Cultural awareness is extremely essential when negotiating with foreigners. Factors such as eye contact, personal space and touch, meeting and greeting time and giving gifts are all crucial in making the deal (Silkenat, Aresty & Klosek, 2009). These are some of the important factors that a vendor should know about each culture before deciding to participate in negotiations as they could either make or break the deal.
In United States eye contact is required and appreciated (Tomalin & Nicks, 2007). To them, it shows confidence and honest. However, to the Asian cultures it may be considered rude (Silkenat, Aresty & Klosek, 2009). In the United States, business men interact with reasonable space between them, touching only happens when close friends are dealing with each other. While in Japan or China, people maintain a large distance sometimes up to four feet apart and touching is very rare unless the business people are related (Ghauri & Usunier, 2003). All countries are time conscious, but the Japanese, Chinese and South Koreans would take a late arrival as an insult, unlike the Americans (Gelfand & Brett, 2004). Asians appreciate gift giving as part of a business transaction, in the United States however, it would be viewed it negatively as a bribe.
Asian companies emphasize on discipline in business. A contract is also regarded as a serious agreement, and company officials take it upon themselves to fulfill their obligations as per the terms of the contract. The law of contracts is enshrined in their constitution and companies abide by it (Silkenat, Aresty & Klosek, 2009). Asians are one of the most reliable people to get into a contract with as they ensure they execute their duty, it is a matter of honor to them as in their culture (Gelfand & Brett, 2004).
A negotiating strategy is the most important aspect in international business negotiation (Gelfand & Brett, 2004). Cultural differences cannot be avoided or ignored, it is therefore, key in ensuring that one is well vast with the cultural expectation before going to the bargaining table (Ghauri & Usunier, 2003). Determining a key cultural factor, if any exists would ensure or enhance chances of success, an example of this would be the culture of gift giving in Asia as a token of appreciation and friendship (Silkenat, Aresty & Klosek, 2009). Building trust is crucial before any negotiation, parties to the negotiation must get to know each other and build a relationship (Gelfand & Brett, 2004). The company should begin negotiating by quoting a price less than they are willing to spend, and then bargain until an agreement is reached of less than their bottom line of ten million dollars.
There are generally three different stages/steps in negotiation, namely: pre negotiation, actual, and post negotiation stages (Gelfand & Brett, 2004). The pre-negotiation stage is considered the most important, it primarily involves planning and making relevant preparations. It is also at this stage where issues of cultural knowledge are addressed, it also sets the foundation for the negotiations (Silkenat, Aresty & Klosek, 2009). The actual negotiation involves face to face interactions, exchange on offers and acceptance. The use of tactic is key, and one must have sufficient persuasion skills in order to make a good bargain without damaging the relations built for the future.
Different styles may be used as is appropriate. For example, accommodating, avoiding, collaborating, competing and compromising (Silkenat, Aresty & Klosek, 2009). Before going into a negotiation, a party should have already determined the starting point and the lowest level which they can go and this is determined by the party’s aim of closing the deal. This often gives one an edge. It is also important that one be well prepared with all relevant information, so as to start with easier terms that can quickly be agreed upon (Gelfand & Brett, 2004). The post-negotiation phase is where the agreement is checked and verified; parties are aware of their obligations and are expected to execute them (Ghauri & Usunier, 2003). Follow up is made.
In the win-win model of negotiation both parties leave the negotiating table satisfied with what they have gotten out of the deal, no party feels used or undercut by the contract, meaning no better deal can be reached at that point (Silkenat, Aresty & Klosek, 2009). To ensure a win-win for both parties, the vendor must strive to only spend the planned ten million dollars and get the expected quantity at a fair price. Some of the strategies that could be used to ensure a win-win situation include asking smart questions, this can be achieved by having a clearly defined aim and being well prepared (Silkenat, Aresty & Klosek, 2009). Another is playing fair, make reasonable demands, and when a good gesture is shown, the other party should reciprocate. In addition, presentation of multiple offers so as to allow the other party to select easily and be content (Gelfand & Brett, 2004). Moreover, by use of assistance of a third party who is entirely neutral to provide non-bias moderation during the negotiation in order to get the best results for all, the third party used should be knowledgeable in the area of negotiation and be well informed of the subject matter (Ghauri & Usunier, 2003).
- Silkenat, J., Aresty, J., & Klosek, J. (2009). The ABA Guide to International Business Negotiations: A Comparison of Cross-cultural Issues and Successful Approaches. Washington: American Bar Association
- Gelfand, M., & Brett, J. (2004). The Handbook of Negotiation and Culture. Stanford: Stanford University Press
- Ghauri, P., & Usunier, J. (2003). International Business Negotiations. London: Emerald Group Publishing
- Tomalin, B., & Nicks, M. (2007). The World’s Business Cultures and how to Unlock Them. New York: Thorogood Publishing