If your goal is to grow your international business, no situation presents
greater risks to strategy execution and bottom line than a cross-cultural negotiation. Two factors often amplify
this:
The negotiation partner is not well known, and
their strategies and objectives are unclear.
Interacting with the other culture is a first for one or both of the parties involved,
and they are not well-prepared.
The challenge to understand the other party also exists in domestic
negotiations, but understanding strategies and objectives across cultures makes it much more difficult. Without
prior cross-cultural experience or preparation, even skilled American negotiators will assume that both sides share
an implicit agreement on what is and isn’t a legitimate negotiation tactic, and that both sides believe in or
at least respect the value of a win-win approach. Furthermore, they will trust in their ability to correctly
interpret clues about where the other side stands in the decision making process. None of these may work well
in international negotiations.
Cultural Differences That Affect Negotiations
1. Negotiation Objectives
In the United States, negotiation objectives follow a logical, factual
approach. The underlying objective is near-to-mid-term business success as defined by the bottom line.
Foreign negotiations can look quite different in contrast. Long-term aspects will likely weigh more heavily.
Negotiators may have a less holistic view of the package being discussed, focusing on narrow details rather than the
overall value. It is important not to assume that the objectives of the foreign side will be identical with
those you would expect in a domestic negotiation. Spending the time and effort to learn about them prior to
engaging can give you a strong advantage.
2. The Importance of Relationships
In the U.S., business relationships don’t have to be extensive
and can usually be quickly established. In most cases, evidence that you are a valid business partner and an
indication that you are willing to negotiate in good faith will suffice. Successful negotiation abroad usually
takes a lot more upfront relationship building. In most cultures in Asia, Europe, and Latin America, strong
relationships will be a prerequisite for entering into any formal or informal negotiations.
3. Decision Makers
Americans negotiating in some Asian and Latin American countries often
find it hard to get access to the decision maker, feeling that they are talking to the wrong person or group of people.
The reality may be that a single decision maker, a person with the authority and willingness to make a direct decision,
may not exist at all. In many cultures, decisions are made by groups. Organizations in these countries
may have powerful leaders and clear hierarchies. However, the role of the leader is not so much to make
decisions themselves, but rather to orchestrate and manage the process of how group decisions are being made and
implemented. Influencing such a decision process requires different approaches and skills.
4. Negotiation Techniques
People around the world are very creative when it comes to negotiating,
bargaining, and haggling. Numerous negotiation techniques are used frequently that would be considered unusual
or exotic in America. It is important to know what to expect and how to best respond.
5. Reaching Closure
When approaching the final stages of an international negotiation,
you'll need to carefully look for clues that the other side is ready to close. They may look very different from
what you are familiar with, and you will pay a price if you miss them. Also, closing an agreement and signing a
contract may still not end the negotiation. In China and especially in South Korea, a contract is viewed a ‘snapshot
in time’. New demands are still likely to be brought up later, so you’ll want to reserve some maneuvering
room.
Conclusion
Proper preparation for your international negotiation will require studying
in-depth material about the target culture and/or engaging a coach who commands extensive knowledge of the
country and its business practices. A successful international negotiator will never engage without
careful preparation. It is a pivotal step towards achieving your objectives, and a very risky one to skip.
