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McGraw-Hill/IrwinInternational Management
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
International ManagementPhatak, Bhagat, and Kashlak
McGraw-Hill/IrwinInternational Management
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
Chapter 13
Negotiations and Decision-Making Across Borders and Cultures
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 ProcessEnvironmental Context of International NegotiationsManaging Negotiation and ConflictEthics in International NegotiationsWhat is Decision-Making?The Decision-Making ProcessInternal and External FactorsImplications 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
13-7
Situational Characteristics Influencing Cross-Border Negotiations
Context of the negotiation
Physical arrangements
Time limits
Status differences
13-8
Fundamental Elements of the Negotiation Process
1. Two or more parties involved in real or perceived conflict over important goals
2. Shared interest in reaching an agreeable solution3. Background preparations leading to the process of
negotiation4. A goal, but not a certainty, of reaching mutual
agreement
13-9
Ex. 13-1: Stages of Negotiation in International Management
PARTY A PARTY B
PREPARATION
PREPARATION
INFORMATION EXCHANGE
PERSUASION
CONCESSION AND
AGREEMENT
RELATIONSHIP BUILDING
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
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
Japanese N = 6 American N = 6 Brazilian N = 6
Promise
Threat
Recommendation
Warning
Reward
Punishment
Positive normative appeal
Negative normative appeal
Commitment
Self-disclosure
Question
Command
7
4
7
2
1
1
1
3
15
34
20
8
8
4
4
1
2
3
1
1
13
36
20
6
3
2
5
1
2
3
0
1
8
39
22
14
Individual Tactics as a Percentage of Total Tactics
13-11
Ex. 13-2 (contd.)
Japanese N = 6 American N = 6 Brazilian N = 6
Number of times word “No” used
Silent periods of 10 seconds or more
Conversation overlaps (interruptions)
Gazing (minutes per random 10 minute period)
Touching
5.7
5.5
12.6
1.3 min.
0
9.0
3.5
10.3
3.3 min.
0
83.4
0
28.6
5.2 min.
4.7
Occurrences in a 30-Minute Bargaining session
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 orientedEgalitarianAnalyticalSequential, monochronicSeeks the complete truthIndividualistConfrontative, argumentative
Chinese
Relationship orientedHierarchical
HolisticCircular, polychronic
Seeks the harmonious wayCollectivist
Haggling, bargaining
13-15
Ex. 13-4 (contd.)
Approach to the Negotiation Process
American
Quick meetingsInformalMake cold calls
Full authorityDirectProposals first
AggressiveImpatient
A “good deal”
Chinese
Long courting processFormal
Draw on intermediaries
Limited authorityIndirect
Explanations first
QuestioningPatient
A long-term relationship
nontask sounding
information exchange
means of persuasion
terms of agreement
13-16
Support for the Negotiation Process by Decision Support Systems
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
13-18
Ex. 13-5: Nature of Conflict Between Members of Low and High Context Culture
Key Questions Low-Context Conflict High-Context Conflict
Why Analytic, linear logic; instrumental oriented; dichotomy between conflict and conflict parties
Synthetic, spiral logic; expressive oriented; integration of conflict and conflict parties
When Individualistic oriented; low collective normative expectations; violations of individual expectations create conflict potentials
Group oriented; high collective normative expectations; violations of collective expectations create conflict potentials
What Revealment; direct, confrontational attitude; action and solution oriented
Concealment; indirect, nonconfrontational attitude; “face” and relationship oriented
How Explicit communication codes; line-logic 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
DEDUCTIVEDECISION-MAKING
INDUCTIVE DECISION-MAKING
DECISION
General facts and objective
observations
Specific information and
details
Specific information and
details
General facts and objective
observations
13-22
Key Terms and Concepts
NegotiationInternational negotiationBargainingRelationship buildingDifference in ideologyConflictDecision-makingProgrammed decisionsNon-programmed decisionsDeductive decision-making styleInductive decision-making style