International Business Negotiations: Culture And Dimensions Essay

Question:

Discuss about the International Business Negotiations for Culture and Dimensions.

Answer:

Introduction

Every stage of an individual encompasses negotiations in some or the other form. Negotiations are a common aspect of every human being and are used as a common parlance (Salacuse, 2013, p. 3). People negotiate on the prices to be paid for a particular service, to the terms at which the oil can be obtained by the United States from the Gulf nations. Every such discussion carries negotiations at some stage, before a final decision is reached. The high end negotiations include the communications for the ratification or the terms of ratification of a treaty of the United Nations. Management Negotiation is such a unique tool that helps in achieving the goals, in a peaceful and successful manner (Salacuse, 2013, p. 3).

Negotiation is not a process, which is solely reserved for the elite, i.e., the top salesperson, the skilled diplomats, the ardent advocates for the organized lobby. Negotiation is something, which is carried on daily basis by every person (Lewicki et al 2011). Even though negotiations are a common parlance, they have not been given the significance they demand. And this common parlance is not a cup of tea of everyone. Hence, people need to have the negotiating skills in order to be an effective negotiator and attain the desired goals for which this process is carried. Being common does not mean that every level of negotiation is the same. Depending upon the situation, the level and complexity of the negotiation process changes. For instance, economic negotiations are carried on for the rich and diverse people, where the objectives are related to business activities or the social production development at the topmost levels. The following part cover a discussion on this very changing aspect of negotiations.

Before a discussion can be made over the details of negotiation process, it becomes crucial to understand what negotiation actually is. Negotiation is the communication of common goals, on a topic, which mutually interests two or more individuals. The communications that take place in negotiations show the views of each of the parties, along with showing their vested interest in the particular matter. A process in which two or more individuals indulge with each other, through a communication line, so that the objectives can be mutually achieved between them is denoted as negotiations (Chaturvedi, 2011, p. 200). When the negotiations are carried on, the communication of each side represents their interests, which supports their perspective. And by using the tools of compromise and concession, the parties agree between themselves to reach a decision. The entire process of negotiation is very crucial and has to be handled with effective control. In case the negotiation process does not provide the resolution for which it was established, the negotiation process continues and cannot be concluded (Dwyer, 2012, p. 83). From negotiating the basic salary, to negotiating a nuclear weapons deal, each and every aspect of life hinges upon Management effective communications.

The negotiations are very crucial in nature as they help in resolving a matter in the most peaceful manner, without resolving to a violent resort. And as the matter is resolved mutually and in a manner free from violence, negotiations help in establishing long term relationships between the parties. And the presence of dispute is not necessary for opting for negotiations, a dilemma between two can also be decided upon by using the process of negotiations. For instance, two groups want to use the water from the river, but the river can only be accessed from a restricted point. So, by mutually negotiating upon the duration for which each group can use the restricted point, the dilemma of which party can access the river first, can be resolved. And it also helps in avoiding a dispute between the two parties (Fells, 2009, p. 4).

Stages of Negotiations

A negotiation process is not a simple process where people sit and discuss their issues. It is a process which involves the pre-negotiations phase, followed by the phases of conceptualization, settling details and follow up. In the first stage, before the negotiation process can officially start, a negotiator is supposed to prepare for the negotiations. So, initially the negotiator determines the reasons behind the negotiations and then the matter is specified for which the negotiations have to be undertaken. The maximum amount of information is collected at this stage and this information helps in gaining an insight over the possible claims which can be raised by the other party, along with clarifying the picture on their objectives, motivations and their needs. After the pre-negotiations stage is done, the next stage is that of conceptualization. In this stage, the very bases of the negotiations are formulated so as to frame the issues in a way whereby the minutest of the details are taken into proper consideration. By the help of fact finding, the objectives and the goals of every phase of negotiations are defined in this stage (Negotiations, 2017).

