Outcomes for Negotiations in any context are influenced by three classes of characteristics – Bargainers characteristics situational constructs and process related measures (Graham, 1985). In the negotiation process, both sides exercise their influence in an effort to achieve their own objectives through their interactions with the other party (Gelfand and Dyer, 2000). As the world economy becomes increasingly globalized, people from different cultures are becoming more and more getting involved in negotiation with one another. Therefore, a good understanding of the negotiation process and the impact of culture on this process are important for anyone who works in an internationally oriented business environment (Adler and Graham, 1989). Therefore the exercises that we participated in by means of the negotiations conducted as a part of this course were crucial in building this cultural awareness while conduction negotiations in various scenarios and settings. Research has shown that individual characteristics, including personality traits and social perceptions have a significant effect on negotiation process or outcomes. Although, it is difficult to point at one specific set of characteristics that have an impact on the negotiation outcome, there are various strategies which canÂ help us.
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We had numerous negotiations during the course based in different settings and contexts. Dozens of studies have examined the meaning and practice of negotiation across cultures (Gelfand and Dyer, 2000). Due to the substantial culture differences, negotiating across cultures differs dramatically from negotiating within the same culture. The key for us in all negotiations was to come with the best strategy and approach all negotiations with an open mind while observing how various cultures react in various scenarios. Luckily we had numerous international students in our class and so we had the opportunity to work with various cultures and learn.
The first negotiation that we were a part of was the Car Purchase negotiation wherein the objective was to simply negotiate without any other cultural objectives. Although, the cultural components came into play on their own and therefore simple negotiation became a complex affair.Â The negotiation was about one team wanting to buy a car from the other team and both were to try and get the best prices and other benefits from it. We decided on a base price and started the negotiations with a higher price bargaining out way down. This proved to be extremely complex given the fact that the pace and style of speaking of everyone is very different. There was difficulty in keeping up with the pace and accents of individuals participating and therefore it became difficult to arrive at decisions quickly. Given the first negotiation our team was also not very well prepared and therefore we were surprised at how hard it is to reach a settlement. Some members are rational and try to reach an agreement; others think it to be a competition and only look to get what they want instead of negotiating for a common ground. The cultural factors like the Chinese and Saudis in the group like me have trouble keeping track of the western team members. The key learning of this first negotiation for the whole class was that we all realized the importance of having common objective or goal as a team before entering into the negotiation. It is crucial that all team members participate for the negotiation for be successful. In the end the first negotiation closed with both teams managing to scrape something out of the deal. Although it was a learning experience in the sense that all members realized the importance of compromise.
The second negotiation that we participated in was the e-negotiation that was to happen between the two parties. This was a challenging negotiation in the sense that we were not supposed to meet the opposing team face to face. The entire negotiation was to be conducted online using emails. This was a new situation since we were not used to cultural idioms and attitudes and applying them in written communication instead of verbal was really difficult. The negotiation was between HHA (Him and Her Australia) and BFM (Beijing Fashion Manufacturers, China), two apparel companies who work together. The purpose of the negotiation was to reach an agreement wherein BFM were to supply clothes manufactured by them at a stipulated deadline but larger quantity that before and at lower price.
The negotiation was well thought out and formal and both teams had little room to argue and fight over the matters. A common ground was reached between the teams, the integrative style of negotiations prevailed. The Chinese company agreed to deliver 16000 units at a cost of $14 per unit while also having the rights to market the HHA’s products in the Chinese market under the HHA brand name. This was the longest negotiation conduced and helped us understand our own team better so as to be able to coordinate with them in terms of planning for future negotiations.
Third negotiation was the of the Hinchinbrook Island wherein as part of the community/environmental groups we were to negotiate with the resort owners and developers team about the protection of natural habitats of the Hinchinbrook Island. The objective of this negotiation was to balance the impact on the nature of the island which was a natural reserve and the economical aspect of the island making money from its assets. The opposing team approached the negotiations with projects to build a causeway and enlarging the resort to accommodate a parking and a marina and paved walkways for tourists in the reserve among other up gradations and construction options. For this negotiation we were prepared well and had a plan. We had decided upon the points we were going to use to counter the arguments by our opponents. We had a win-win strategy wherein we realized the island needs to improve tourism but its cost to nature had to be kept to the minimum. Some of the outrageous demands of the opponents were opposed very strongly by our team which resulted I ego clashes and some people getting offended. But in the end we agreed upon allowing the opponents to build the resort improvements and expand facilities, but we disagreed on the walkways, marina and the parking. In the end the key point of negotiation by the other team of building the causeway, fell through and our team had the advantage in this negotiation. We fought hard the ethical aspect of our offers in this deal and in the end the opposite team’s own underlying biases made way for us to agree upon a deal which was best for the natural reserve and the local community.
