Cross-cultural

Negotiation
Outline:

• Components of negotiation
• Individual negotiation styles
• Negotiation tactics
• Cultural differences in negotiation
Negotiation:
= the use of dialogue to resolve disputes,
produce agreements or achieve goals.

• Make a sale of goods or services

• Open new market /create a partnership
• Secure supply
• Maintain / expand an existing business
Components of negotiation:

• Strategies > the goals

• Process > who, where, how
• Behavior > the tactics used
• Substance > the details
Prior to negotiation: making contact
How do parties (a buyer and a seller) discover each other?

Their companies have already been doing business

before current negotiators become involved.

Cold-calling

Advertising and web site

Mutual associations or intermediaries

Preparing for negotiation
Focus on interests not positions

Aspire to joint opportunity finding

Negotiation is primarily a process, not an

event Information is power

Framing is a strong determinant of a negotiation

outcome
Preparing for negotiation

1. Establish goals:
a. Aspirational base
b. Real base

Determine the other side’s goals:

a. What are their aspirations? b.
What is their real base?
Preparing for negotiation
2. Process:
a. Who will participate?
b. What will happen if the expected parties are
not there or new one are present?
c. Determine the setting
d. Means: in person, video-conference,

telephone, e-mail.
Preparing for negotiation
3. Tactics:
a. What stance will be taken?
b. How flexible is it?
c. What is the tone?
d. Specific ploys to be used?
Preparing for negotiation
4. Substance:
a. Prepare materials:
i. Draft documents
ii. Product and price details
iii. Terms
iv. Additional information
Individual negotiation styles:

Shell identified five styles/responses to negotiation. [11]

Individuals can often have strong dispositions towards
numerous styles; the style used during a negotiation
depends on the context and the interests of the other party,
among other factors. In addition, styles can change over
time:
•Accommodating
•Avoiding
•Collaborating
•Competing
•Compromising
Individual negotiation styles:
Accommodating:
Individuals who enjoy solving the other’s problems and preserving
personal relationships; sensitive to the emotional states, body
language, and verbal signals of the other parties. They can, however,
feel taken advantage of in situations when the other party places little
emphasis on the relationship.

Avoiding:
Individuals who do not like to negotiate and don’t do it unless they
must; they tend to defer and dodge confrontation; however, they may
be perceived as tactful and diplomatic.
Individual negotiation styles:
Collaborating:
Individuals who enjoy negotiations that involve solving tough problems
in creative ways. Collaborators are good at using negotiations to
understand the concerns and interests of the other parties. They can,
however, create problems by transforming simple situations into more
complex ones.
Individual negotiation styles:
Competing:
Individuals who enjoy negotiations because they present an
opportunity to win something. Competitive negotiators have strong
instincts for all aspects of negotiating and are often strategic. Because
their style can dominate the bargaining process, competitive
negotiators often neglect the importance of relationships.
Individual negotiation styles:

Compromising:
Individuals who are eager to close the deal by doing what is fair and
equal for all parties involved in the negotiation. Compromisers can be
useful when there is limited time to complete the deal; however,
compromisers often unnecessarily rush the negotiation process and
make concessions too quickly.
Negotiation Tips and Tricks
1. The Nibble Technique
Salesman proposes adding additional cost items after initial
deal has been reached.
Buyer can preempt this tactic by clarifying all aspects of the
product, service, delivery and other terms before discussing the
price.

2. The Flinch
Customer expresses surprise when price or terms are presented.
Salesman might then added extras to his offer. If the customer
does not flinch again, salesman can assume he has found the
customer’s real base.
Buyer can counteract this by referring to a competitor’s offer.
3. Deferring to Higher Authority
Either side can respond to requests by saying that they must
consult with their team or their boss.

Cannot be used too much or the other side might wish to stop
present contact and negotiate with the real decision maker.

4. Good Guy, Bad Guy

In a negotiating team, one person projects inflexibility and opposition

giving concessions while the other member of the team creates the
opposite impression and that they sympathize with the needs of the
other side. The goal is to have the other side give either concessions
or give up key information.
5. Set Aside
Buyer begins discussion with major demand that the seller must agree to
before further items are discussed. If successful, the salesman will
surrender key positions or drop prices to continue further negotiations,
which can then be pressed further.

Salesman’s response should be to suggest that the demand be set aside

in order to focus on the key features of their product or service.

6. Hot Potato Technique

Make one side’s limitation or problem the other side’s problem, too.
For example, “I have a budget of X amount”, “I need to get Y”

Response: present a solution that is comes closer to solving the

problem to test to see if the problem is real.
7. Splitting the Difference (Twice)
Establish a gap in positions and get the other party to suggest that
you split the difference and then do it again.

Buyer: Your price is 10,000, but my limit is 9,000. What can we do?

Seller: Well, we are 1,000 apart, so lets split the difference.

Buyer: So the price would be 9,500? I must check with my company.

