Chapter 5. Negotiation F Negotiation is the process in which at least two partners with different needs and viewpoints try to reach an agreement on matters.

Chapter 5

Negotiation

Negotiation is the process in which at least two Negotiation is the process in which at least two partners with different needs and viewpoints partners with different needs and viewpoints try to reach an agreement on matters of try to reach an agreement on matters of mutual interest.mutual interest.

A negotiation becomes cross-cultural when the A negotiation becomes cross-cultural when the parties involved belong to different cultures parties involved belong to different cultures and therefore do not share the same ways of and therefore do not share the same ways of thinking, feeling, and behaving.thinking, feeling, and behaving.

INTERNATIONAL NEGOTIATIONINTERNATIONAL NEGOTIATION

More complex than domestic More complex than domestic negotiations negotiations

Differences in national cultures and Differences in national cultures and differences in political, legal, and differences in political, legal, and economic systems often separate economic systems often separate potential business partners potential business partners

Cross-Cultural Negotiation Variables(Exhibit 5-6)

Culture

Goals National/corporatePrinciples versus specific details

Negotiating styles objective/subjective/axiomatic

Negotiating behaviordefense/attack/trust

deception/pressure/concessionsVerbal and nonverbal behavior

Attitudes toward time/scheduling

Composition of teamsLevel of preparation

Culture

Task versusinterpersonalrelationships

Trust leveland durationrelations

STEP 1: PREPARATION

STEP 2: RELATIONSHIP BUILDING

STEP 3: EXCHANGING INFORMATION

STEP 5: CONCESSIONS and AGREEMENT

STEP 4: PERSUASION

Steps in the International Negotiation Process

STEP 1: PREPARATIONSTEP 1: PREPARATION

Is the negotiation possible?Is the negotiation possible?Know what your company wants Know what your company wants Know the other side Know the other side Send the proper teamSend the proper teamAgendaAgendaPrepare for a long negotiation Prepare for a long negotiation EnvironmentEnvironmentStrategyStrategy

DIFFERENCES IN CULTURES DIFFERENCES IN CULTURES IN KEY NEGOTIATING IN KEY NEGOTIATING

PROCESSESPROCESSES Negotiation goal - Negotiation goal - signing the contract or signing the contract or

forming a relationshipforming a relationship Personal stylePersonal style - formal or informal - formal or informal Communication styles - Communication styles - direct or indirectdirect or indirect Sensitivity to time - Sensitivity to time - low or highlow or high Forms of agreement - Forms of agreement - specific or generalspecific or general Team organization - Team organization - a team or one leadera team or one leader

STEP 2: RELATIONSHIP BUILDINGSTEP 2: RELATIONSHIP BUILDING

No focus on businessNo focus on businessPartners get to know each otherPartners get to know each otherSocial and interpersonal mattersSocial and interpersonal mattersDuration and importance vary by cultureDuration and importance vary by culture

STEP 3: EXCHANGING INFORMATION STEP 3: EXCHANGING INFORMATION

Task-related information is Task-related information is exchanged exchanged

First offerFirst offer

STEP 4: PERSUASIONSTEP 4: PERSUASION

Heart of the negotiation processHeart of the negotiation processAttempting to get other side to Attempting to get other side to

agree to a positionagree to a positionNumerous tactics can be usedNumerous tactics can be used

VERBAL AND NONVERBAL VERBAL AND NONVERBAL NEGOTIATION TACTICSNEGOTIATION TACTICSPromisePromiseThreatThreatRecommendationRecommendationWarningWarningRewardRewardPunishmentPunishmentNormative appealNormative appeal

OTHER NEGOTIATION OTHER NEGOTIATION TACTICSTACTICS

CommitmentCommitmentSelf disclosureSelf disclosureQuestionQuestionCommandCommandRefusalRefusalInterruptingInterrupting

FREQUENCIES OF VERBAL NEGOTIATION BEHAVIORSFREQUENCIES OF VERBAL NEGOTIATION BEHAVIORS

0 20 40 60 80 100

Interrupt

NO

Promise

Recommend

Command

CommitmentBrazilian

U.S.

Japanese

““DIRTY TRICKS” DIRTY TRICKS” IN INTERNATIONAL IN INTERNATIONAL

NEGOTIATIONSNEGOTIATIONS

Dirty tricks are negotiation tactics Dirty tricks are negotiation tactics that pressure opponents to accept that pressure opponents to accept unfair or undesirable agreements or unfair or undesirable agreements or concessionsconcessions

PLOYS/DIRTY TRICKS PLOYS/DIRTY TRICKS - POSSIBLE RESPONSES- POSSIBLE RESPONSES

Deliberate deception - point out what is Deliberate deception - point out what is happening happening

Stalling - do not reveal when you plan Stalling - do not reveal when you plan to leave to leave

Escalating authority - clarify decision Escalating authority - clarify decision making authoritymaking authority

Good guy, bad buy routine - do not Good guy, bad buy routine - do not make any concessionsmake any concessions

You are wealthy and we are poor - You are wealthy and we are poor - ignore the ploy ignore the ploy

Old friends - keep a psychological Old friends - keep a psychological distancedistance

GENERAL RESPONSES TO DIRTY TRICKS

Avoid using the tricks yourself.Avoid using the tricks yourself.Point out the dirty tricks when they Point out the dirty tricks when they

are used.are used.Be ready to walk out of the negotiation Be ready to walk out of the negotiation

if the other side fails to play fairlyif the other side fails to play fairlyRealize that ethical systems differ by Realize that ethical systems differ by

culture and understand that ...culture and understand that ...

