Cultural Differences In International Business Negotiation

INTRODUCTION

An international business deal is not only cross border but also cross culture that influences people on how they think, behave and communicate. The differences in cultures between the business executives also creates many barriers that interrupts or completely shatter the deal. Because of the great diversity of world’s people & cultures, it is impossible for anyone to fully understand all cultures that exists and with whom the trade takes place.

The “top 10” elements of negotiation constitutes this basic framework for identification of the cultural differences that arises during the negotiation process. They are as follows:

Goal for negotiation- Contract/relationship?

Negotiators from different cultures perceives the purpose of negotiation differently. Even though the written contract express the relationship, the essence of this deal is relationship itself. Thus determining how the counterparts see the purpose of our negotiation is important. Merely convincing the relationship negotiators of our ability to deliver at low cost may not be sufficient to crack the deal.

Business people approach to deal making with these behaviour- a negotiation is either a WIN-WIN or WIN-LOSE. The win–win negotiators perceives deals as collaborative & problem-solving process on the other hand the win-lose negotiators perceives it as a confrontational process.

Personal style of negotiators- Informal/formal?

Personal style is the way negotiators talk to other people using dresses, speech, interaction with other people & titles. Cultures strongly influence personal attitude of the negotiators. Example: Americans have a less formal style than Germans, they are more casual.

Communication style of negotiation- Direct/indirect?

Methods of communication are different among different cultures. Some emphasizes direct & simple methods whereas others depend on indirect & complex methods for communicating.

Culture that relies on directness, for eg., the Israeli or the American, we can expect to receive a clear & definite response to our negotiations and queries. Whereas, those that value indirect communications, for eg., the Japanese, reaction to negotiations may be received by some vague gestures, comments or other signs.

Sensitivity towards

Generally some particular groups tendencies are to act emotionally, which is prevalent while negotiation. Thus according to this stereotype, it is generally found that the Latin Americans showcase their feelings at the negotiating process, on the other hand the Japanese / Asians hide their emotions.

Organization of team- One leader/group consensus?

It is important in any deal to know how other side makes decisions, how are they organized and who has the authority to commit. Culture, however, plays an important role that affects how executives are organized while negotiating a deal. For example- it has been a common trend among Chinese people to arrive in a larger group during negotiation as compared to the Americans who usually arrive in a smaller group generally consisting of the top management.

Risk takers- High/low?

Some cultures are risk takers as compared to other cultures.

For example, Japanese are more risk averse since their emphasis is largely on requiring huge amounts of information & the extensive group decision’s process. In comparison to Japanese, Americans are more risk