Cross-cultural

Negotiation
Steven Tolliver

Cross-cultural Negotiation, Steven Tolliver

Outline:

Components of negotiation
Individual negotiation styles
Negotiation tactics
Cultural differences in negotiation

Cross-cultural Negotiation, Steven Tolliver

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
Cross-cultural Negotiation, Steven Tolliver

Components of negotiation:

Strategies
Process
Behavior
Substance

> the goals

> who, where, how
> the tactics used
> the details

Cross-cultural Negotiation, Steven Tolliver

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

Cross-cultural Negotiation, Steven Tolliver

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

Cross-cultural Negotiation, Steven Tolliver

Preparing for negotiation

1. Establish goals:
a. Aspirational base
b. Real base
Determine the other sides goals:
a. What are their aspirations?
b. What is their real base?
Cross-cultural Negotiation, Steven Tolliver

Cross-cultural Negotiation, Steven Tolliver

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.
Cross-cultural Negotiation, Steven Tolliver

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?

Cross-cultural Negotiation, Steven Tolliver

Preparing for negotiation

4. Substance:
a. Prepare materials:
i.

Draft documents

ii. Product and price details

iii. Terms
iv. Additional information

Cross-cultural Negotiation, Steven Tolliver

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

Cross-cultural Negotiation, Steven Tolliver

Individual negotiation styles:

Accommodating:
Individuals who enjoy solving the others 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 dont do it unless they
must; they tend to defer and dodge confrontation; however, they may
be perceived as tactful and diplomatic.
Cross-cultural Negotiation, Steven Tolliver

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.

Cross-cultural Negotiation, Steven Tolliver

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.

Cross-cultural Negotiation, Steven Tolliver

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.

Cross-cultural Negotiation, Steven Tolliver

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
customers real base.
Buyer can counteract this by referring to a competitors offer.
Cross-cultural Negotiation, Steven Tolliver

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.
Cross-cultural Negotiation, Steven Tolliver

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.
Salesmans 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 sides limitation or problem the other sides 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.
Cross-cultural Negotiation, Steven Tolliver

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 buyers original position.
Cross-cultural Negotiation, Steven Tolliver

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.

Cross-cultural Negotiation, Steven Tolliver

10. Attacking Techniques

The use of criticism (of the other sides 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

Cross-cultural Negotiation, Steven Tolliver

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

Cross-cultural Negotiation, Steven Tolliver

Language
Problems of comprehension / use of false
friends words, especial in high-context cultures

Misuse of language or using commands

Cross-cultural Negotiation, Steven Tolliver

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

Cross-cultural Negotiation, Steven Tolliver

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.
Cross-cultural Negotiation, Steven Tolliver

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

Cross-cultural Negotiation, Steven Tolliver

Nonverbal behaviors or body language

Facial expressions
Eye contact
Personal space
Physical contact
Silence
Sounds
Gestures
Cross-cultural Negotiation, Steven Tolliver

John L. Graham, Professor, Marketing and International Business, University of California, Irvine
The Paul Merage School of Business

Cross-cultural Negotiation, Steven Tolliver

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
Cross-cultural Negotiation, Steven Tolliver

Negotiating: The top ten ways that culture

can affect your negotiation,
- Jeswald W. Salacuse

Cross-cultural Negotiation, Steven Tolliver

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.
Cross-cultural Negotiation, Steven Tolliver

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.

Cross-cultural Negotiation, Steven Tolliver

3. Formality vs. informality

Perceived lack of proper repect
Appearance of coldness
Too close, too soon

Cross-cultural Negotiation, Steven Tolliver

4. Direct or indirect communication

Difficulty in saying no
Considered rude to argue
Or
Arguments are considered to be sign of
engagement
Cross-cultural Negotiation, Steven Tolliver

5. Time
Punctuality
Pacing and preliminaries
(understanding the other side and building
relationship or specifying contract terms and
details)
Time is money
Cross-cultural Negotiation, Steven Tolliver

6. Emotion
Appropriate display of emotion varies by culture
Spain & South America > England, Germany

Cross-cultural Negotiation, Steven Tolliver

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
Cross-cultural Negotiation, Steven Tolliver

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.
Cross-cultural Negotiation, Steven Tolliver

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
Cross-cultural Negotiation, Steven Tolliver

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
Cross-cultural Negotiation, Steven Tolliver

Creative negotiation:
Seek out creative outcomes
Understand cultures, especially your own.
Dont 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

Cross-cultural Negotiation, Steven Tolliver

Steven Tolliver
steventolliver@manfatta.com

Cross-cultural Negotiation, Steven Tolliver