negotiating golbally
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NEGOTIATING GLOBALLY
By Melissa Egan, Joanne Lieu, Jeremy Rome, and Alexandru Caratas
TIPPING THE SCALE IN OUR FAVOR
THE PERSUADERS
WHAT IS NEGOTIATION?
• Negotiation is a process in which at least one individual tries to persuade another individual to change her or her ideas or behavior
• Business Negotiations usually involve one party trying to influence another party to make a particular decision or sign a contract.
• When the parties involved belong to different cultures and do not share the same ways of thinking, feeling, and behaving
• All global negotiations are cross cultural, some domestic
WHEN DOES A NEGOTIATION BECOME CROSS- CULTURAL?
WHY IS CROSS-CULTURAL NEGOTIATION IMPORTANT?
• Single most important business skill
• Global managers spend more than 50% of their time in formal and
informal negotiations
• Poor communication and cross cultural misunderstandings can all
have harmful consequences
• Negotiation and persuasion styles vary highly across cultures
• Emotional sensitivity is highly valued
• Hides emotions• Demonstrates loyalty towards
employer• Group decision made by consensus• “Face-Saving” is crucial• Non Argumentive, Quiet when right• Written statements must be
accurate and valid• Focused on good of the group
Japanese
STYLES OF NEGOTIATION VARY ACROSS CULTURES
• Emotional sensitivity is not highly valued
• Very straight-forward• Little commitment towards
employer• Team provides input to decision
maker• “Face-Saving” is not important• Argumentative but impersonal • Give importance to documentation
as evidence• Profit motive or individual benefit is
aim
North America
n
STYLES OF NEGOTIATION VARY ACROSS CULTURES
• Emotional sensitivity is valued• Emotionally expressive and
passionate• Loyal to employer (often is family)• Decisions come from one individual• “Face-Saving” is crucial• Argumentative and passionate
when right or wrong• Impatient with documentation
(obstacle)• Good of group is good for individual
Latin America
n
STYLES OF NEGOTIATION VARY ACROSS CULTURES
WHEN SHOULD WE NEGOTIATE?
• Negotiation is not always the best way to doing business
• “Take it or Leave it” Strategy can sometimes be better (take less time, etc)
CONSIDER NEGOTIATION WHEN THESE CONDITIONS EXIST:
HOW TO NEGOTIATE SUCCESSSFULLY?
• Depends on 3 things: People, Situation, and Process
• Negotiators have most control over the “Process” – strategy and tactics
QUALITIES OF A GOOD
NEGOTIATOR Varies by culture
• Situational contingencies influence success as much as individual
characteristics, but they are rarely as critical to success as the strategy
and tactics used
• Location: Meet at your place or at a neutral location
• Physical Arrangements: sitting face-to-face encourages competition.
Sitting at a right angel facilities cooperation.
• Participants: Go it alone or bring your team? Depends on cultural
context.
• Time Limits: is one party limited to a time constraint?
• Status Differences: Do they value titles, formalities, age, etc
HOW TO NEGOTIATE SUCCESSSFULLY?
STAGES OF A NEGOTIATION
3 approaches to each stage:
1. Traditional Approach
– Competitive
2. Principled Approach
– Collaborative/Individual
3. Synergistic Approach
– Collaborative/Cultural
PLANNING & PREPARATION
Planning behavior of successful negotiators:
• Planning time: quality over quantity
• Exploring options: look for a wide array of actions and outcomes
• Establishing common ground: look for similarities rather than
differences
• Long Term vs. Short Term: place greater emphasis on long term
issues
• Setting limits: set a range of objectives for greater flexibility
• Issue vs. Sequence Planning: discuss each issue independently
INTERPERSONAL RELATIONSHIP BUILDING
• Similarities become basis for relationship building
• Separate people from the problem
• Example: Americans are very task-orientated
– Want to get straight to business with little time spent on getting to know
the other party
– Place great value on the written contract
– Many other countries place higher value on relationships vs. contracts
EXCHANGING TASK-RELATED INFORMATION
• Stating a position restricts the ways in which
your interests can be met
• Focus on interests to gain greatest range of
mutually acceptable solutions
• Communication barriers significantly affect
understanding and outcomes
• Implement role reversal to appreciate other
party’s point of view
PERSUADING
• Effective negotiators regard their counterparty’s issues as their
own
• Emphasize creating mutually beneficial options by:
– Understanding party’s interests, values, and needs
– Pinpoint areas of similarity and difference
– Generate new options based on party differences
• Opportunities for developing mutually beneficial solutions greater in
cross-cultural negotiations than single-cultures
MAKING CONCESSIONS & REACHING AGREEMENT
• Use objective criteria rather than “dirty tricks”
• Those who make concessions earlier in the negotiation are
disadvantaged
• Example: Americans negotiate sequentially
– Make small concession throughout the negotiation
– Asian countries prefer to discuss all issues prior to making any
concessions
– Russians make little to no concessions
Discussion Question
What similarities/differences can you identify
between the various negotiation processes
presented here, and typical negotiation practices in
your country?
