McGraw-Hill/Irwin International Management International Management Phatak, Bhagat, and Kashlak 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter 13 Negotiations and Decision-Making Across Borders and Cultures McGraw-Hill/Irwin International Management 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
13-3 Learning Objectives Understand the process of negotiation and decision-making and their significance for multinational and global corporations. Understand the environmental context of international business negotiations and the concept of multinational negotiating strength. Identify the various patterns of negotiation and conflict resolution in different national and cultural contexts. Understand the influence of national and cultural variations in decision-making. Discuss the importance of computer-mediated communication in negotiation and decision-making.
13-4 Chapter Topics What is Negotiation? The Negotiation Process Environmental Context of International Negotiations Managing Negotiation and Conflict Ethics in International Negotiations What is Decision-Making? The Decision-Making Process Internal and External Factors Implications for Managers
13-5 Negotiation The process of verbal and non-verbal exchanges between two or more parties with the goal of reaching a mutually satisfactory agreement
13-6 Bargaining The process of arguing and haggling over prices and other details involved in transactions of goods and services, common in flea markets, bazaars, and fairs all over the world
Situational Characteristics Influencing Cross- Border Negotiations 13-7 Context of the negotiation Physical arrangements Time limits Status differences
Fundamental Elements of the Negotiation Process 13-8 1. Two or more parties involved in real or perceived conflict over important goals 2. Shared interest in reaching an agreeable solution 3. Background preparations leading to the process of negotiation 4. A goal, but not a certainty, of reaching mutual agreement (May succeed or fail)
13-9 Ex. 13-1: Stages of Negotiation in International Management CULTURAL, NATIONAL, AND ORGANIZATION INFLUENCES Cultural Variables Political and Legal Pluralism International Economic Situation Nature of Regulations and Control Processes Political Risk and Instabilities Differences in Ideology Organizational Stakeholders Administrative Heritage Nature of Organizational Control Processes Patterns of Past Successes and Failures PARTY A PARTY B PREPARATION RELATIONSHIP BUILDING INFORMATION EXCHANGE PERSUASION CONCESSION AND AGREEMENT PREPARATION CULTURAL, NATIONAL, AND ORGANIZATION INFLUENCES Cultural Variables Political and Legal Pluralism International Economic Situation Nature of Regulations and Control Processes Political Risk and Instabilities Differences in Ideology Organizational Stakeholders Administrative Heritage Nature of Organizational Control Processes Patterns of Past Successes and Failures
13-10 Ex. 13-2: Differences in Negotiator Strategies and Tactics in Three Countries Individual Tactics as a Percentage of Total Tactics Japanese N = 6 American N = 6 Brazilian N = 6 Promise 7 8 3 Threat 4 4 2 Recommendation 7 4 5 Warning 2 1 1 Reward 1 2 2 Punishment 1 3 3 Positive normative appeal 1 1 0 Negative normative appeal 3 1 1 Commitment 15 13 8 Self-disclosure 34 36 39 Question 20 20 22 Command 8 6 14
13-11 Ex. 13-2 (contd.) Occurrences in a 30-Minute Bargaining session Japanese N = 6 American N = 6 Brazilian N = 6 Number of times word No used 5.7 9.0 83.4 Silent periods of 10 seconds or more 5.5 3.5 0 Conversation overlaps (interruptions) 12.6 10.3 28.6 Gazing (minutes per random 10 minute period) Touching 1.3 min. 0 3.3 min. 0 5.2 min. 4.7
13-12 Ex. 13-3: Comparison of Cultural Approaches to Negotiation American Negotiator Indian Negotiator Arab Negotiator Accepts compromise when deadlock occurs Has firm initial and final stands Sets up principles but lets subordinates do detail work Has a maximum of options Respects other parties Is fully briefed Keeps position hidden as long as possible Relies on truth Trusts instincts Seeks compromises Is ready to alter position at any point Trusts opponent Respects other parties Learns from opponent Avoids use of secrets Protects face of other parties Avoids confrontation Uses a referent person to try to change others, e.g. Do it for your father Seeks creative alternatives to satisfy all parties Mediates through conferences Can keep secrets
13-13 Ex. 13-3 (contd.) Swedish Negotiator Italian Negotiator Gets straight to the point of the discussion Avoids confrontation Time conscious Overly cautious Informal Flexible Reacts slowly to new propositions Quiet and thoughtful Dramatic Emotional Able to read context well Suspicious Intrigues Uses flattery Concerned about creating a good impression Indefinite
13-14 Ex. 13-4: Differences Between American and Chinese Culture and Approach to the Negotiation Process Contrast of Basic Cultural Values American Task and information oriented Egalitarian Analytical Sequential, monochronic Seeks the complete truth Individualist Confrontative, argumentative Chinese Relationship oriented Hierarchical Holistic Circular, polychronic Seeks the harmonious way Collectivist Haggling, bargaining
Ex. 13-4 (contd.) 13-15 Approach to the Negotiation Process American Quick meetings Informal Make cold calls Full authority Direct Proposals first Aggressive Impatient A good deal nontask sounding information exchange means of persuasion terms of agreement Chinese Long courting process Formal Draw on intermediaries Limited authority Indirect Explanations first Questioning Patient A long-term relationship
Support for the Negotiation Process by Decision Support Systems 13-16 Reducing the amount of time that is necessary for feedback from headquarters in order to carry out effective negotiations Providing a large amount of data and information on alternative scenarios that may result from the negotiation process Increasing the likelihood that important data and information are available when needed
13-17 Conflict Conflict can be understood as a state of disagreement or opposition between two parties, where if party accomplishes their objectives, the other party is unable to achieve its desired outcomes
Ex. 13-5: Nature of Conflict Between Members of Low and High Context Culture 13-18 Key Questions Low-Context Conflict High-Context Conflict Why When What Analytic, linear logic; instrumental oriented; dichotomy between conflict and conflict parties Individualistic oriented; low collective normative expectations; violations of individual expectations create conflict potentials Revealment; direct, confrontational attitude; action and solution oriented Synthetic, spiral logic; expressive oriented; integration of conflict and conflict parties Group oriented; high collective normative expectations; violations of collective expectations create conflict potentials Concealment; indirect, nonconfrontational attitude; face and relationship oriented How Explicit communication codes; linelogic style: rational-factual rhetoric; open, direct strategies Implicit communication codes; point-logic style: intuitive-effective rhetoric; ambiguous, indirect strategies
13-19 Decision-Making The conscious process of moving toward objectives after considering various alternatives. It is concerned with making an appropriate choice among a multitude of possible scenarios.
13-20 Ex. 13-6: Steps in the Decision-Making Process 1. DEFINE THE PROBLEM 2. ANALYZE THE PROBLEM 3. IDENTIFY DECISION CRITERIA AND THEIR IMPORTANCE 4. DEVELOP AND EVALUATE ALTERNATIVE SOLUTIONS 5. CHOOSE THE BEST SOLUTION 6. IMPLEMENT THE SOLUTION 7. EVALUATE THE OUTCOMES
13-21 Ex. 13-7: Deductive Versus Inductive Style of Decision-Making DEDUCTIVE DECISION-MAKING General facts and objective observations INDUCTIVE DECISION-MAKING Specific information and details Specific information and details General facts and objective observations DECISION
13-22 Key Terms and Concepts Negotiation International negotiation Bargaining Relationship building Difference in ideology Conflict Decision-making Programmed decisions Non-programmed decisions Deductive decision-making style Inductive decision-making style