Cross cultural negotiation
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Transcript of Cross cultural negotiation
Cross-cultural Negotiation, Steven Tolliver
Cross-culturalNegotiation
Steven Tolliver
Cross-cultural Negotiation, Steven Tolliver
Outline:
• Components of negotiation
• Individual negotiation styles
• Negotiation tactics
• Cultural differences in negotiation
Cross-cultural Negotiation, Steven Tolliver
Negotiation:
= the use of dialogue to resolve disputes, produce agreements or achieve goals.
• Make a sale of goods or services
• Open new market /create a partnership
• Secure supply
• Maintain / expand an existing business
Cross-cultural Negotiation, Steven Tolliver
Components of negotiation:
• Strategies > the goals
• Process > who, where, how
• Behavior > the tactics used
• Substance > the details
Cross-cultural Negotiation, Steven Tolliver
Prior to negotiation: making contact
How do parties (a buyer and a seller) discover each other?
Their companies have already been doing business before current negotiators become involved.
Cold-calling
Advertising and web site
Mutual associations or intermediaries
Cross-cultural Negotiation, Steven Tolliver
Focus on interests not positions
Aspire to joint opportunity finding
Negotiation is primarily a process, not an event
Information is power
Framing is a strong determinant of a negotiation outcome
Preparing for negotiation
Cross-cultural Negotiation, Steven Tolliver
Preparing for negotiation
1.Establish goals:
a.Aspirational base
b.Real base
Determine the other side’s goals:
a.What are their aspirations?
b.What is their real base?
Cross-cultural Negotiation, Steven Tolliver
Cross-cultural Negotiation, Steven Tolliver
Preparing for negotiation
2. Process:
a.Who will participate?
b.What will happen if the expected parties are
not there or new one are present?
c. Determine the setting
d.Means: in person, video-conference,
telephone, e-mail.
Cross-cultural Negotiation, Steven Tolliver
Preparing for negotiation
3. Tactics:
a.What stance will be taken?
b.How flexible is it?
c. What is the tone?
d.Specific ploys to be used?
Cross-cultural Negotiation, Steven Tolliver
Preparing for negotiation
4. Substance:
a.Prepare materials:
i. Draft documents
ii. Product and price details
iii. Terms
iv. Additional information
Cross-cultural Negotiation, Steven Tolliver
Individual negotiation styles:
Shell identified five styles/responses to negotiation.[11]
Individuals can often have strong dispositions towards
numerous styles; the style used during a negotiation
depends on the context and the interests of the other party,
among other factors. In addition, styles can change over
time:•Accommodating•Avoiding•Collaborating•Competing•Compromising
Cross-cultural Negotiation, Steven Tolliver
Accommodating:
Individuals who enjoy solving the other’s problems and preserving
personal relationships; sensitive to the emotional states, body
language, and verbal signals of the other parties. They can, however,
feel taken advantage of in situations when the other party places little
emphasis on the relationship.
Avoiding:
Individuals who do not like to negotiate and don’t do it unless they
must; they tend to defer and dodge confrontation; however, they may
be perceived as tactful and diplomatic.
Individual negotiation styles:
Cross-cultural Negotiation, Steven Tolliver
Collaborating:
Individuals who enjoy negotiations that involve solving tough problems
in creative ways. Collaborators are good at using negotiations to
understand the concerns and interests of the other parties. They can,
however, create problems by transforming simple situations into more
complex ones.
Individual negotiation styles:
Cross-cultural Negotiation, Steven Tolliver
Competing:
Individuals who enjoy negotiations because they present an
opportunity to win something. Competitive negotiators have strong
instincts for all aspects of negotiating and are often strategic. Because
their style can dominate the bargaining process, competitive
negotiators often neglect the importance of relationships.
Individual negotiation styles:
Cross-cultural Negotiation, Steven Tolliver
Compromising:
Individuals who are eager to close the deal by doing what is fair and
equal for all parties involved in the negotiation. Compromisers can be
useful when there is limited time to complete the deal; however,
compromisers often unnecessarily rush the negotiation process and
make concessions too quickly.
