Negotiations

Abstract The purpose of this essay is to produce an article that provides a company that is preparing to expand its business to new markets in other countries with information on the phases of negotiation. To provide some tips for achieving success and to explain how culture affects negotiations and the issues employees should consider. On the behalf of our shareholders, customers and management, I want to thank you all for your hard work and dedication to the success of our company. Without you, we could not have had the success and growth we have experienced over the past year. Because of that growth, we are able to broaden our horizon by expanding the company into new markets in other countries. Our ability to respect and listen to each other created an environment that gave birth to good decision-making and innovation. Working together to we overcame all obstacles that stood before us. To continue our success in the new market we will need to take those qualities with us and I am very confident we can do it. To carry the success this company has had in America to new markets in other countries; we must understand the cultures that we will encounter in this new market. As you all know negotiations can be difficult and adding cultural differences to the formula makes the negotiation process more difficult. If we conduct negotiations in the same way we do here in America we could offend our potential client and lose the business. Without understanding the culture, we will continue to fail at negotiation repeatedly, not understand why we failed. The rest of this article will define culture and negotiation. It will provide information on the phases of a negotiation and tips for achieving success in a negotiation. It will also explain how culture affects negotiations and the issues employees should consider. What is Culture' Culture is the unique character of a social group. It encompasses the values and norms shared by members of that group. The economic, social, political, and religious institutions direct and control current group members and socialize new members. All of these elements of culture can affect social interactions like negotiations. Cultural values direct group members’ attention to what is more and less important. Cultural norms define what appropriate and inappropriate behavior is. Cultural values and norms provide the philosophy underlying the society’s institutions. At the same time, cultural institutions preserve cultural values and norms, give them authority, and provide a context for social interaction. There are many different cultural values, norms, and institutions. Not all relate to negotiation. However, many do because they provide a basis for interpreting situations and a basis for interpreting the behaviors of others. Cultural values that our research indicates are relevant to norms and strategies for negotiation include individualism versus collectivism, egalitarianism versus hierarchy, and direct versus indirect communications. Other values, no doubt, are also relevant. Bret, J.M. p. 99 para. 4(2000) What is Negotiation' Negotiation is a form of social interaction. It is the process by which two or more parties try to resolve perceived incompatible goals. In order to understand the effect of culture on negotiation, it is useful to have a mental model of negotiation. What is it that people mean when they say they negotiate' What is involved in negotiating' What is a good outcome in negotiation' What does it take to get a good outcome' What goes wrong in a negotiation that has a poor outcome' However, if culture has an effect on negotiation, the mental models of negotiators from one culture may not map on to the mental models of negotiators from another culture, making the specification of a single mental model problematic. Bret, J.M. p. 97 para. 4 (2000) Phases of Negotiation The forgoing aspects of communication style are employed in specific phases of negotiation. Exchanges proceed according to four phases of negotiation in all cultures; the emphasis and the time spent on any phase are what differ: Beamer, L. & Varner, I. (2008) 1. Development of a relationship 2. Information exchange 3. Persuasion 4. Concession and agreement Development of Relationships Phase In the development of relationship phase, where the relationship between negotiating teams is being established, trust is the critical factor. In cultures where relationships have high priority, time may be spent on non-business activities so the negotiators can get to know each other. Beamer, L. & Varner, I. (2008) Information Exchange Phase In the information exchange phase, frank disclosures are very affective and generate trust. One way to obtain information is to ask questions rather than wait for disclosures. Beamer, L. & Varner, I. (2008) Persuasion Phase In the persuasion phase, all information need to come to an agreement has been established. In other words, where the conflicts lie as well as the concord, has been revealed. Beamer, L. & Varner, I. (2008) Concession and Agreement Phase In the concession and agreement phase, the negotiators’ communication task turns to concessions and agreements. When making a concession, skilled negotiators link that to a counter concession, using “if” language. Once an agreement is made without conditions, the issue is settled. Beamer, L. & Varner, I. (2008) Achieving Success in Negotiation All good plans are premised on good strategy and adapting our tactics to meet new challenges. Strategy is not based on guesswork but on intelligence, and even more importantly, preparation. It is one thing to prepare for a negotiation within our own country, but it is entirely different when we consider a business partnership that operates within an altogether different culture. If we don't prepare wisely beforehand, then