The third stage in the process of negotiation relates to the setting of details in a clear manner. Under this stage Management , the agreement is finalized and even the details of venture, in detail, are completed. The possible issues or problems which can crop up later on, on the basis of practicality are discussed in this stage and a viable and workable agreement is attained. This stage looks easy on paper but is the most significant stage and it is absolutely crucial that the details are settled in a meticulous and correct way. It has, at times, been noticed that due to the improper settling of details, the negotiations fail as the parties fail in undertaking the efforts to pay attention to the details, which could avoid such incidents from occurring. The final stage is that of follow up under which the possible problems are identified in a manner, so that they could be resolved and it can also include the re-negotiating of the contract (Negotiations, 2017).

Linkage Theory and Negotiations

Linkage theory is the way in which the outcome or the process of the negotiations is determined or influenced (Crump, 2007). Even one negotiation has the power of resulting in different outcomes. Further, a range of explanations can be put forward for the different outcomes, which is dependent upon the involved variables. The environment surrounding the negotiations has a crucial role to play in the entire process of negotiation. This is because the factors present in the environment, have the ability to support, suspend, halt or advance the negotiations. Through the use of linkage theory, the relationship which is present between the negotiations and the environment can be explained (Maggi, 2016).

The process of initiating negotiations is quite difficult. But more difficult than this is to maintain negotiations and ultimately bring them to a successful end. Due to these reasons, the linking of negotiations process, with a thing which has momentum, becomes of great significance and can be stated as a technique having utility. The negotiation linkage process remains as a useful conceptual tool in the matter of gaining understanding towards the relationship between the pertinent environment and the precise negotiations. The EU-Chile and US-Chile negotiations were not initiated on their own, after the EU-Mercosure or the NAFTA negotiations took place, which again were not started on their own. All these had a specific role in the entire negotiations process and could not be left out (Devereaux, Lawrence and Watkins, 2006). A specific environment can be designed through the state of affairs, the result of which is the formation of an action, which translates into events like the attainment or fixing of deadlines (Watkins, 1998). These very states of affairs also hold the capability of hindering the process of negotiations, with issue linkage (Tollison and Willett, 1979).

Roger Fisher and William Ury brought forward a concept in their 1981 bestseller which was known as BATNA and which stood for “Best Alternative To a Negotiated Agreement”. It is a significant rule under the negotiation process. This is due to the fact that a prudent decision cannot be made till the time the parties know all the possible alternatives which can be adopted (Spangler, 2012). These alternative course of actions are revealed through BATNA and it shows such position which is the most beneficial for the parties, where the negotiations fail or the same cannot be attained. The success of a negotiator is attributed to the knowledge regarding the driving force of these processes. Through BATNA, such agreements can be avoided which are not suitable for an individual, where the substitutes are possible. However, this process has to be taken with care and only after considering the likelihood of the bargaining power of the other party and the value of time and effort (Brett, 2007).


BATNA are not considered as a safety net, and instead they are treated as being a leverage which can be used for negotiations by the successful negotiators. It is crucial that the BATNAs are actionable and tangible; otherwise the parties would not invest in the BATNAs. The negotiators use a range of techniques to get the desired results. These can range from using a threatening or an aggressive technique which shows the adoption of a hard negotiation style, or the soft style can be adopted so that a conflict can be avoided (Barsky, 2017).

The presenters of this technique gave three distinctive suggestions for making the BATNAs successful. As per Fisher and Ury (2012), there is a need for inventing a list which can be undertaken by people when the agreement is not gained. The second suggestions put forward that for converting the promising ideas, it is crucial that they are transformed into tangible or partial alternatives. The last suggestion relates to selecting the alternative which sounds the best. In these aspects, i.e., for negotiation process and for BATNA, culture also has a major role, which has now been highlighted.

Types of Negotiations

There are four kinds of negotiations and it is imperative to determine the appropriate form of Management negotiation, as each of them demands a different strategy.

Descriptive Negotiation- this form of negotiation approach is called competitive or claiming value approach, which states that one person, can win only at the expense of the other person. However, this approach is also called win-lose approach as one party always wins and the other party loses. The major concern regarding this approach is that this approach usually maximizes a person’s own interests. This form of approach include compelling and withholding information and manipulation, as one person seek to obtain advantage through concealing information or by using manipulative and misleading actions. The negotiator must influence the belief of the other person as much possible and obtain possible information about the person.