Individual negotiation styles:
Cross-cultural Negotiation, Steven Tolliver
Negotiation Tips and Tricks1. The Nibble Technique
Customer expresses surprise when price or terms are presented. Salesman might then added extras to his offer. If the customer does not flinch again, salesman can assume he has found the customer’s real base.
Buyer can counteract this by referring to a competitor’s offer.
2. The Flinch
Salesman proposes adding additional cost items after initial deal has been reached.
Buyer can preempt this tactic by clarifying all aspects of the product, service, delivery and other terms before discussing the price.
Cross-cultural Negotiation, Steven Tolliver
3. Deferring to Higher Authority
4. Good Guy, Bad Guy
Either side can respond to requests by saying that they must consult with their team or their boss.
Cannot be used too much or the other side might wish to stop present contact and negotiate with the real decision maker.
In a negotiating team, one person projects inflexibility and opposition giving concessions while the other member of the team creates the opposite impression and that they sympathize with the needs of the other side. The goal is to have the other side give either concessions or give up key information.
Cross-cultural Negotiation, Steven Tolliver
5. Set Aside
Buyer begins discussion with major demand that the seller must agree to before further items are discussed. If successful, the salesman will surrender key positions or drop prices to continue further negotiations, which can then be pressed further.
Salesman’s response should be to suggest that the demand be set aside in order to focus on the key features of their product or service.
6. Hot Potato Technique
Make one side’s limitation or problem the other side’s problem, too. For example, “I have a budget of X amount”, “I need to get Y”
Response: present a solution that is comes closer to solving the problem to test to see if the problem is real.
Cross-cultural Negotiation, Steven Tolliver
7. Splitting the Difference (Twice)
Establish a gap in positions and get the other party to suggest that you split the difference and then do it again.
Buyer: Your price is 10,000, but my limit is 9,000. What can we do?
Seller: Well, we are 1,000 apart, so lets split the difference.
Buyer: So the price would be 9,500? I must check with my company.
Buyer consults and says he has tried but the company cannot accept it adding its too bad because we are only 500 apart (Now 1,000 difference is forgotten)
If seller needs to make the sale, he might offer to split the difference again, making the final price only 250 above buyer’s original position.
Cross-cultural Negotiation, Steven Tolliver
8. The Trade Off Technique
When one side presents a problem or obstacle, for example “the order will be ready one month later that expected” this presents the other side with a chance to extract concessions. This could include extra goods, a discount on future or past orders, etc. but it is important not to appear willing to accept the problem as explained.
9. The Walk Away TechniqueIf one side decides that they must have something, they lose the a great deal of power in a relationship. Try to preserve the ability to stop the negotiation if the terms are not what is desired.
Announcing that negotiations are cancelled may cause the other side to drop their position.
Cross-cultural Negotiation, Steven Tolliver
10. Attacking Techniques
The use of criticism (of the other side’s country, company or them personally) may be a tactic to throw them off balance and lose control emotionally.
The other side should try to not get upset and see it as a tactic. Keep smiling and focus on the real issue
Cross-cultural Negotiation, Steven Tolliver
Cultural differences cause four kinds of problems in
international business negotiations. These differences
are manifested in:
•Language
•Nonverbal behaviors
•Values
•Thinking and decision-making processes
Cultural differences
Cross-cultural Negotiation, Steven Tolliver
Problems of comprehension / use of “false friends” words, especial in high-context cultures
Language
Misuse of language or using commands
Cross-cultural Negotiation, Steven Tolliver
High-context vs. Low-context
Edward T. Hall, Beyond Culture, New York: Anchor Books,1976.
High context: communication draws on shared culture, fewer words need to suggest meaning.
Low-context: communication is more direct and explicit
Cross-cultural Negotiation, Steven Tolliver
Translators:
Use to communicate with the other side
Use to gain time in making responses
Use to study the non-verbal communications of
the other side
Internal group conversations should be allowed and followed.
Cross-cultural Negotiation, Steven Tolliver
Anthropologist Ray L. Birdwhistell: less than 35% of the message in conversations is conveyed by the spoken word while the other 65% is communicated nonverbally.
