Wednesday, May 9, 2012
International business negotiations: Ideas, Questions, and Insights
What are important aspects of international business negotiations? What insights stand out from course readings, the second simulation, web sources, experience, etc.? What major challenges do international business negotiators encounter? What cultural factors warrant attention?
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I believe that it is very important to accommodate in international business. As the second simulation showed us, Good Grains Inc was very accommodating to the other interests groups, creating a collaborative negotiation as opposed to the previous simulation which was much more competitive. The ministries seemed to be more willing to work with Good Grains because of Good Grains' willingness to compromise. However, I think a very tough challenge faced in a collaborative international business negotiation is to not negotiate against yourself. The second simulation started as a collaborative negotiation, but turned into a constant backslide on Good Grains' part until it no longer seemed like a practical business venture. A good way to prevent this is to consider everyone's Best Alternative to Negotiated Agreement (BATNA) to determine what you stand to gain/lose in an agreement.
ReplyDeleteI completely agree with Craig. Stepping back and looking at the second simulation with an objective set of eyes, Good Grains really did possess the majority of the negotiating leverage. At worst, we were all equal partners. Everyone at the table (with any amount of power) stood to gain from Good Grain’s decision to expand their business into our nation. They were the potential trend-setter, as no other outside business had decided to operate out of Inamlia before. Ultimately, Good Grains were the ones taking the biggest risk. Good Grains success or failure would have major implications on our nation’s future economy. For example, if Inamlia took too much in the negotiation with Good Grains, and they weren’t able to make enough of a profit for the business venture to succeed over time, then why would any other businesses want to move production into our nation in the future? Good Grains ultimately would be the lab rat for other companies looking to invest in Inamlia. We need to remember that we’ve only been an independent nation for 25 years. We need Good Grains to succeed for our people and their futures. The nation of Inamlia probably should have been bending over backwards, doing whatever it took, not only to get Good Grains into our nation, but to help make them as successful as possible. We want Good Grains to get rich behind this deal, to display a template for other investors. We could demand more from future businesses through negotiation, but we could only do this if Good Grains was able to earn a profit that made the international move worthwhile.
DeleteEspecially in the context of international development projects, there is a certain degree of hesitancy and fear of big business involvement leading to exploitation. As the historic failures of many of these projects demonstrate, this fear is well warranted in many situations. Thinking about the context of the most recent simulation, it really seemed to get reduced to Culture, Environment and Labor against business and commerce. In part this was due to the nature of the issues, but clearly there was a lack of trust that business would do right in terms of the local community interests. Business did a good job of compromising (perhaps too much) but some of this compromise may have been avoided by building more trust at the beginning of the negotiation. While someone had to facilitate the negotiations, having the main business interest outlining the conversation only increased the sense of their dominance. It is a balancing act for sure, but it can't be overstated that a little bit of trust building in any international business negotiation goes a long way.
ReplyDeleteIt's vital in international business negotiations to consider the needs and interests of both parties. Both sides need to understand where the other party is coming from and be willing to make some compromises and accommodate one another. In the Breaking Bread simulation Good Grains was very understanding of the needs and interests of the parties from Inamlia, but those parties weren't very accommodating to Good Grains. The parties from Inamlia needed to consider the interests of Good Grains and really understand that they were a business with business intentions. However, Good Grains was also trying to benefit the development of Inamlia, which most parties from Inamlia failed to consider.
ReplyDeleteInternational negotiators face a whole new set of challenges each time they engage in a different negotiation. Understanding the culture of the party which you are negotiating with is one of the first major challenges to overcome. Other challenges include laws and regulation compliance, over coming ethnocentrism, each countries development stages, and even each sides willingness to cooperate.
Based on what occurred in the Breaking Bread simulation it seems cultural factors that warrant attention are language and any aspect involved with the history of the country. These two components play major roles in the culture of a country and are highly regarded by its citizens. In the simulation these two topics were the most difficult to negotiate and served as priority topics of the negotiation.