Buyer consults and says he has tried but the company cannot accept it
adding its too bad because we are only 500 apart (Now 1,000 difference is
forgotten)

If seller needs to make the sale, he might offer to split the difference again,
making the final price only 250 above buyer’s original position.
8. The Trade Off Technique

When one side presents a problem or obstacle, for example “the order
will be ready one month later that expected” this presents the other side
with a chance to extract concessions. This could include extra goods, a
discount on future or past orders, etc. but it is important not to appear
willing to accept the problem as explained.

9. The Walk Away Technique

If one side decides that they must have something, they lose the a
great deal of power in a relationship. Try to preserve the ability to stop
the negotiation if the terms are not what is desired.

Announcing that negotiations are cancelled may cause the other side to
drop their position.
10. Attacking Techniques

The use of criticism (of the other side’s country, company or them
personally) may be a tactic to throw them off balance and lose
control emotionally.

The other side should try to not get upset and see it as a
tactic. Keep smiling and focus on the real issue
Cultural differences

Cultural differences cause four kinds of problems in

international business negotiations. These differences
are manifested in:
•Language
•Nonverbal behaviors
•Values
•Thinking and decision-making processes
Language
Problems of comprehension / use of “false
friends” words, especial in high-context cultures

Misuse of language or using commands

High-context vs. Low-context
Edward T. Hall, Beyond Culture, New York: Anchor
Books,1976.

High context: communication draws on shared

culture, fewer words need to suggest meaning.

Low-context: communication is more direct and

explicit
Translators:

Use to communicate with the other side

Use to gain time in making responses
Use to study the non-verbal communications of
the other side
Internal group conversations should be
allowed and followed.
Nonverbal behaviors
Anthropologist Ray L. Birdwhistell: less than 35% of the
message in conversations is conveyed by the spoken
word while the other 65% is communicated nonverbally.

Albert Mehrabian: where meaning in face-to-

face interactions comes from.
• 7% from the words used
•38% from speaking style: tone of voice, loudness, etc.
•55% from facial expressions
Nonverbal behaviors or body language
Facial expressions
Eye contact
Personal space
Physical contact
Silence
Sounds
Gestures
John L. Graham, Professor, Marketing and International Business, University of California, Irvine
The Paul Merage School of Business
The Hofstede culture matrix
Geert Hofstede, sociologist
Framework for Assessing Culture:
•Small vs. large power distance
•Individualism vs. Collectivism
•Masculinity vs. Femininity
(Achievement vs. Quality of Life)
•Weak vs. strong uncertainty avoidance
•Long vs. short term orientation
“Negotiating: The top ten ways that culture
can affect your negotiation”, - Jeswald W.
Salacuse
1.Negotiating goal: Contract or relationship?

74 percent of Spanish respondents claimed their

goal is a contract, vs. 33 percent of Indian
executives.

Relationship is goal: requires investment in getting

to know each other and building trust.

Contract is goal: efforts are focus on developing

the contract terms.
2. Win – Lose or Win – Win

Zero-sum: a winner and a loser vs.

Mutual gains bargaining

“100 percent of the Japanese respondents
claimed that they approached negotiations
as a win-win process, only 33% of the
Spanish executives took that view.”
3. Formality vs. informality

Perceived lack of proper repect

Appearance of coldness
Too close, too soon
4. Direct or indirect communication

Difficulty in saying “no”

Considered rude to argue

Or

Arguments are considered to be sign of

engagement
5. Time

Punctuality

Pacing and preliminaries

(understanding the other side and building
relationship or specifying contract terms and
details)

“Time is money”
6. Emotion

Appropriate display of emotion varies by culture

Spain & South America > England, Germany

7. Agreements: general or specific

U.S.: Specific agreements to cover all

anticipated cases and act as guide to behavior.

China: Agreement on general principals and use

the relationship to work out any difficulties.

Could also be reflective of power dynamic of

the companies, not just nationality
8. Top-down or bottom-up negotiation

Start with general principals and move to the

details?

OR start with specifics and general principals

emerge from details?

France: Basic principals guide later details

U.S.: Specific details form the basis of general
terms.
9. One leader vs. group consensus

One key decision maker:

Complete authority to negotiate

Group: representatives or specialists from various

internal departments.

One leader: may reach agreements faster

Group: may anticipate and solve problems before

they become emergencies
10. Dealing with risk

Share information, try new methods,

tolerate uncertainty.

Japan > United States

Avoid moving too fast
Focus on mechanisms to lessen risks
Provide information (on market, company,
proceedures, etc.)
Build relationship and trust
Move step-by-step not all-at-once
Creative negotiation:
Seek out creative outcomes
Understand cultures, especially your own.
Don’t just adjust to cultural differences, exploit them.
Gather intelligence and know the terrain.
Design the information flow and process of meetings.
Invest in personal relationships.
Seek information and understanding.
Make no concessions until the end.
William Hernandez Requejo and John L.
Graham,
Global Negotiation: The New Rules, New York: Palgrave Macmillan, 2008