STEPS 5: CONCESSIONS AND STEPS 5: CONCESSIONS AND AGREEMENTAGREEMENT

Final agreement: The signed Final agreement: The signed contract, agreeable to all sides contract, agreeable to all sides

Concession making requires that Concession making requires that each side relax some of its each side relax some of its demandsdemands

STYLES OF CONCESSIONSTYLES OF CONCESSION

Sequential approach - consider each Sequential approach - consider each issue as a separate point. Each side issue as a separate point. Each side reciprocates concessionsreciprocates concessions

Holistic approach - more common in Holistic approach - more common in Asia. Concession making begins after Asia. Concession making begins after all issues are discussedall issues are discussed

BASIC NEGOTIATION BASIC NEGOTIATION STRATEGIESSTRATEGIES

CompetitiveCompetitive

–The negotiation as a win-lose The negotiation as a win-lose gamegame

Problem solvingProblem solving

–Search for possible win-win Search for possible win-win situationssituations

BASIC NEGOTIATION STRATEGIESBASIC NEGOTIATION STRATEGIES

Cultural norms and values may Cultural norms and values may predispose some negotiators to predispose some negotiators to one strategy one strategy

Most experts recommend a Most experts recommend a problem solving negotiation problem solving negotiation strategystrategy

The Successful International The Successful International Negotiator: PERSONAL Negotiator: PERSONAL

CHARACTERISTICSCHARACTERISTICS Tolerance of ambiguous situations Tolerance of ambiguous situations Flexibility and creativity Flexibility and creativity HumorHumor Stamina Stamina EmpathyEmpathy Curiosity Curiosity BilingualBilingual

Successful negotiators

Understand the negotiation stepsUnderstand the negotiation stepsBuild cross-cultural communication Build cross-cultural communication

skillsskillsUnderstand nonverbal communicationUnderstand nonverbal communicationAvoid attribution errorsAvoid attribution errors

Profile of a Successful American Negotiator

Knows when to compromiseKnows when to compromise Takes a firm stand at the beginning of the Takes a firm stand at the beginning of the

negotiationnegotiation Refuses to make concessions beforehandRefuses to make concessions beforehand Keeps his or her cards close to his or her chestKeeps his or her cards close to his or her chest Accepts compromises only when the negotiation is Accepts compromises only when the negotiation is

deadlockeddeadlocked Sets up the general principles and delegates the Sets up the general principles and delegates the

detail work to associatesdetail work to associates Keeps a maximum of options open before Keeps a maximum of options open before

negotiationnegotiation Operates in good faithOperates in good faith

Profile of a Successful American Negotiator

(contd.)

Respects the “opponents”Respects the “opponents” States his or her position as clearly as possibleStates his or her position as clearly as possible Knows when he or she wishes a negotiation to move Knows when he or she wishes a negotiation to move

onon Is fully briefed about the negotiated issuesIs fully briefed about the negotiated issues Has a good sense of timing and is consistentHas a good sense of timing and is consistent Makes the other party reveal his or her position Makes the other party reveal his or her position

while keeping his or her own position hidden as while keeping his or her own position hidden as long as possiblelong as possible

Lets the other negotiator come forward first and Lets the other negotiator come forward first and looks for the best deallooks for the best deal

Profile of a Successful Indian Negotiator

Looks for and says the truthLooks for and says the truth Is not afraid of speaking up and has no fearsIs not afraid of speaking up and has no fears Exercises self-controlExercises self-control Seeks solutions that will please all the parties involvedSeeks solutions that will please all the parties involved Respects the other partyRespects the other party Neither uses violence nor insultsNeither uses violence nor insults Is ready to change his or her mind and differ with Is ready to change his or her mind and differ with

himself or herself at the risk of being seen as himself or herself at the risk of being seen as inconsistent and unpredictableinconsistent and unpredictable

Profile of a Successful Indian Negotiator(contd.)

