Cross-Cultural Negotiations

1. Cross-Cultural Negotiations Scott Bearder, Eric Bulthuis, Kathryn Davis, Eric Launer, Philip Lawson, Destinie Martinez, Raz Sanchez, William Turner, Chandra York

2. Fundamentals & Best Practices • Two major types of bargaining: • Distributive • Integrative • It is preferable to make no assumptions whatsoever about what is in the mind of the other person and to probe gently, but constantly to find out.

3. You Can Negotiate Anything • Herb Cohen (1980) • Three key elements in any negotiation: • Time: The negotiator must be willing to commit a good amount of time to the negotiation process if success is to be attained. • Ex: refrigerator • Information: the more information the negotiator possesses, the more power he or she gains in the negotiation process. • Ex: open ticket • Power: this is achieved in multiple ways. Having the upper hand time and information wise is the biggest way.

4. Ronald Burke (1979) • Asked manager about when they solved problems satisfactorily and unsatisfactorily. • Satisfactorily= genuinely integrative style was employed by 58.5% of the managers. • Needs, preferences, and desires of both the managers and employees received full consideration and the pie was viewed as expansive. • Highest probability of success even over compromise. • Unsatisfactory: 79.2% were classified as being forceful, tough, or hard style that totally disregarded the other party’s needs, preferences, and desires. • This is successful when the negotiator is tough and the person they are negotiating with is soft. BUT, this is not desirable for business.

5. Fisher, Ury, & Patton (1991) • Four parts or principles to deal with all types of bargainers: • Separate the people from the problem • Focus on interests of both parties, not their positions. • Invent options, or complex solutions, for mutual gains by means of brainstorming, taking time out to analyze whether additional options exist, and so on. • Use objective criteria • Fisher et al also recommend that negotiations have a best alternative to a negotiated settlement (BATNA)

6. Key Rules for Negotiating • Listen more than you talk • Do not become emotional • Don’t agree to a settlement immediately • Be reasonable, but make initial high offers, or initial high counteroffers if an offer has already been made. • If it is a difficult bargainer, openly bring up this issue and indicate that your position is the desirability of satisfying both parties. • Do your homework, be prepared, and take noted periodically during the negotiations. • Periodically summarize, identifying key points. • Focus on a settlement range and not a specific point within it, indicate you are willing to bargain. • Be sensitive to cross-cultural issues (saving face) • Focus on getting to know the other party in the beginning, let the stages flow. • Don’t finalize a deal unless you are satisfied both logically and emotionally. • Use simple language to avoid misunderstandings. • Don’t overestimate your ability to “read” body language.

7. Japanese Negotiations • The Japanese are non-confrontational. • They have a difficult time saying 'no', so you must be vigilant at observing their non-verbal communication. • It is best to phrase questions so that they can answer yes. • For example, do you disagree with this? • Group decision-making and consensus are important. • Written contracts are required. • The Japanese often remain silent for long periods of time. Be patient and try to work out if your Japanese colleagues have understood what was said. •  Japanese prefer broad agreements and mutual understanding so that when problems arise they can be handled flexibly. • Never lose your temper or raise your voice during negotiations. • Some Japanese close their eyes when they want to listen intently. • The Japanese seldom grant concession. They expect both parties to come to the table with their best offer. • The Japanese do not see contracts as final agreements so they can be renegotiated. • http://www.kwintessential.co.uk/resources/global-etiquette/japan-country-profiles.html

8. Weiss (1994) • Low familiarity with counterpart’s culture: • Employ an agent or advisor • Involve a mediator • Induce the counterpart to follow the script • Adapt to counterpart’s script • Moderate familiarity with counterpart’s culture: • Try to coordinate the adjustment of both parties and embrace counterpart’s script or ways of responding. • High familiarity with counterpart’s culture: • Improvise an approach or creative “symphony”

9. Case Study: Entering the Chinese Market • Sent top lawyer to settle agreement quickly • Lawyer was extroverted and eager to learn about culture • Trust developed quickly • Result: opening with a high, reasonable offer and gaining trust between parties is best

10. Negotiating • Westerners are encouraged to establish trust before making an offer • Terminating a negotiation early is not advised • U.S. companies have to be careful with bribery when expanding internationally

11. Paradox 6.1 • Is Chess more influential than the Chinese board game of Go for strategy and negotiation?

12. Paradox 6.1 • Chess- game of war (western game) • Object is to eliminate other opponent • And to “kill” the other opponent • Chris Nielson argues that chess metaphor is to blame for losses for some American firms

13. Paradox 6.1 • Go- the “competitive game” (eastern game) • Object is to occupy as much space on the board as possible to render the opponent helpless • Example of this paradox is GM and Toyota

14. Paradox 6.2 • Why do veteran international negotiators from one national culture frequently complain that their counterparts from a dissimilar national culture are simultaneously very sincere and very deceptive?

15. Chinese Negotiation Tactics • Instability in China (going back 5,000 years) • Sun Tzu’s book, “The Art of War” • Turbulent history of China

16. Problems with Western Negotiators • No respect • Want to get down to business too quickly • Try to win the deal no matter what • Spanish negotiators making fun of there US counterparts.

17. Paradox 6.3 • When negotiating, is it best to make the opening offer or respond to it?

18. Best Practices • Best practice of negotiating is to open with a high offer and make it high • If other party opens, respond with a high counteroffer as long as trust is involved • Trust is rarely developed in enough time • High and low context cultures vary greatly in negotiating techniques

19. Low Context: United States & Germany • Don’t allow time to develop trust • Opens with high, but reasonable offer they’re willing to go down on • Engage in less haggling

20. High Context: China & Thailand • Devote more time to gaining trust • Once they know other parties perspective they make an opening offer • Chinese companies that want to be global offer have introduced training to negotiate with Westerners

21. Paradox 6.4 • How can time be considered as three circles(past, present, and future) as well as only one circle? Past Present Future

22. Paradox 6.4 • Linear vs Nonlinear perspective of time and views on negotiation • Nonlinear orientations to time are dominant in Asia, Africa, and Latin America • Linear orientations are common in the United States

23. Paradox 6.4 • Different Cultures vary in their preferred orientation of time • Focus on past, present, or future achievements • Buddhism emphasizes one circle (past, present, and future)

24. Paradox 6.5 • Is the Yin-Yang dynamic exclusively Asian?

25. Paradox 6.5 • The underlying concept of the Yin-Yang Dynamic is change and transformation • When Yin reaches its extreme it becomes Yang, and when Yang reaches its extreme it becomes Yin. Therefore, Yin and Yang are dependent on each other.

26. Paradox 6.5 • When a person understands the concept of the Yin-Yang dynamic, they see the world in tones of gray. • Westerners may see the gray in situations, while Asians possess a superior talent in doing so. • Basically, the Yin-Yang dynamic is not exclusively Asian; however, it is much more prevalent there.

27. Paradox 6.6 • Is there only one type of face?

28. Definition of Face • Face- unwritten set of rules by which negotiators cooperate with one another to avoid damaging one another’s honor

29. Types of Faces • Saving face • Giving face • Respect person you are negotiating with • Never know when you will need them in the future • No set winner and loser

30. Types of Face in Asia • Self-face- personal or moral integrity • Other-face- face person shows in negotiation • Mutual-face- saving and giving face

31. United States don’t like to tie • Asia a lot more comfortable with a tie