Lose-lose Approach- this negotiation approach is adopted when one of the partners believe that his own interests are intimidated and ensures that the consequence of the negotiation is not suitable to the interest of the other party as well. Therefore, in this approach, in the end of the negotiation, both the parties end up as losers. Hence, it is the most undesirable negotiation approach.

Compromise Approach- This form of approach results in the improvement over the outcome of the lose-lose strategy. This form requires both the parties to compromise and convince each other and figure out a common solution.

Integrative Approach- this form of approach is also called creative value or collaborative approach and is considered superior to all other forms of negotiation approaches. This approach makes both the parties believe that they are achieving their respective objectives. The major concern of this approach is to maximize joint outcomes and the most appropriate strategies include sharing information, cooperation and mutual problem-solving attitude in the parties.

Uniformity of Negotiations

Lewicki et al (2011) made a statement, whereby he acknowledged the negotiation as a process which was present in the daily lives of every individual. However, this does not mean that there is uniformity in the manner in which the negotiations take place everywhere and it also fails to acknowledge the complex negotiation skills required in the international business context. Even though the techniques of negotiations are commonly used in international business, the level and intricacies of negotiations change on the basis of the country which is involved in a particular negotiation deal. A major factor, which contributes towards the international level negotiations, is the difference in the culture followed by the different nations (Chang, 2006).

Culture can be defined as the set of beliefs and values. Culture is what acts as the foundation to the people of a nation’s perception, their manner of behaving in particular cases, their assumptions and their expectations (Javidan and House, (2001). Depending upon the specific scenario, these cultural differences are effectively perceived by successful negotiators, which helps in attained the desired results of for which the negotiations were started. The difference in the nature, the traditions and faith of the other party is carefully analyzed by the representatives of the international businesses, with a specific reference to the nation in which they deal, so that the partnership or the undertaken transaction can be concluded in an efficient and hassle free manner (Peleckis, 2013).

Through analyzing the cultural differences and the dimensions of a particular culture, the critical incompatibilities present between the parties can be conveyed in an easier manner. Even the cultural dimension analysis of Hofstede is helpful in this regard as it enables the designing of the negotiation process at an international level, and also highlights the variance in the different dimensions, depending upon the culture of the parties undergoing negotiation (Hofstede, Hofstede and Minkov, 2010). Globally, apart from the cultural differences, the businesses are faced with issues like uncertainties, a long-term attitude towards communications, the power placement, along with the emotional differences amid the parties (Peleckis, 2013).


The differences in the cultural dimensions also have the power of manipulating and persuading the representatives of different cultures in a negotiation process. Signs, symbols and the manner in which people address each other act as the intricacies in a negotiation process. So, it remains significant that the international level business negotiations are initiated only when the necessary information has been obtained, and the negotiator has properly apprised him of the cultural details. And where this is not possible, it is suggested to hire such an individual who is an expert of the particular nations’ culture and who can act as the mediator in the particular negotiation process (Peleckis, 2013).

This can be further explained with the help of an example. There is a vast cultural difference in the one followed by US and the one present in Japan. The Japanese people are very formal, whereas the level of formality in US is very informal. In the same manner, in the former, the hierarchy is given emphasis, whereas in the latter, the equality is given major emphasis. Even the manners in which people are greeted in these two cultures are very different (Adachi, 2010). The people of US firmly shake the hands, whereas the Japanese are famous for their Japanese Bowing Etiquettes (Japan Today, 2014). Hence, when the negotiations are undertaken between these two nations, these points are to be kept in mind.

A case study was undertaken between the local subsidiaries located in Korea and Japan, and its holding, Dutch company and this study highlighted that the negotiations between the head office and the subsidiaries was very complex. In this particular instance, the cultural barriers were in addition to the substantial lack of cultural awareness. The influencers amid the parties, in addition to the atmosphere and the relationship which these parties had, highlighted the difficulties of the negotiation process. The atmosphere’s role in the negotiations of this case, confirms the points made under the linkage theory (Fjellstr?m, 2005).

