Negotiation Styles Hofstede and E&W Journal Marketing[sav lecture b]

TUNGHAI UNIVERSITYDepartment of International Business - Taichung

Western Approaches

East-West Negotiation Styles

East vs. West Styles: Hofstede 1991

Hofstede’s E-W Research

• Power Distance (respect for authority)

• Collectivist/Individualist (concern for group)

• Masculinity/Femininity (assertiveness/competitiveness)

• Uncertainty Avoidance (comfort in unstructured situations)

• Time Orientation (short versus long term outlook)

Notable Cultural Differences & Negotiation Process

Expectations• Individualism & Power Distance

– Eastern: Group based & clear hierarchical decision making structure.

– Western: More individualistic, non-structured decision making.

• Long-Term Orientation– Eastern: Patient but persistent, willing to re-negotiate

contracts to achieve long-term objectives.– Western: Time is money and opportunity lost if not

implemented according to plan. Success measured in quarters (earnings reports), not decades (5 yr planning cycles).

Western Approaches to Negotiation

• It is more common for a negotiation to be considered a contract versus an ongoing relationship– “It’s only business”

• Assume that the deal will result in a contract that will be adhered to.– Contract guides the relationship.– Law enforces the contract (third party/entity)

Communication Styles

• High-Context Asian Cultures– Information transmitted via multiple methods

(words, symbols, rituals, practice)

– Unspoken, but clearly transmitted/understood.

• Low-Context Western Cultures– More direct control of explicit information

transmission and distribution (value).– Individuals control information (value) and

expect to use this for an advantage, to excerpt power, to be rewarded for their unique effort.

Western Focus of Negotiations

1. Making a sale/deal – product, process, service

2. Procedural Orientation: Sequential– New sale, re-order, change order– Sellers influence buyer based on current status of

sale, features & benefits of the sale.– ROI, savings, efficiency -- synergies, opportunity

3. Outcome:– Verbal agreement

contract

compliance.

Western Tools for Negotiating

• Large Sales:– RFI, RFQ, RFP (Request for Information /

Proposal)– Size: 5-500 pages, 10-60 day response, legal

binding– Presentation, Modification, Negotiation, Contract

phases

• Joint Ventures:– Memorandum of Understanding (MOU)– Memorandum of Intent (MOI)– Shareholder Agreement

Template: Shareholder Agreement (ITC)

37 Pages - Outline to be completed

Definitions of:

Purpose

Representatives

Liability

Investment/Profits

Contingencies:

Hardship

Death of a party

Relief from performance

Liability for early withdrawal

Resolution of disputes

Applicable law

Ancillary Agreements: IP / Know How /

Perceived advantage:

• He who has the pen, controls the negotiation outcome….

– Use who’s draft copy?– Establishes an anchor (ch. 2).

Questions?

Group Discussion

• How many have negotiated with Westerner’s? What was it for?

• What was the experience like?– What do you remember?– What did you like / dislike?– What did you learn?

Summary

• Western negotiation models are typically based more on transactions…– Technical process (stages)– Technical analysis (features, benefits)– Predictable

• An objective Economic Exchange…(ROI)