Albert Mehrabian: where meaning in face-to-face interactions comes from.• 7% from the words used•38% from speaking style: tone of voice, loudness, etc.•55% from facial expressions
Nonverbal behaviors
Cross-cultural Negotiation, Steven Tolliver
Facial expressions
Eye contact
Personal space
Physical contact
Silence
Sounds
Gestures
Nonverbal behaviors or body language
Cross-cultural Negotiation, Steven TolliverJohn L. Graham, Professor, Marketing and International Business, University of California, IrvineThe Paul Merage School of Business
Cross-cultural Negotiation, Steven Tolliver
The Hofstede culture matrix
Geert Hofstede, sociologist
Framework for Assessing Culture:
•Small vs. large power distance
•Individualism vs. Collectivism
•Masculinity vs. Femininity (Achievement vs. Quality of Life)
•Weak vs. strong uncertainty avoidance
•Long vs. short term orientation
Cross-cultural Negotiation, Steven Tolliver
“Negotiating: The top ten ways that culture can affect your negotiation”, - Jeswald W. Salacuse
Cross-cultural Negotiation, Steven Tolliver
1.Negotiating goal: Contract or relationship?
74 percent of Spanish respondents claimed their goal is a contract, vs. 33 percent of Indian executives.
Relationship is goal: requires investment in getting to know each other and building trust.
Contract is goal: efforts are focus on developing the contract terms.
Cross-cultural Negotiation, Steven Tolliver
2. Win – Lose or Win – Win
Zero-sum: a winner and a loser vs.
Mutual gains bargaining
“100 percent of the Japanese respondents claimed that they approached negotiations as a win-win process, only 33% of the Spanish executives took that view.”
Cross-cultural Negotiation, Steven Tolliver
3. Formality vs. informality
Perceived lack of proper repect
Appearance of coldness
Too close, too soon
Cross-cultural Negotiation, Steven Tolliver
4. Direct or indirect communication
Difficulty in saying “no”
Considered rude to argue
Or
Arguments are considered to be sign of engagement
Cross-cultural Negotiation, Steven Tolliver
5. Time
Punctuality
Pacing and preliminaries (understanding the other side and building relationship or specifying contract terms and details)
“Time is money”
Cross-cultural Negotiation, Steven Tolliver
6. Emotion
Appropriate display of emotion varies by culture
Spain & South America > England, Germany
Cross-cultural Negotiation, Steven Tolliver
7. Agreements: general or specific
U.S.: Specific agreements to cover all anticipated cases and act as guide to behavior.
China: Agreement on general principals and use the relationship to work out any difficulties.
Could also be reflective of power dynamic of the companies, not just nationality
Cross-cultural Negotiation, Steven Tolliver
8. Top-down or bottom-up negotiation
Start with general principals and move to the details?
OR start with specifics and general principals emerge from details?
France: Basic principals guide later detailsU.S.: Specific details form the basis of general terms.
Cross-cultural Negotiation, Steven Tolliver
9. One leader vs. group consensus
One key decision maker: Complete authority to negotiate
Group: representatives or specialists from various internal departments.
One leader: may reach agreements faster
Group: may anticipate and solve problems before they become emergencies
Cross-cultural Negotiation, Steven Tolliver
10. Dealing with risk
Share information, try new methods, tolerate uncertainty.
Japan > United States
Avoid moving too fastFocus on mechanisms to lessen risks Provide information (on market, company, proceedures, etc.)Build relationship and trustMove step-by-step not all-at-once
Cross-cultural Negotiation, Steven Tolliver
Seek out creative outcomes
Understand cultures, especially your own.
Don’t just adjust to cultural differences, exploit them.
Gather intelligence and know the terrain.
Design the information flow and process of meetings.
Invest in personal relationships.
Seek information and understanding.
Make no concessions until the end.William Hernandez Requejo and John L. Graham,
Global Negotiation: The New Rules, New York: Palgrave Macmillan, 2008
Creative negotiation: