International Business Negotiations

Conducting Negotiations and

Managing Conflict

Learning Objectives

• Appreciate that miscommunication can create conflict across cultures

• Diagnose and explain causes of cross-cultural conflict

• Understand the positive role of negotiations as well as ways to manage cross-cultural conflict and the

• Explain the main stages of international negotiations and the impact of cultural values on negotiations

Overview

• Cultural causes of conflict

• Managing conflict

• Understanding international negotiations

• Process of international negotiations

Conflict

• When disagreements and friction arise in the course of interaction because of opposing interests or cultural differences

Conflict is Common

• Many chances for distorted, confused, or missed messages

• Negotiation and diplomatic skills increasingly important

• American managers spend 20% of time on conflict issues• Higher for international environment

Common Tasks That Produce Conflict

• Foreign labor strikes

• Negotiate with overseas vendors, clients, & partners

• Lobby governments

• Mediate relations with outside pressure groups

• Managing diverse employees

Conflict and Business

• Not always bad

• Can be productive exchange

• Key is to understand role of culture

Causes of Conflict

• Language• Poor translation or limited skills

• Lack of understanding cultural norms• Inappropriate behavior

• Decision-making• Centralized or Decentralized

• Culture’s propensity for conflict• Avoid or accept

Types of Conflict Resolution

• Avoidance—ignore altogether

• Accommodation

• Compromise

• Collaboration

• Competition—face head-on

A Typology of Conflict Styles

Conflict Preferences

• Culture influences styles • Collectivists & high uncertainty cultures prefer

avoidance • Individualistic culture prefers competitive

• Cultural tendencies vary with WHO• Peers vs.. subordinates

• Individuals tend to stick with a style

Conflict Preferences (Cont’d)

• Equity norm• To each according to what they deserve

• Equality norm• Each group member gets about the same

share

Response to Conflict

• After negative action or conflict occurs, generally there is a direct or indirect request for repair

• Account giving is an explanation for the conflict

• Consideration for saving face

International Conflict Management: Linking Culture and Face to the

Account-giving Process

Account Giving

Mitigating—lower tensions

• Concessions—acknowledge & take responsibility

• Justification—acknowledge but unavoidable

• Ideological—acknowledge but necessary

• Refusal—resist acknowledgment

Aggravating—increase tensions

The Use of and Reactions to Accounts in International Conflict: The Impact of Culture and Face

International Negotiation

Process of communicating with another

person or group to make a joint decision or

reach an agreement

Key Elements of Negotiations

• Multiple parties

• Mixed motives • Disagreements & common interests

• Movement of parties• Shifting of positions over time

• Reaching agreement as a goal

Approaches to International Negotiation

• Macrostrategic• Focus on relative bargaining power of parties• Power can shift throughout process

• Comparative

• Focus on interactions during negotiations• Consideration of cultural factors

Setting Up Shop in Developing Countries: How Negotiating Strength May Shift over Time

Preparing for Negotiations

1.Never underestimate complexity

2.Gain in-depth cultural understanding

3.Seek outside help where needed

4.Ensure inside negotiator(s) have language skills

5.Consider team approach

6.Spend time necessary to prepare

Framework for International Negotiations

I. Basic model used by negotiators

II. Perspectives on individual negotiators

III. Dispositions affecting interactions

IV. Views about the interaction process

V. Outcomes

I. Basic Model Used by Negotiators

• How the negotiation process might be conceived

• A bargaining effort

• Joint problem solving or exploration

• A debate

II. Perspectives on Individual Negotiators

• How negotiators are chosen

• Knowledge/experience

• Personal characteristics/status

• Aspirations of individuals

• Individual vs. Community goals

• Group decision making

• Authoritarian vs. Consensual

III. Dispositions Affecting Interactions

• Time orientation• Monochronic vs. polychronic

• Risk-taking orientation• High vs. low

• How trust is determined• Intuition• Common experience• Reputation• Threat of sanctions• Basic model used by negotiators

IV. Views About the Interaction Process

• Important of protocol• Formal vs. informal

• Complexity of communication• High vs. low

• Tactics for persuasion• Logic/facts/experience

• Dogma/tradition

• Emotion/intuition

V. Outcomes

• Agreement preferences

• Contractual vs. implicit

Successful Negotiations

• Preparation does not ensure success

• Negotiation style still plays significant role

• Training and preparation still best method

Stages in the International Negotiation Process

International Negotiation Process

1) Nontask sounding—establish rapport

2) Task-related exchange—exchange of background, needs and preferences

3) Persuasion—negotiation, attempts to modify positions

4) Agreement—conclusion and accord is reached

Stage 1: Nontask Sounding

• Time needed to establish relationships

• Entertaining

• Establishing trust

• Status of negotiators

• Variations in importance across cultures

Stage 2: Task-Related Exchange of Information

• Most important in some cultures

• Explanations of initial bargaining positions

• Differences in bargaining room across cultures

Stage 3: Persuasion

• Attempts to modify other party’s position

• Most important step for U.S. negotiators

• Tactics used to persuade• Direct/honest – Threats• Bluffing – Misrepresentations

• Timing of concessions• Throughout or at end

Stage 4: Agreement

• Concessions and persuasion culminating in agreement

• Importance of follow-through

• Final outcome• Use of formal written • Informal handshake

• Differences in notion of contracts

Types of Behavior During Negotiation Process

• Substantive behavior—facilitates the negotiation process such as initiation, acceptance, rejection, accommodation, and retraction.

• Strategic behavior—influences the expectation and the actions of the other side such as commitment, exchange, demands, treat, ingratiation.

• Persuasive behavior—supports arguments and presents evidence in support of claims a negotiator makes such as the use of statistical information or expressive language.

Types of Behavior During Negotiation Process

• Task behavior—promotes focus on the issue such as providing and requesting information, or clarification.

• Affective behavior—shows expression of feelings such as humor, irritability, or social correctness.

• Procedural behavior—moves the discussion along such as references to procedure or time.

Behavior in the Stages of Negotiation: Differences Across Low- and High-Context Cultures