International Marketing15th edition

Philip R. Cateora, Mary C. Gilly, and John L. GrahamMcGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Introduction

• Executives – Must also negotiate with representatives of

foreign governments• Negotiation of the original agreement – A crucial aspect of all international

commercial relationships • Taking cultural differences into account– Enhances business agreements– Leads to long-term, profitable relationships

across borders

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Overview

• The Dangers of stereotypes• The Pervasive Impact of Culture on

Negotiation Behavior– Differences in Language, Nonverbal

Behaviors, Values, Thinking, and Decision-Making Processes

• Implications for Managers and Negotiators– Negotiation teams, preliminaries, at the

negotiation table, and after negotiations

• Creative International Negotiations

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Global PerspectiveA Japanese Aisatsu

• Aisatsu is a meeting or formal greeting for high-level executives typical in Japan

• The example involved the president of a large Japanese industrial distributor and the marketing vice-president of an American machinery manufacturer

• The Japanese president had the advantage as he knew English: so when the interpreter spoke, the American’s attention and gaze was given to the interpreter. However the Japanese president could carefully watch the American’s facial expression!

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The Dangers of Stereotypes

• Negotiations are conducted between people, not national stereotypes

• Cultural factors often make huge differences• Negotiation behaviors are different across

regions, genders, and type of industry• Age and experience also make important

differences• Consider the culture of customers and

business partners, but treat them as individuals

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The Pervasive Impact of Culture

on Negotiation Behavior• Regional generalizations very often are not

correct– Japanese and Korean negotiation styles are

quite similar in some ways, but in other ways, they could not be more different

• Cultural differences cause four kinds of problems in international business negotiations– Language– Nonverbal behaviors– Values– Thinking and decision-making processes

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Differences in Language and Nonverbal Behaviors• Americans are near the bottom of the

languages skills list• Americans don’t like side conversations by

foreigners in their native language• The variation across cultures is greater when

comparing linguistic aspects of language and nonverbal behaviors than when the verbal content of negotiations is considered

• 15 cultural groups were videotaped and their cultural differences are explained in the next few slides

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Verbal Negotiation Tactics(The “What” of

Communications)

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Exhibit 19.1

19-8

Linguistic Aspect of Language and Nonverbal Behavior

(“How” Things are Said)

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Exhibit 19.2

19-9

• Japan (least aggressive, very polite)

• Korea (more aggressive, very interrupting)

• China (northern) (asking questions)

• Taiwan (fewer questions, more information)

• Russia (asking questions, silent periods)

• Israel (few self disclosures, most promises and recommendations, very interrupting)

• Germany (fewer questions, more self disclosures)

• United Kingdom (less interruptions)

Negotiation Styles of 15 Cultural Groups (1 of

2)

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Negotiation Styles of 15 Cultural Groups (2 of

2)• Spain (more interruptions, few self disclosures)

• France (more aggressive, very interrupting)

• Brazil (more aggressive, physical touching)

• Mexico (less interruptions)

• French-Speaking Canada (more aggressive, more interruptions)

• English-Speaking Canada (less aggressive, more interruptions)

• United States (less interruptions)

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Differences in Values

• Objectivity– “Separating people from the problem”

• Competitiveness and equality– Japanese appear to be the best negotiators

with the highest profits– Japanese appear to be more equitable with

buyers

• Time– The passage of time is viewed differently

across cultures– These differences most often hurt Americans

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Cultural Differences in Competitiveness and

Equality

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Exhibit 19.3

19-14

Differences in Thinking and Decision-Making

Processes• Western approach – sequential• Eastern approach – holistic• Americans – business negotiation is a

problem-solving activity• Japanese – a business negotiation is a

time to develop a business relationship with the goal of long-term mutual benefit

• American buyers should anticipate such a holistic approach and be prepared to discuss all issues simultaneously and in an apparently haphazard order

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Implications for Managers and Negotiators

