International Mark eting

P h i l i p R. C a t e o r a John L. Graham

Negotiating with International Customers, Partners, and Regulators

Chapter 19
McGraw-Hill/Irwin International Marketing

Iftekhar Amin Chowdhury (IAC)

Negotiations on Global 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
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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
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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

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Differences in Language and Nonverbal Behaviors

Americans are near the bottom of the languages skills list Americans dont 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

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

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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 differences most often hurt Americans

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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

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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

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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

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Negotiation Preliminaries
Checklist for planning international negotiations
1. 1. 2. 3. 4. 5. 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

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Negotiation Preliminaries
Aspects of the negotiation setting that should be pre-manipulated
1. 2. 3. 4. 5. 6. 7. Location Physical arrangements Number of parties Number of participants Audiences (news media, competitors, fellow vendors, etc.) Communications channels Time limits

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At the Negotiation Table

Business negotiations proceed through four stages
1. 2. 3. 4. Nontask sounding Task-related exchange of information Persuasion Concessions and agreement

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Nontask Sounding
Learn the mood of the other side Learn about the clients background and interest for cues about appropriate communication styles Judgments about the kind of person in the negotiation

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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
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Summary of Japanese and American Negotiation Styles

Exhibit 19.4

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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
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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

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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
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