Puts things into perspective and switches easily from the Puts things into perspective and switches easily from the small picture to the big onesmall picture to the big one

Is humble and trusts the opponentIs humble and trusts the opponent Is able to withdraw, use silence, and learn from withinIs able to withdraw, use silence, and learn from within Relies on himself or herself, his or her own resources and Relies on himself or herself, his or her own resources and

strengthsstrengths Appeals to the other party’s spiritual identityAppeals to the other party’s spiritual identity Is tenacious, patient, and persistentIs tenacious, patient, and persistent Learns from the opponent and avoids the use of secretsLearns from the opponent and avoids the use of secrets Goes beyond logical reasoning and trusts his or her instinct Goes beyond logical reasoning and trusts his or her instinct

as well as faithas well as faith

Profile of a Successful Arab Negotiator

Protects all the parties’ honor, self-respect, and Protects all the parties’ honor, self-respect, and dignitydignity

Avoids direct confrontation between opponentsAvoids direct confrontation between opponents Is respected and trusted by allIs respected and trusted by all Does not put the parties involved in a situation Does not put the parties involved in a situation

where they have to show weakness or admit defeatwhere they have to show weakness or admit defeat Has the necessary prestige to be listened toHas the necessary prestige to be listened to Is creative enough to come up with honorable Is creative enough to come up with honorable

solutions for all partiessolutions for all parties Is impartial and can understand the positions of the Is impartial and can understand the positions of the

various parties without leaning toward one or the various parties without leaning toward one or the otherother

Profile of a Successful Arab Negotiator(contd.)

Is able to resist any kind of pressure that the opponents Is able to resist any kind of pressure that the opponents could try to exercise on himcould try to exercise on him

Uses references to people who are highly respected by the Uses references to people who are highly respected by the opponents to persuade them to change their minds on some opponents to persuade them to change their minds on some issuesissues

Can keep secrets and in so doing gains the confidence of the Can keep secrets and in so doing gains the confidence of the negotiating partiesnegotiating parties

Controls his temper and emotionsControls his temper and emotions Can use conference as mediating devicesCan use conference as mediating devices Knows that the opponent will have problems in carrying out Knows that the opponent will have problems in carrying out

the decisions made during the negotiationthe decisions made during the negotiation Is able to cope with the Arab disregard for timeIs able to cope with the Arab disregard for time

Profile of a Successful Swedish Negotiator

Very quiet and thoughtfulVery quiet and thoughtful Punctual (concerned with time)Punctual (concerned with time) Extremely politeExtremely polite Straightforward (they get straight down to business)Straightforward (they get straight down to business) Eager to be productive and efficientEager to be productive and efficient Heavy-goingHeavy-going Down-to-earth and overcautiousDown-to-earth and overcautious Rather flexibleRather flexible Able to and quite good at holding emotions and Able to and quite good at holding emotions and

feelingsfeelings

Profile of a Successful Swedish Negotiator

(contd.)

Slow at reacting to new (unexpected) proposalsSlow at reacting to new (unexpected) proposals Informal and familiarInformal and familiar ConceitedConceited PerfectionistPerfectionist Afraid of confrontationsAfraid of confrontations Very privateVery private

Profile of a Successful Italian Negotiator

Has a sense of drama (acting is a main part of the culture)Has a sense of drama (acting is a main part of the culture) Does not hide his or her emotions (which are partly sincere Does not hide his or her emotions (which are partly sincere

and partly feigned)and partly feigned) Reads facial expressions and gestures very wellReads facial expressions and gestures very well Has a feeling for historyHas a feeling for history Does not trust anybodyDoes not trust anybody Is concerned about the bella figura, or the “good Is concerned about the bella figura, or the “good

impression,” he or she can create among those who watch his impression,” he or she can create among those who watch his or her behavioror her behavior

Believes in the individual’s initiatives, not so much in Believes in the individual’s initiatives, not so much in teamworkteamwork

Is good at being obliging and simpatico at all times Is good at being obliging and simpatico at all times

Profile of a Successful Italian Negotiator(contd.)

Is always on the qui vive, the “lookout”Is always on the qui vive, the “lookout” Never embraces definite opinionsNever embraces definite opinions Is able to come up with new ways to immobilize and Is able to come up with new ways to immobilize and

eventually destroy his or her opponentseventually destroy his or her opponents Handles confrontation of power with subtlety and tactHandles confrontation of power with subtlety and tact Has a flair for intrigueHas a flair for intrigue Knows how to use flatteryKnows how to use flattery Can involve other negotiators in complex combinationsCan involve other negotiators in complex combinations

Decision-MakingProcess

Decision-MakingProcess

AnalyzeAlternatives

AnalyzeAlternatives

Implementand Evaluate

Implementand Evaluate

Define theProblem

Define theProblem

Specify objectives and Criteria

/Gather and analyze relevant data

Specify objectives and Criteria

/Gather and analyze relevant data

Select the best one

Select the best one

Developalternatives

Developalternatives

Cultural Variables Affecting Decision-Making

Objective (basing decisions on rationality) Objective (basing decisions on rationality) versus subjective (basing decisions on versus subjective (basing decisions on emotions) approachemotions) approach

Risk toleranceRisk tolerance Locus of control – internal (managers in Locus of control – internal (managers in

control of events), or external (managers control of events), or external (managers have little control over events)have little control over events)

Cultural Variables in the Decision-Making Process(Exhibit 5-9)

Problem Data Consideration of Decision ImplementationDefinition gathering alternative solutions

Objective/subjectiveperspective

Internal/externallocus of control

Risk tolerance Past/future orientation

Individualism/collectivismLocus of decision making

Utilitarianism/moral ideals

Culture