International Business Negotiation

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- Cultural aspects -


1. Introduction in the negotiation process

2. Factors that influence the international negotiations

3. Cultural aspects of International Business Negotiations
3.1. Hofstede’s cultural dimensions
3.2. The influence of culture on negotiations

4. Negotiation patterns in cross- cultural negotiations

5. Analysis of cultural differences in international negotiations – A study case upon the American and Chinese culture 5.1. Negotiating with China
5.2. The study case

6. Conclusions

1. Introduction in the negotiation process

Negotiation is a basic human activity. It is a process we undertake in everyday activities to manage our relationships, such as between husband and wife, children and parents, employers and employees, buyers and sellers and business associates. In business relationships, parties negotiate because they think they can influence the process in such a way that they can get a better deal than simply accepting or rejecting what the other party is offering.

The negotiation process involves a set of guidelines and decisions through which a company aims to accomplish its objectives and to promote its interests. In order for a negotiation to end up well the negotiator should be very careful in choosing the appropriate strategies and tactics. The negotiator style expresses his personality, socially (cultural, education) and individually (temper and intellect) determined. We need to make a clear distinction between strategies and tactics. The strategy represents the overall guideline and it should indicate the direction in which the negotiation should go. In other words it represents the general plan in which are presented the general objectives that lead to the final goal of the negotiation. Tactics, on the other hand, always follow after strategy flashing it out with a concrete line of action. If strategy is the thought then tactics are its formulation therefore tactics should not be directly oriented towards the objectives, but towards the strategy. The negotiation style highlights the negotiator’s personality which is socially (culture, education) and individually (intellectual capacity, temper) determined.

2. Factors that influence the international negotiations

Although there has been an interest in international negotiation for centuries, the frequency of international negotiation has increased rapidly in the last 20 years. The international negotiations are influenced by two contexts: environmental context and immediate context. The environmental context includes environmental forces that neither negotiator controls. The immediate context includes factors over which negotiators appear to have some control. Understanding the role of factors in both contexts is important to grasping the complexity of international negotiation process and outcomes.

There are six factors in the environmental context that make international negotiations more challenging than domestic negotiations. These factors are presented below.

Political and legal pluralism: Firms conducting business in other countries are working with different legal and political systems. There may be implications regarding the taxes, labour codes and standards that must be meet and different codes of contract law and standards of reinforcement (eg: case law versus common law).

International economics: An important factor that must be considered when negotiating internationally is the fluctuation of international currencies. The risk is typically greater for the party who must pay in the other’s party currency.

Foreign governments and bureaucracies: Countries differ in the extent to which the government regulates industries and organizations. The governments of many developing and (former) communist countries closely supervise imports and joint ventures and frequently an agency of the government has a monopoly in...
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