Negotiation Strategies: Mastering Tactics & Cultural Nuances
Negotiation: Tactics and Time Management
Negotiation is a process with a beginning, middle, and end, occurring in phases over time.
STEP 1: PREPARE
To prepare, you must:
- Understand the negotiation.
- Identify areas of greatest utility.
- Analyze the negotiators.
- Evaluate possible scenarios.
- Use a checklist.
This requires:
- Systematically examining the subject.
- Knowing the negotiation history.
- Building likely scenarios, including pre-trade agreements and potential breakdowns.
- Analyzing the actors (yourself and others) regarding skills, behavior, and prior negotiation results.
- Assessing the best alternative to a negotiated agreement (BATNA) for both parties.
- Anticipating the consequences of likely agreements.
STEP 2: CREATE
This includes initiating contact with the other party and activities related to value creation. It involves relationships, interests, options, and legitimacy.
Relationship: The most important negotiations are with those you’ve dealt with before and will again. A strong working relationship empowers parties to resolve differences. Transactions should improve future collaboration.
Interests: Interests are the underlying reasons for positions, including needs, concerns, hopes, desires, and fears. Agreements that meet these interests are better.
Options: Options are the range of possibilities for agreement. The best agreements come from exploring many options to maximize win-win potential.
Legitimacy: Legitimacy is the perception of fairness. Agreements should rely on external parameters, criteria, or principles beyond either party’s will, such as laws, industry standards, or general principles like reciprocity.
International Negotiations
Newspapers frequently discuss various forms of negotiation. Business and law schools teach techniques to influence people, negotiate prices, terms, and persuade or intimidate. However, ethical practices and understanding are crucial for long-term international partnerships.
Negotiation is pervasive, seen in media, work, shopping, and family life, making us a civilization of negotiators (Wood et al., 1997).
Globalization has elevated international negotiations’ role in national destinies. Governments participate in multilateral forums (e.g., World Trade Organization, International Monetary Fund) and regional agreements (e.g., Mercosur) to address problems and establish trade policies.
International business involves more risks than domestic transactions due to differing currencies, laws, and regulations. The biggest risk is misunderstanding international negotiators due to cultural diversity, negotiation methods, and personal styles.
Executives become international negotiators due to market integration (e.g., European Union), Eastern Europe’s reorganization, and diverse business agreements like joint ventures and licensing agreements (Acuff, 1998).
Foreign entrepreneurs often evaluate companies based on executives’ professionalism and cultural refinement rather than size or reputation, motivating Brazilian businesses to adopt international negotiation techniques (Acuff, 1998).
Influence of Culture on Negotiations
Culture comprises behavior patterns, perceptions, and value systems resulting from societal adaptation, socialization, and shared identity.
Hall (1976) distinguishes high-context and low-context cultures. High-context cultures involve lengthy negotiations, prioritizing relationships over legal aspects. Low-context cultures favor shorter talks, emphasizing legal documentation and efficiency.
Sawyer and Guetzkow (1965) argued that nations have distinct negotiation styles. Druckman et al. (1976) studied Argentinian, American, and Indian negotiators, finding cultural differences in proposal exchanges.
Tung (1982) found culture crucial for negotiation success, but understanding cultural differences is necessary but insufficient. Graham and Sano (1986) noted similarities between Brazilian and American executives but differences with Taiwanese and Japanese negotiators.
Swidler (1986) suggested culture shapes behavior through habits and styles, influencing negotiation strategies.
Culture affects the negotiation process, not necessarily the outcome. Studies show behavioral changes due to culture, though other variables also matter.
Negotiation outcomes are influenced by negotiator characteristics, the situation, and the process, all impacted by culture (Jolibert, 1988).
Understanding cultural skills and behaviors helps international negotiators anticipate reactions, develop the trading environment, and respond confidently to tactics.
International Negotiation Insights
Adapted from Ricard Shell, Wharton School, HSM (March/April 2002)
Culture is vital in negotiations. Understanding and respecting others’ culture is crucial.
Globalization and media have altered customs and attitudes worldwide. Businesses often adopt Americanized behaviors due to U.S. influence.
Avoid stereotypes based on outdated concepts. Focus on behavioral tendencies rooted in cultural history.
Most cultures are relationship-based, while North America and Northern Europe are transaction-based. Negotiators must adapt to these differences.
Recognize culture’s role and understand others’ assumptions to reduce miscommunication.
English is a common business language, but words can have different meanings. Be cautious in communication.
William Ury (HSM, July/August 1999) notes that cultural assumptions affect negotiation opportunities and relationships. Americans view time as money, while others see it as relationship-building time.
Understanding one’s own culture is as important as understanding others’.
A Japanese company trained its team on Japanese culture before a U.S. joint venture to enhance understanding of how Americans would perceive them.
Behavioral and Cultural Aspects
Globalization demands personal and professional development, especially for those negotiating across cultures.
Cultural and behavioral aspects significantly impact negotiation outcomes.
Individuals within a culture have diverse representations and meanings, adding complexity to negotiations.
Companies have unique cultures influencing employee behavior. Corporate culture, shaped by founders, affects negotiation styles.
Negotiators bring cultural values and personal histories to the table, affecting interpretations of success or failure.
Developing Negotiation Competence
Companies need skilled negotiators who understand cultural nuances.
Professionals must adapt to diverse cultural contexts, recognizing that people carry core cultural elements and personal histories.
Negotiators cannot abandon their values but must understand and respect others’ cultures.
Cultural awareness allows for flexible interaction and successful negotiations.
Models of International Negotiation
Four basic models exist: North American, European, Japanese, and African.
North American: Target, time, honesty, ethics.
European (North): Technical, quality, punctuality.
European (South): Personal knowledge, trust, word.
Japanese: Hierarchy, consensus, group harmony.
African: Continuity, tradition, cooperation.
International Etiquette
Understanding etiquette and protocol is crucial for successful international business.
Cultural norms vary; ignorance can ruin negotiations. Consult embassies or chambers of commerce for detailed rules.
South Africa: Multiracial society with strict coexistence rules. Handshakes are common, but vary by ethnic group. Address people by title and surname. Avoid discussing violence or racism.
China: Harmony and consensus are valued. Avoid aggression and ignorance. Collectivism influences negotiations. Etiquette and protocol are essential. Avoid prolonged eye contact. Negotiations are lengthy.
United States: Ethnocentric and individualistic culture. Direct communication is preferred. Negotiations are fast-paced and focus on financial benefits.
Spain: Nationalistic pride is prominent. Handshakes and cheek kisses are common greetings. Address people by title and surname. Avoid discussing sensitive topics. Build trust and relationships.
France: Protocol and appearances are important. Handshakes are customary. Avoid racial, religious, and political topics. Punctuality is essential. Engage in intellectual debates.
Italy: Family plays a significant role. Formality is common. Negotiations vary by region. Dress elegantly. Shake hands with everyone present.
Japan: Respect for hierarchy is crucial. Avoid physical contact and maintain formality. Patience and calmness are valued. Learn basic Japanese phrases.
Macao: Follow Chinese etiquette. Indirect communication is preferred. Negotiations take time.
United Kingdom: Individual freedom and criticism are accepted. Handshakes are common. Avoid discussing politics, religion, and health issues. Punctuality is important. Engage in small talk and teamwork.