The culture was considered as a crucial part in this case study, with a particular reference to the cultural negotiations, which took place between the subsidiary and its head office. Due to the presence of the cultural gaps in the holding and its subsidiary, a need for negotiations was highlighted. Through these negotiations, the people could understand each other and the desired or acceptable manner of communicating amongst them. The organization also played a role in influencing the negotiations. The organizational culture was considered as a substantial part for both the subsidiaries and the holding company and the atmosphere in the organization was considered as a key driving factor. However, a barrier, which was present, in this case was the clash of national and organizational culture, where the national culture always won (Fjellstr?m, 2005).

The success of relationships in the international business depends upon proper negotiations. This emphasizes the need of effective negotiator. Once an understanding is gained in this matter, the set goals can be achieved and for doing this, the negotiator considers all the factors which are relevant to the negotiations process. A study was conducted in Thailand, to understand the negotiation process adopted in this nation as is commonly perceived by the business negotiators of international business and that of Thailand, and a specific reference was made to the cross-cultural international business negations. In order to attain the desired information, a questionnaire was used, the focus of which was upon the retrospective negotiations and its associated experience. This questionnaire was circulated to all the executives who were working in Thailand at that time (Numprasertchai and Swierczek, 2006).

The importance of the cross cultural negotiators in both the performance of targets and in future oriented prospects was highlighted through the results of this questionnaire. Through this very study, it was highlighted that the tactics, as well as, the protocols played a minute part in the successful cases of negotiations. Moreover, the significance of information focus, along with the relationship orientation was highlighted as being the major contributors towards the success of Thai and international negotiators. This study also elucidated upon the significance of time orientation, which was found to be higher in international cases, when compared to the Thai equivalents (Numprasertchai and Swierczek, 2006).

Another example of the role of culture in this context can be established in the reference of Chinese people. In order to attain successful negotiations in China, it has to be done in a way that is considered as acceptable by the nation and its people. Therefore, a negotiator needs to be aware about the culture and the cultural dynamics of the nation, along with the behavior of Chinese, which is a key factor in any negotiation process. European negotiators are often told to have the qualities of friendship, ambiguity, patience and trust when dealing with Chinese people. This is done to avoid any unnecessary tension or misunderstanding from occurring. By proper understanding the differences, successful business relations can be established (Woo and Prud'homme, 1999).


A negotiation with the Chinese people is not a cup of tea of everyone. Even though the European counterparts are told to demonstrate harmony and politeness, these seldom prove helpful. This is because of the lack of politeness, which is adopted by the Chinese, along with the demonstration of fierce adversarial bargaining, which leave the European negotiators helpless in such cases (Blackman, 1997). Some scholars have also highlighted the shrewdness of the Chinese negotiators, along with their mastering of the art of using perfect timings and the psychology to their advantage (Gordon, 1986).

McCall and Warrington (1989) have highlighted the need of understanding the role which communication skills play in the cultural knowledge. The negotiations have to be done on the basis of the particular circumstances, depending upon the nature of the parties, the degree of formality and even the subject matter on which the negotiations take place. These need specific skill sets, which are crucial and should be present in the arsenal of a successful negotiator. This is highlighted from the practices adopted by Chinese, who keep their customs and philosophies at the top, even in their business dealings, hence requiring customized negotiations skills (Wong-Scollon, and Scollon, 1990).

Conclusion

The above discussion highlights that the statement which was made by Lewicki, is partially true. Therefore, even though negotiations are present in the daily lives of the people, the same differ with the level and the nature of the particular situation. Skills are crucial for any negotiation deal, especially based on complexity of a matter.

The linkage theory brings forward both the opportunities, as well as, the challenges, which are present in the entire process of negotiations, through apt identification of the environmental factor having an impact over the negotiations. To conclude, negotiations are a special skill set, which has to be modified based on the needs of a particular case. Hence, the negotiations skills are differentiated based on difference in scenarios.

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