Our team meetings were very interesting as we never managed to start on time. Cultural differences came to front when we realized that most members of my team did not respect the time as much as someone who has grown up in Australia does. As a result the environment I our team meeting was casual and informal. We lacked the sense of urgency and at times we had to conduct meeting without some members of the team. Most of the work happened via emails and thus we used to divide work and perform negotiations. This way we all had good knowledge about our areas and so we all took leadership in the aspect that we were to negotiate on. We often had ethical conflicts in the team meetings about the various topics and often the team members would start taking the side of the opposition and argue that we should agree o there points. In such situations we had to use our cultural skills to convince them and bring the objective and purpose of these exercises back into sight. We decided on one set of guidelines on how to conduct the negotiations by Spoelstra & Pienaar (1999) which we followed for all negotiations so as to plan and prepare for them:
- Understand the nature of conflict in any negotiation
- Understand and identify the objectives of every negotiation
- Have all the information on all issues and also evaluate the importance of various issues
- Understand the needs and personalities of all individuals both in your team and the opponents’
- Have all historical and legal information available before the negotiation
The classical processes of negotiation have four steps – Non-task, Task, Persuasion and Agreement (Graham, 1985). This means that it is important to first build the rapport and be confirmable with the other side, then get down on the actual task and persuade the other team to agree. Finally the agreement is reached when both parties agree on common grounds beneficial for both. To approach the final negotiation which carried the most marks and also was crucial for learning, we decided to prepare detailed plans and conduct research. We read theory and other literature regarding the negotiations, industry and case. We knew the opposing team and had seen them negotiated so we also prepared to counter them individual biases in their team. We set on various levels on which we will argue and also strategies that we will be using. Just as before we divided the work and assigned roles to everyone in the team on which aspect to prepare on. The final negotiation was to happen mainly on four aspects. First aspect was the question of closure of mines. The mines had been declared unsafe by the federal government and thus were ordered to be closed. But since these generated employment for the region, the local government is keen on saving these mines by agreeing with Fernett brio to improve the safety of mines and improve the facilities so as to save as many mines as possible. The second point of negotiation was the getting as many engineers from their mines trained on safety aspects of mining. Fernett Brio has one of the best safety records in the world in mining and they want to make use of it so as to enhance their capabilities and reputation. Thirdly, the Zijan mining wants to upgrade its transportation system and have Fernett brio invest in the up gradation of the railway tracks. This would enhance the capability of the mining district and make the industry productive. Finally, the main point of the deal was the profit sharing ratio between both the companies, so as to get into a partnership. As Fernett Brio, we decided to follow a competitive bargaining strategy and having the upper hand in the negotiations, we decided to bargain for the maximum and then slide down based on the arguments. Four members of the team, each was assigned one problem mentioned above and was to meet its target.
The negotiations were the final and therefore both teams were motivated. Also had learned from past negotiations and therefore were formal and professional. Both sides approached the points tactically and argued with making up points. Like the assumption which was made by the opponents about how much growth will the new railway system will offer. They came up with an inflated figure which was un-acceptable and therefore did not warrant the full 15 million investments into the railways system. The final arrangements were agreed upon after rigorous negotiations on both teams. By now both teams had understood the importance of agreeing on a common ground that allowing the negotiations to fall through by fighting and being stubborn. In the last time left to finish the deal we could not reach to an agreement and thus time got over whereby No deal was made in this case.
This course made me understand the process of negotiation, tactics, and behaviours that can be used to successfully conduct business negotiations. Also, the most important aspect that added value was that i can now conduct business negotiations in a multi-cultural context.
Adler, N.J., and Graham, J.L., 1989, Cross-cultural interaction: the international comparison fallacy?, Journal of International Business Studies, Vol. 20, pp. 515-37
Gelfand, M. and Dyer, N., 2000, A cultural perspective on negotiation: progress, pitfalls, and prospects, Annual Psychology: An International Review, Vol. 49 No. 1, pp. 62-99
Graham, JL., 1985, Cross-cultural marketing negotiations: a laboratory experiment, Marketing science (pre-1986), 4, no. 2, pp 130
Spoelstra, M. and Pienaar, W., 1999, Negotiation: Theories, Strategies and Skills, 2nd Edn, Juta Academic, New York
Tian, F., 2009, Cross Cultural Negotiation and Management, McGraw Hill, Sydney
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