I n t e r n a t i o n a l M a r k e t i n g I n t e r n a t i o n a l M a r k e t i n g

Negotiating with International

Customers, Partners, and Regulators

Chapter 19

P h i l i p R. C a t e o r aJ o h n L . G r a h a m

McGraw-Hill/IrwinInternational Marketing Iftekhar Amin Chowdhury (IAC)

19-2

Negotiations onGlobal Perspective

Negotiations onGlobal Perspective

• Face-to-face negotiations

– An omnipresent activity in international commerce

• Executives

– Must also negotiate with representatives of foreign governments

• Negotiation of the original agreement

– A crucial aspect of all international commercial relationships

• Taking cultural differences into account

– Enhances business agreements– Leads to long-term, profitable relationships across borders

19-3

The Dangers of StereotypesThe Dangers of Stereotypes

• Negotiations

– Are conducted between people, not national stereotypes

• Cultural factors often make huge differences

• Negotiation behaviors are different

– Across regions, genders, and type of industry

• Age and experience also make important differences

• Consider the culture of customers and business partners, but treat them as individuals

19-4

The Pervasive Impact of Culture on Negotiation Behavior

The Pervasive Impact of Culture on Negotiation Behavior

• Cultural differences cause four kinds of problems in international business negotiations

– Language– Nonverbal behaviors– Values– Thinking and decision-making processes

► Order is important

19-5

Differences in Language and Nonverbal BehaviorsDifferences in Language and Nonverbal Behaviors

• Americans are near the bottom of the languages skills list

• Americans don’t like side conversations by foreigners in their native language

• The variation across cultures is greater when comparing linguistic aspects of language and nonverbal behaviors than when the verbal content of negotiations is considered

19-6

Linguistic Aspect of Language and Nonverbal Behavior (“How” Things are Said)

Linguistic Aspect of Language and Nonverbal Behavior (“How” Things are Said)

19-7

Differences in ValuesDifferences in Values

• Objectivity

– “Separating people from the problem”

• Competitiveness and equality

– Japanese appear to be the best negotiators with the highest profits

– Japanese appear to be more equitable with buyers

• Time

– The passage of time is viewed differently across cultures– These differences most often hurt Americans

19-8

Differences in Thinking and Decision-Making Processes

Differences in Thinking and Decision-Making Processes• Western approach – sequential

• Eastern approach – holistic

• Americans – business negotiation is a problem-solving activity

• Japanese – a business negotiation is a time to develop a business relationship with the goal of long-term mutual benefit

19-9

Implications for Managers and Negotiators

Implications for Managers and Negotiators

• Four steps for more efficient and effective international business negotiations

1. Selection of the appropriate negotiation team

2. Management of preliminaries, including training, preparations, and manipulation of negotiation settings

3. Management of the process of negotiations

4. Appropriate follow-up procedures and practices

19-10

Negotiation TeamsNegotiation Teams

• Willingness to use team assistance

• Listening skills

• Influence at headquarters (senior executive)

• Gender should not be used as a selection criterion for international negotiation teams

19-11

Negotiation PreliminariesNegotiation Preliminaries

• Checklist for planning international negotiations

1. Assessment of the situation and the people

2. Facts to confirm during the negotiation

3. Agenda

4. Best alternative to a negotiated agreement (BATNA)

5. Concession strategies

6. Team assignments

19-12

Negotiation PreliminariesNegotiation Preliminaries

• Aspects of the negotiation setting that should be pre-manipulated

1. Location

2. Physical arrangements

3. Number of parties

4. Number of participants

5. Audiences (news media, competitors, fellow vendors, etc.)

6. Communications channels

7. Time limits

19-13

At the Negotiation TableAt the Negotiation Table

• Business negotiations proceed through four stages

1. Nontask sounding

2. Task-related exchange of information

3. Persuasion

4. Concessions and agreement

19-14

Nontask SoundingNontask Sounding

• Learn the mood of the other side

• Learn about the client’s background and interest for cues about appropriate communication styles

• Judgments about the “kind” of person in the negotiation

19-15

Task-Related Information ExchangeTask-Related Information Exchange

• Let the foreign counterparts bring up business

• Expect a large number of questions but little feedback

• Allow periods of silence

• Use multiple communication channels

• Understand the lack of, or the bluntness of negative feedback

• Meet aggressive first offers with questions, not anger

19-16

Summary of Japanese and American Negotiation Styles

Summary of Japanese and American Negotiation StylesExhibit 19.4

19-17

PersuasionPersuasion

• Task-related information exchange versus persuasion

• Avoid threats, warnings, and other aggressive negotiation tactics

• Avoid emotional outbursts

• Ask more questions

• Use third parties and information channels of communication

19-18

Concessions and AgreementConcessions and Agreement

• Write down concession-making strategies

• Understand differences in decision-making styles

• In many cultures, no concessions are made until the end of the negotiations

19-19

After NegotiationsAfter Negotiations

• In most countries other than America– Legal systems are not depended upon to settle disputes

• Japan – Contacts primarily contain comments on principles of the

relationship

• China – Contracts are more a description of what business partners view

their respective responsibilities to be

• Many foreign CEOs expect a formal contract signing ceremony

• Follow-up communications are very important