiating with Chinese
Some recommendations:Practice patience.Accept prolonged stalemate.Refrain from exaggerated
expectations.Establish a contact in ChinaRemember to save ‘face’ for
everyone
Some recommendations:Practice patience.Accept prolonged stalemate.Refrain from exaggerated
expectations.Establish a contact in ChinaRemember to save ‘face’ for
everyone
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Managing the Conflict Resolution
Managing the Conflict Resolution
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Negotiation Conflicts Between Low Context and High Context
Cultures
Negotiation Conflicts Between Low Context and High Context
CulturesLow Context Conflict Area
High Context Conflict Area
• Explicit and direct, linear presentation of facts
• Individualistic, short-term oriented
• Task-oriented, up-front, impatient
• Implicit, circular logic
• Collective, decisions by consensus; long-term oriented
• “Face” and relationship-oriented; non-confrontational, patient
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The Influence of Culture on Decision Making
The Influence of Culture on Decision Making
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Individualism VSCollectivism
Objective VS Subjective
Risk ToleranceVS Risk Avoidance
Uncertainty VS Familiarity
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Approaches to Decision MakingApproaches to Decision Making
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Utilitarianism VS Moral Idealism
Autocratic VS Participative
Slow Pace VS Fast Pace
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Chapter Learning GoalsChapter Learning Goals
Appreciate the variables in the decision-making process and understand the influence of culture on decision making.
Appreciate the variables in the decision-making process and understand the influence of culture on decision making.
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Cultural Variables in Decision-Making Process
Cultural Variables in Decision-Making Process
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EXHIBIT 5-7 Cultural Variables in the Decision-Making Process
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Chapter Learning GoalsChapter Learning Goals
Become familiar with the Japanese decision-making process and how it is influenced by their cultural norms.
Become familiar with the Japanese decision-making process and how it is influenced by their cultural norms.
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Comparative Management in Focus: Decision Making in
Japanese Companies
Comparative Management in Focus: Decision Making in
Japanese Companies
5-42 Copyright ©2014 Pearson Education, Inc.
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Comparative Management in Focus: Decision Making in
Japanese Companies
Comparative Management in Focus: Decision Making in
Japanese Companies
5-43 Copyright ©2014 Pearson Education, Inc.
EXHIBIT 5-8 Decision Making Procedure in Japanese Companies
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Copyright ©2014 Pearson Education, Inc. 5-44
ConclusionConclusion
Managers need working knowledge of decision-making processes and negotiating tactics used by managers in different countries
It is important to understand the cultural variables that influence negotiations and decision making, and how they influence these activities
Managers should prepare for, and conduct negotiations with cultural sensitivity
Managers need working knowledge of decision-making processes and negotiating tactics used by managers in different countries
It is important to understand the cultural variables that influence negotiations and decision making, and how they influence these activities
Managers should prepare for, and conduct negotiations with cultural sensitivity
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