we are likely to be in for a bumpy ride. The Negotiation Experts (2010) The following are some tips on achieving success when negotiating with other cultures: Make sure you understand what you're doing We must always make certain we understand our goals or objectives clearly, before we board the plane. Similarly, if our negotiations are through a third party acting on our behalf, we want to ensure that they fully understand our objectives. Next, we must know our authority limits prior to the negotiations - what we can do and not do. It is vital that if any agreement is reached, it is not to be considered binding until the appropriate decision makers, have given the agreement their stamp of approval. It may also be helpful if our negotiator has sufficient authority to suggest to their counterpart, that the preliminary agreement has a good prospect of being accepted by the principal decision makers. This should all be determined internally prior to the start of any international negotiation. The Negotiation Experts (2010) Team Organization We will want to arrange and organize our ability to communicate, pass documents and set up an appropriate hierarchical structure. Identify all the logistic needs beforehand. Carefully consider the structure of the team, so that only the relevant players are involved. It is better if we have a single spokesperson who can integrate all the components into a single vision. Multiple speakers can cause our counterparts to become confused. For example, negotiators that have incorporated only technical experts have often become bogged down in the technical details. This might lead to needless squabbling over minor issues that cloud the bigger picture. Team members should understand their responsibilities fully, and any tasks assigned to them. whether it be logistics for the team, communication, research, travel, etc. We may also need to arrange for the use of a qualified and competent interpreter or translator. Interpreters need to be considered as an equal and functioning member of the team. They have to be briefed on the nature of the negotiations, and how they are to provide their translation. Such as whether it will be a summary or verbatim translation. They may be asked to provide assistance in understanding the cultural nuances that might be encountered. The Negotiation Experts (2010) Research the other side and their perspective on the pending partnership It is crucial to gain as much understanding about the business background and personalities of the other side. We will need to know and understand the country's political climate, economy, culture and laws. The local or regional business climate, where the primary business is to be conducted, is important, as is their international standing with their neighboring countries. The Negotiation Experts (2010) Consider all your options and estimate the other side's options If our deal collapses, then what do we do' It is unwise to assume that the agreement will automatically succeed. We have to consider our BATNA - (Best Alternative to a Negotiated Agreement). We must strive to consider all our alternatives should the partnership not materialize. Of the available options, we then have to compare our best alternative to a proposed agreement, to see how it measures up. Similarly, we need to estimate what alternatives may be available to our counterpart. By estimating the BATNA's of both parties, we will have a better understanding of the relative negotiating powers that come to the table. Our foreign counterpart may need us more than we need them, or vice versa. The Negotiation Experts (2010) What negotiators do in the first half of the negotiation has a significant impact on their ability to generate integrative solutions with high joint gains. These findings contribute to the knowledge of the processes leading to successful negotiation outcomes. Adair W.L. & Brett J.M. p. 97 para.6 (2005) A strategy, that may not lead to a successful negotiation when dealing with other cultures are power behaviors. Power behaviors in negotiations are those strategies of influence by which a negotiator tries to satisfy individual goals, sway the other party, and gain advantage over the other party. Research on power-based influence in negotiations refers to pressure tactics contentious behavior, and a distributive approach that include threats, persuasion, status, and positioning. Adair W.L., Okumura T. & Brett J.M. p. 372 para.7(2001) Conclusion Just because a company is successful in negotiation with other US companies; does not assure success in negotiation with companies of different cultures. The information in this article highlights that success is not assured. Prior preparation, following by the phased approach to the negotiations process and using some negotiation tips can increase the probability of a successful negotiation with other cultures. References Adair W.L. & Brett J.M. (2005), The Negotiation Dance: Time, Culture, and Behavioral Sequences in Negotiation Organization Science 16(1), pp. 33–51, Adair W.L., Okumura T. & Brett J.M. (2001), Negotiation Behavior When Cultures Collide: The United States and Japan, Journal of Applied Psychology 2001, Vol. 86, No. 3. 371-385 Beamer, L. & Varner, I. (2008). Intercultural Communication in the Global Workplace. New York, NY: McGraw-Hill/Irwin Publisher Brett J.M. (2000), Culture and Negotiation, INTERNATIONAL JOURNAL OF PSYCHOLOGY, 2000, 35 (2), 97± 104 International Reading Association (2010). Cultural Background, Retrieved October 23, 2010 from (http://www.reading.org/General/CurrentResearch/Standards/ProfessionalStandards2010/ProfessionalStandards2010_Glossary.aspx) The Negotiation Experts (2010), Global Negotiation Preparation, Retrieved November 08, 2010 from http://www.negotiations.com/articles/business-agreements/