Culture is everything it could be by far the most important part of international negotiation. Culture can be a country, a community, an organization, or a group of individuals. Culture is learned over ones life so it is important to understand when negotiating with someone from a different culture that they are looking at the world in a completely different way. Culture can include language, religion, values, norms, history along with a wide variety of other things. The point is that culture is infused into every aspect of our lives and effects the way we do business.
ReplyDeleteThe main problem that most international business men and women face when entering into negotiation with people from a different culture is that they simply don't understand the others culture. They don't understand that people from different areas have different ways of negotiating and doing business we see this especially in Catherine Lee's book. Taking the time to learn about another culture before you start working with it can make all the difference and allows for less misunderstandings. An example would be the use of language in Asia where "yes" doesn't necessarily mean i agree with you lets do that it means please go on, not understanding the difference could be the difference between making a deal or being shown the door.
Based on the Breaking Bread simulation there were a few cultural factors that got attention they were language, the change in working hours, changing the name, and changing the celebration of a national holiday. These issues were all possible road blocks that could have really slowed down negotiation between all the stake holders involved, but because all the parties were open of negotiation and willing to work together those issues were agreed upon without much conflict.
I would have to agree with everything said in the above post. Culture is everything! Looking back to the April 18th posts, where the prompt had to do directly with this. There were lots of good ideas, reasons, and explanations about the importance of culture in the processes of international negotiating.
DeleteCulture is apart of each one of us to the very core of our being. It fuels every move we make, every action we take, and every word we speak. When interacting with people of another culture, whether that interaction be negotiating or just having a conversation, its hard for us to understand the motives behind the things the person from another country does or the traditions they have. A perfect example of this comes from the Breaking Bread simulation. It was hard for Good Grains to understand why the workers wanted a month long vacation every year or why they needed such a long break in between their work day to spend with their families. These cultural values meant so much to the workers, but to the Good Grains representatives these values seemed silly and they had a hard time relating because of the the cultural barriers.
As a Communication major, I've had class after class that has gone in to depth about the importance of culture in the communication process. In Lee's book she emphasizes this point by saying, "Some cultural barriers, such as language or social courtesies, camouflage the true and essential needs of the other side."(P.90) She then expands on that thought by explaining how sometimes, by overlooking those essential needs we wrongfully assume the integrity of the other party, leading to mistrust and negative negotiating experience. For example, in America negotiation isn't a strong part of our cultures, but some cultures are offended by refusing to negotiating. They see the negotiating process as a relationship building experience. That's why it's import to do as Lee says,"Finding a way that is appropriate for many cultures is finding Consideration, Acceptance, Respect and Empathy expressed in universal action." (P.162)
An important aspect of international business negotiations that I noticed through our simulation was the very collaborative nature of the negotiation process as a whole. Every party needed to collaborate effectively in order to experience mutual gain, both in individual and in collective terms. Accommodations had to be made in some sort of manner and on varying levels within the negotiation. We all had a vested interest in the success of the acquisition and for the future of our nation, various business groups, and organizations. Varying degrees of convergence had to be displayed and implemented at the negotiating table in order to ensure that a mutually satisfying outcome would occur. As our ideas and definitions of success started to merge together, we were able to recognize each other’s motivation and willingness to get a workable deal done. Relationships were able to mature (through the 6 months of prior negotiations) and we were able to step into our simulation assuming those relationships. I also recognized that because of the number of parties involved in the process, patient collaborative negotiation is a major key to the success of the outcome.
ReplyDeleteThroughout the readings and our in-class simulation I have come to understand that International Business Negotiations deals with solving many cultural conflicts in order to come to an agreement. I noticed that a great first step during our in-class negotiations was to prioritize agenda items and decide what the interests and priorities of others were going to be. This planning stage is described in both Lee and Brett's books. Having an idea of the background of other countries, negotiatiors, and governement agencies you are going to be working with is the ideal information to possess before negotiations. This proved to be useful in our own negotiations through the Breaking Bread exercise. Another important piece to negotiations in general is being flexible. Large coorperations are described in the book as being controlling, confident, and sometimes not as willing to make adjustments to plans as the Good Grains company's approach in our activity. Confidence is described as a valuable characteristic of a company, but when that company starts talking down to other negotiators the flow of communication ends; which was seen during our talks as Good Grains started to use their authority against the different ministries. Much of what we have read about up to this point in class was exemplified in the latest simulation.
