In a number of cases the foreign market entry and strategy implementation involve negotiation with the government of the foreign country and / or foreign firm. International business plans “are always often implemented through, face-to-face negotiations with business partners and customers from foreign countries. The sales of goods and services, the management of distribution channels, the contracting for marketing research and advertising services, licensing and franchise agreements and strategic alliances all require managers from different cultures to sit and talk with one another to exchange ideas and express needs and preferences. Executives must also negotiate with representatives of foreign governments who might approve a variety of their marketing actions’ or in fact be the actual ultimate customer for goods’ and services. In many countries governmental officials may also be joint venture partners, and in some cases vendors.
International business negotiations are deliberate interactions of two or more social units (at least one of them a business entity), originating from different nations, that are attempting to define or redefine their interdependence in a business matter.
Successful negotiation demands threadbare analysis and evaluation of the commercial and their impressive presentation and proper understanding and appreciation of the cultural nuances of the negotiating party and skillfully navigating the negotiation process accordingly.
It is rightly said that “negotiation is both an art and a science”. The science of it requires analyzing the relative bargaining strengths of each party and the different strategic options available to each party and assessing how the other party might respond to various bargaining ploys. The art of negotiation incorporate interpersonal skills, the ability to convince and be convinced, the ability to employ a basketful of bargaining ploys, and the wisdom to know when and how to use them. In the context of international business, the art of negotiation also includes understanding the influence of national norms, value systems, and culture on the approach and likely negotiating tactics of the other party as well as sensitivity to such factors in shaping a firm’s approach to negotiations with a foreign government
Cultural Problems in International Business Negotiations
Important problems in international business negotiations caused by cultural differences include those pertaining to the following:
- Language and non-verbal behaviors
- Thinking and decision making processes
Some problems may arise when negotiators are not able to properly communicate in a common language. Even when the same language is used, problems may arise due to different meanings for the same word in different cultures or because of different connotations when used in different contexts. Cross-cultural differences in non-verbal communication are sometimes very perplexing. A particular gesture or symbol may have quite different connotations in different cultures. For example, the symbol Thums-Up signals approval in the United States, Britain and Russia, but regarded highly offensive in Iran and is considered a rude gesture in Australia.
There are also significant cross-cultural differences in values. For” example, peoples differ in their adherence to time, promises etc. Similarly, business ethics vary substantially. Culture can also have a significant impact on by whom and how decisions are made.
Research has identified at least three fundamental aspects of decision making that differ significantly by culture. Decision by consensus is characteristics of collectivist-oriented cultures such as Japanese. Secondly, how decisions are made also varies by culture. One of the key factors that influence decisions is the role of information in the decision making process. In the United States and Sweden, managers emphasize rationality and utilize quantitative information. By contrast, French, Italian, and Argentinean managers emphasize past experience and qualitative information over quantitative data in making decisions. These examples further illustrate that the type of information that managers pay attention to and utilize in decision making can vary. Thirdly, culture also seems to play a significant role in the extent to which managers are comfortable in making decisions in uncertain environments. For example, managers from the United States, Germany, and Scandinavia seem to have the highest tolerance, while managers from Italy, Iberia, and Japan seem to have much Lower tolerance for making decisions in circumstances of uncertainty. These differences in tolerance can have a variety of implications. For example, if managers from Germany and Iberia are trying to an agreement concerning a joint venture in the context of significant uncertainty, they may clash and differ in their willingness to make decisions.