Negotiation and Culture

8/8/2019 Negotiation and Culture

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NEGOTIATION AND

CULTURE

PRESENTED BY:

KAMAL PANDEY

RAVI SEMWAL

ANKIT SHARMARAVI KANT NAWANI

MOHIT DHINGRA


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When negotiating in Russia, the slower you

go, the further youll get.

Dont hurry to reply, but hurry to listen.

-- Traditional Russian proverbs


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When Arabs give a yes answer to a request,

they are not necessarily certain that the actionwill or can be carried out. Etiquette demands

that your request have a positive response. A

positive response to a request is a declaration of

intention and an expression of goodwillnot

more than that. . . . If an action does not follow,

the other person cannot be held responsible for

failure.

-- Margaret Omar Nydell

University of Alexandria, Egypt


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INTRODUCTION

At the height of foreign investment in Russia, BP PLC spent$484 million to buy 10 percent of Sidanko, one of the velargest Russian oil companies. Eighteen months later, BP wasenmeshed in a bankruptcy proceeding and takeover ght that

resulted in the loss of BPs investment.What went wrong with this deal?

In the race to have a foothold in an emerging market, BPapparently overlooked negotiating fundamentals and culturalissues.

Culture is often the culprit when deals that cross national

borders, like the one between BP and Sidanko, lead to disputesand unanticipated costs.


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Our presentation lays the groundwork forunderstanding how culture affects negotiation.

It begins by describing:

Negotiation fundamentals.Elements of negotiation that are the same

across cultures.

Culture and explains how culture affectsnegotiations.


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Negotiation Fundamentals

When you ask people all over the world what comes to mindwhen you say negotiation, most describe some sort of a marketin which two people exchange a series of offers.

Negotiations are not limited to direct deal making over xed

resources. In all cultures, people negotiate to resolve disputesand to make decisions in teams.

When negotiators reach agreement, resources are alwaysdistributed, but the amount of resources available fordistribution is not necessarily xed.

Fundamental to negotiation are the circumstances in which

people negotiate and the types of agreements they reach.


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Types of Negotiations

All types of negotiations occur because peopleperceive that their goals are incompatible.

When people see themselves as interdependent (or

potentially so) but in conict, they naturallynegotiate to try to deal with the conict.

Negotiators from BP trying to buy Sidanko wantedto pay as little as possible. Negotiators from

Sidanko trying to raise capital by selling a stake to aforeign oil company wanted to gain as much aspossible.


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Distributive and Integrative

AgreementsNegotiation is about claiming value: how much of aset of resources you are going to get and how much theother party gets. Successful value-claiming negotiationleads to a distributive outcome that divides a xed set of

resources such that your interests or the needsunderlying your positions are met.

Negotiation can also be about creating value: howyou and the other party can increase the resourcesavailable to divide. Successful value-creating

negotiation leads to an agreement that is both integrativeand distributive, one that divides an enhanced set ofresources.


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Negotiation Fundamentals Affected by Culture:

Interests, Priorities, and Strategies

All negotiators have interests and priorities, and all

negotiators have strategies.

Interests are the needs or reasons underlying the

negotiators positions.

Priorities reect the relative importance of various

interests or positions.

A negotiation strategy is an integrated set of behaviors

chosen because they are thought to be the means ofaccomplishing the goal of negotiating.


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Negotiators interests, priorities, and use of

strategies are affected by culture. So it is

useful to have an understanding of culturebefore considering how and why culture

affects interests, priorities, and strategies.


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Culture and Negotiation

Culture is the unique character of a social group.

Cultures consist of psychological elements, the

values and norms shared by members of a group,

as well as social structural elements: the

economic, social, political, and religious

institutions that are the context for social

interaction.

Cultural values direct attention to what issues are

more and less important and inuence negotiators

interests and priorities.


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Cultural norms dene what behaviors are appropriate

and inappropriate in negotiation and inuencenegotiators strategies.

Cultural institutionspreserve and promote values

and norms.

Cultural values, norms, and ideologies serve as sharedstandards for interpreting situations .

When two parties negotiate, both bring culture to the

table with their interests and priorities and their

negotiation strategies.Exhibit 1.1 illustrates how culture affects negotiation.


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EXHIBIT 1.1. How Culture Affects Negotiation


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The top ten ways that culture

can affect your negotiation1. Negotiating goal: Contract or

relationship?

Negotiators from different cultures may tend to

view the purpose of a negotiation differently. For

deal makers from some cultures, the goal of a

business negotiation, first and foremost, is a

signed contract between the parties. Other culturestend to consider that the goal of a negotiation is

not a signed contract but rather the creation of a

relationship between the two sides.


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2.Negotiating attitude: Win-

Lose or Win-Win?Because of differences in culture, personality, or

both, business persons appear to approach deal

making with one of two basic attitudes: that a

negotiation is either a process in which both can

gain (win-win) or a struggle in which, of

necessity, one side wins and the other side loses

(win-lose).


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3.Personal style: Informal or

formal?

Personal style concerns the way a negotiator talks

to others, uses titles, dresses, speaks, and interactswith other persons. Culture strongly influences the

personal style of negotiators. It has been observed,

for example, that Germans have a more formal

style than Americans.


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4. Communication: Direct or

indirect?

Methods of communication vary among cultures.

Some emphasize direct and simple methods ofcommunication; others rely heavily on indirect

and complex methods.


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5. Sensitivity to time: High or

low?

Discussions of national negotiating styles

invariably treat a particular culture's attitudestoward time. It is said that Germans are always

punctual, Latins are habitually late, Japanese

negotiate slowly, and Americans are quick to

make a deal.


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6.Emotionalism: High or low?

Accounts of negotiating behavior in other cultures

almost always point to a particular group'stendency to act emotionally. According to the

stereotype, Latin Americans show their emotions

at the negotiating table, while the Japanese and

many other Asians hide their feelings.


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7. Form of Agreement: General

or specific?

Cultural factors influence the form of the written

agreement that the parties make. Generally, Americans

prefer very detailed contracts that attempt to anticipate allpossible circumstances and eventualities, no matter how

unlikely.

Why? Because the deal is the contract itself, and onemust refer to the contract to handle new situations that mayarise.


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8. Building an agreement: Bottom up or

top down?Related to the form of the agreement is the question ofwhether negotiating a business deal is an inductive or a

deductive process.Does it start from an agreement on

general principles and proceed to specific items, or does it

begin with an agreement on specifics, such as price,delivery date, and product quality, the sum total of which

becomes the contract? Different cultures tend to emphasize

one approach over the other. Some observers believe that

the French prefer to begin with agreement on generalprinciples, while Americans tend to seek agreement first on

specifics.


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9. Team organization: One leader or group

consensus?

In any negotiation, it is important to know how the

other side is organized, who has the authority to

make commitments, and how decisions are made.Culture is one important factor that affects how

executives organize themselves to negotiate a deal.


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10. Risk taking: High or low?

In deal making, the negotiators' cultures can affect

the willingness of one side to take risks-- to

divulge information, try new approaches, and

tolerate uncertainties in a proposed course of

action. The Japanese, with their emphasis on

requiring large amount of information and their

intricate group decision-making process, tend to

be risk averse. Americans, by comparison, are risk

takers.


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THANK YOU!

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Negotiation and Culture