Negotiating with International Customers, Partners, and Regulators

1. Negotiating with International Customers, Partners, and Regulators

2. Global PerspectiveA Japanese Aisatsu • Face-to-face negotiations are an omnipresent activity in international commerce. • Executives must also negotiate with representatives of foreign governments. • A crucial aspect of all international commercial relationships is the negotiation of the original agreement. • If cultural differences are taken into account, business agreements can be made that lead to long-term, profitable relationships across borders.

3. The Dangers of Stereotypes Europeans Stereotype Themselves

4. The 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

5. The Pervasive Impact of Culture on Negotiation Behavior • Regional generalizations very often are not correct • Cultural differences cause four kinds of problems in international business negotiations: • Language • Nonverbal behaviors • Values • Thinking and decision-making processes

6. Differences 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

7. Differences in Language and Nonverbal Behaviors Japanese Negotiators Exchange Business Cards – Important Ritual

8. Differences in Language and Nonverbal Behaviors Verbal Negotiations Tactics – The What of Communic-ations

9. Differences in Language and Nonverbal Behaviors Linguistic Aspects of Language and Nonverbal Behaviors (How Things Are Said)

10. Differences in Language and Nonverbal Behaviors (continued) • Japan • Korea • China (northern) • Taiwan • Russia • Germany • United Kingdom • Spain • France • Brazil • Mexico • French-speaking Canada • English-speaking Canada • United States

11. Differences 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 difference most often hurt Americans

12. Cultural Differences in Competitiveness and Equality • Insert Exhibit 19.3

13. 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

14. Implications for Managers and Negotiators Four steps for more efficient and effective international business negotiations: • Selection of the appropriate negotiation team • Management of preliminaries, including training, preparations, and manipulation of negotiation settings • Management of the process of negotiations • Appropriate follow-up procedures and practices

15. Negotiation 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

16. Negotiation Teams Women Get the Job Done – Chile’s Foreign Minister Maria Soledad Alvear

17. Negotiation Preliminaries Through His Books and Seminars, Chester Karrass Has Taught More People Negotiating Skills Than Anyone Else on Earth

18. Negotiation Preliminaries Checklist for planning international negotiations: • Assessment of the situation and the people • Facts to confirm during the negotiation • Agenda • Best alternative to a negotiated agreement (BATNA) • Concession strategies • Team assignments

19. Negotiation Preliminaries Different Negotiations Settings Have Different Advantages

20. Negotiation Preliminaries (continued) Aspects of the negotiation setting that should be pre-manipulated: • Location • Physical arrangements • Number of parties • Number of participants • Audiences (news media, competitors, fellow vendors, etc.) • Communications channels • Time limits

21. At the Negotiation Table • Nontask sounding • Task-related exchange of information • Persuasion • Concessions and agreement

22. At the Negotiation Table Japanese vs. American Negotiating Styles

23. Nontask 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

24. Task-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

25. Persuasion You want him on your side – Banana Salesmen in Agra, India are world renowned

26. Persuasion • 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

27. Concessions 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

28. After 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

29. After Negotiations Tung Chee Hwa, Chief Executive of Hong Kong Administrative Region and Mickey Consummate Deal for Walt Disney World

30. Conclusions • Experience levels are going up worldwide • Culture still counts • Differences between countries and cultures, no matter how difficult, can be worked out when people talk to each other in face-to-face setting