• Four steps for more efficient and effective international business negotiations1. Selection of the appropriate negotiation

team2. Management of preliminaries, including

training, preparations, and manipulation of negotiation settings

3. Management of the process of negotiations

4. Appropriate follow-up procedures and practices

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Negotiation Teams

• Willingness to use team assistance• Listening skills• Influence at headquarters (senior

executive)• Gender should not be used as a selection

criterion for international negotiation teams

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Negotiation Preliminaries

(1 of 2)• Checklist for planning international negotiations1. Assessment of the situation and the

people2. Facts to confirm during the negotiation3. Agenda4. Best alternative to a negotiated

agreement (BATNA)5. Concession strategies6. Team assignments

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Negotiation Preliminaries

(2 of 2)• Aspects of the negotiation setting that should be pre-manipulated1.Location2.Physical arrangements3.Number of parties4.Number of participants5.Audiences (news media, competitors,

fellow vendors, etc.)6.Communications channels7.Time limits

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Summary of Japanese, American,

and Chinese Negotiation Styles

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Exhibit 19.4

19-20

At the Negotiation Table

• Business negotiations proceed through four stages1. Nontask sounding2. Task-related exchange of information3. Persuasion4. Concessions and agreement

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Nontask Sounding

• Learn the mood of the other side• Learn about the client’s background and

interest for cues about appropriate communication styles

• Judgments about the “kind” of person in the negotiation

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Task-Related Information Exchange

• Let the foreign counterparts bring up business

• Expect a large number of questions but little feedback

• Allow periods of silence• Use multiple communication channels• Understand the lack of, or the bluntness

of negative feedback• Meet aggressive first offers with questions,

not anger

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Persuasion

• Task-related information exchange versus persuasion

• Avoid threats, warnings, and other aggressive negotiation tactics

• Avoid emotional outbursts• Ask more questions• Use third parties and information

channels of communication

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Concessions and Agreement

• Write down concession-making strategies• Understand differences in decision-

making styles• In many cultures, no concessions are

made until the end of the negotiations

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After Negotiations• In most countries other than America legal

systems are not depended upon to settle disputes• Japan

– Contacts primarily contain comments on principles of the relationship

• China – Contracts are more a description of what business

partners view their respective responsibilities to be

• Many foreign CEOs expect a formal contract signing ceremony

• Follow-up communications are very important

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Creative International Negotiations

• Although the Japanese have their obstacles to creativity such as, hierarchy and collectivism, they have been able to build a successful society despite their lack of natural resources and relative isolation by developing negotiating styles that in many ways overcome these obstacles

• Only creative outcomes must be accepted• After negotiators have “gotten to yes,” a

scheduled review of the agreement may actually get your business relationship past “yes” to truly creative outcomes

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10 Ways to Generate More Ideas

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Exhibit 19.5

19-28

Conclusions

• Experience levels are going up worldwide• Culture still counts• Differences between countries and

cultures, no matter how difficult, can be worked out when people talk to each other in face-to-face setting

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Summary (1 of 3)

• It is important to take cultural differences into account when meeting clients, customers, and business partners across the international negotiation table

• Negotiators’ personalities and backgrounds influence their behavior– Making it important to get to know the

individuals who represent client and customer companies

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Summary (2 of 3)

• Four kinds of problems frequently arise during international business negotiations1. Level of language2. Nonverbal behaviors 3. Values4. Thinking and decision-making processes

• Much care must be taken in selecting negotiating teams

• Situational factors such as the location for meetings and the time allowed must be carefully considered and managed

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Summary (3 of 3)• Business negotiations involve four steps

1. Nontask sounding2. Task-related information exchange3. Persuasion4. Concessions and agreement.

• The time spent on each step can vary considerably from country to country

• Americans tend to be deal oriented– More care should be taken in follow-up

communications with foreign clients and partners who put more emphasis on long-term business relationships

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