• Includes verbal and nonverbal tactics
• Words communicate 7% of meaning
• Tone of voice communicates 38%
• Facial expression 55%
• “It’s hard to read the writing on the wall if you don’t know the
language, much less where to find the wall”
NEGOTIATING TACTICS
INITIAL OFFERS• Different Opening Strategies (Russia Sweden)
• What do extreme initial positions show us?
– Demonstrate that the counterpart will not be exploited
– Allow the negotiator to gain more than expected
– Prolong the negotiating process
– Modify the counterparts’ beliefs about the negotiators
preferences
– Create more room to make subsequent concessions
exhibit cooperation
– Communicate the negotiator’s willingness to play the game
according to the norms
VERBAL TACTICS
RANGE OF TACTICS
Tactic Description Example
Promise Conditional/ positiveI will lower the price if you
...
Threat Conditional/negativeI will walk out of this meeting if you ...
Recommendation Third party positiveIf you lower your price, more teenagers will ...
Warning Third party negativeIf you settle, the press will
...
Reward Unconditional/ positive I‘ll buy you a coffee
Tactic Description Example
Punishment Unconditional/negativeI refuse to listen to your screaming. I‘m leaving
Normative Appeal I appeal to a societal normEverybody else buys our
product for $5 per unit
Commitment Unconditional/positiveI will deliver 100 units by June
15
Self-DisclosureI will tell you something about
myself
We really need to sign a major contract by the end of
the year
QuestionI ask you something about
yourself
Can you tell me more about your brazilian operation?
Command I order you to do something Lower your price
RANGE OF TACTICS
VERBAL BEHAVIOR
Irritators Counterproposals
Behavioural Labeling
Defend/attack spiral
Active Listening Questions Feelings Commentary
Argument Dilution
How you reduce the use of dirty tricks
• Not using them yourself
• Recognising them when your counterparts use them, explicitly
pointing them out establish the rules of the game
• Knowing what the best alternative is to a negotiated solution
• Realizing that tactics that appear dirty to people from another
culture may be acceptable to your team
NONVERBAL TACTICS
Discussion Question
What verbal and nonverbal negotiating tactics are
most frequently used in Austria and why?
GENERAL
“Managing conflict is critical for sustaining organizational efficiency
and effectiveness”
• Conflict management strategies of Japanese, American and
German subjects
– USA: focus on interests polychronicity
– GER: focus on regulations explicit
– JPN: focus on status power hierarchy
• Persuasion was relatively universal, persuasive arguments differ
• Integrating interest– cognitive problem solving– Prioritize interests & trade-off
• Applying regulation– relying on mutual standards & regulations– Connecting proposal with universal standards
• Deferring status power– Force conciliation on basis of social status – Quick solving to avoid social disruption
CONFLICT MANAGEMENT STRATEGIES
VALUES CONGRUENT WITH STRATEGIES
Interest strategy: individualism, egalitarianism, polychronicity
Hypothesis 1: Values for individualism and polychronicity are positively correlated with each other and each negatively correlated to hierarchy
Regulations strategy: explicit contracting, egalitarianism
Hypothesis 2: Value for explicit contracting positively related, value for hierarchy negatively correlated to regulations strategy
Power strategy: hierarchy, collectivism, low explicit contracting
Hypothesis 3: Values for hierarchy are positively correlated, values for individualism and explicit contracting are negatively correlated to power strategy
• Hypothesis 4a: The interest strategy will be used most
by American negotiators, then German negotiators, then
Japanese negotiators
• Hypothesis 4b: The regulations strategy will be used
most by German negotiators, then American negotiators,
then Japanese negotiators
• Hypothesis 4c: The power strategy will
be used most by Japanese negotiators,
then German negotiators, then American
negotiators
CONSTELLATION OF STRATEGIES
• 104 business people: 38 Japanese, 36 Germans, 30 Americans
• CASE: engineering director hired 2 interns, violating the HR
director’s summer intern programme
• ISSUES:
a. Whether students will be part of the HR programme
b. Who would pay for their salary
c. Who would hire interns in the future
d. Intern qualifications
e. Timing of hiring
f. Use of an orientation programme
g. Continuation of a membership programme
METHOD
UNITS USED:
- persuasions based on regulations
- persuasions based on social power
- persuasions based on interests
- positive remarks
- negative remarks
- procedural remarks
- questions
- offers of information or proposals
- interruptions
- residual category
ANALYSIS AND RESULTS
21%
17%
9%
15%
5%
6%
7%
6%
6%
8%
• 70% of the variance in management behaviour could be
explained by the value dimensions
• Hypothesis 1, 3 and 4c generally supported
• Hypothesis 2, 4a and 4b partially supported
• 4 characteristics of an effective strategy:• The current conflict is resolved in a way that satisfies the
parties in conflict,
• Future-related conflicts are prevented,
• The time and money spent are minimal,
• The relationship between parties is preserved.
ANALYSIS AND RESULTS
Discussion Questions
What type of strategy (“Interest”, “Regulation, “Power”)
would you pursue and why?
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