ReplyDeleteThis was written by: Sarah McRae (I do not know why my computer isn't allowing my user name to appear!)
The only person you can change and truly control is yourself. This is important to remember in negotiations in two respects. First, that the responsibility of your own actions is what you have power over and what you should focus on. It's important to know about the culture and business atmosphere you will be engaging in. This can mean understanding what how to properly poor tea or how the procedure of negotiation in done. Perhaps more important is knowledge awareness of your own bias. Knowing yourself, knowing that you come from a culture that is often viewed as aggressive, competitive, and self-superior, is less of a barrier when you are able to acknowledge this. It can be hard to understand actions of another negotiation party that comes from a different culture because their decisions can be inconceivable to you. If you don't acknowledge that your way isn't always the best you will spend time trying to figure out why they why they don't see that this deal is the best option for them. For example, when Good Grains offered the workers more money for less work hours it was assumed that this wasn't a compromise on their part, but rather a betterment of their lifestyle. But this is assuming that Good Grains values and the Inamalian people have the same values and by making such a self-important statement that "our way is the best way" negotiations are not only halted but the relationship might also be greatly damaged.
ReplyDeleteStacey Frederick
I think there has been a significant increase in internation negotiations throughout the last couple of years. More businesses have realized that it can be successful to negotiate across borders if it is done correctly and the relationship is analyzed prior to the negotiation. You must plan the negotiation and know what you are going into prior to the negotiation itself. There are certain "guidelines" you must know before dealing with someone across borders. Especially if you are dealing with someone in a different culture- it is crucial to have done your research and understand that culture before going into that negotiation. You can't just assume that you know what you are doing and go into it, but you have to understand that there are certain obstacles with cross-cultural negotiations and you must plan ahead with that. You must plan your communication ahead of time with each and every negotiation because each one is DIFFERENT. I feel that is where most negotiations go wrong, this was brought up in the simulation when people did not acknowledge culture as something that was important to everyone.
ReplyDeleteI think that one crucial element of international business is the creation of relationships and legacies: systems that can maintain themselves after negotiators have departed. I think that one of the hardest issues with international negotiation and business is the tendency for negotiators to recreate the wheel because the framework of previous negotiations was abandoned, neglected, or forgotten. I feel it is very important for this framework to represent a variety cultural intersections upon which a middle ground can serve as a scaffold for mutual growth. I suspect that while culture can change, i.e. Japan in the last 50 years, cultures need to feel that they are represented for sustainable business to occur.
ReplyDeleteNate, love the post and i could not agree with you more.
DeleteIt would be cool to see an international agency that did negotiation mediation for all shapes and sizes(headquartered in Switzerland and whoes mission is to mediate the toughest negotiations). I have noticed too that often much time is spent "recreating the wheel." My thought is that as technology allows us to hold information much longer than we can live, the relevant information can get lost. This coupled with many countries still trying to catch up to the business level modern societies are reaching, requires constant reeducation. An agency that was able to take techniques and procedures like we have learned and adapt them to fit all cultures and needs. I am someone who thinks the culture plays an important part in negotiation because it is one aspect that can stop you dead in your tracks. But if this party could develop a international business culture I think we would see a sports car rather than a wheel the "needs recreating"
-Michael Ryan Fashana
Its the old adage of its not what you know, but who you know. The natural human instinct to be apart of something or associated with people. This translates into the field of business as well. Establishing and setting a concrete relationship in business and negotiation can create the matter of repeat business in the long run. Therefore, Knowing the relationship between the parties prior can allot a better strategy when negotiating. These guidelines dependent on the culture and relationship will then allow a more effect way of going about business to ensure success. One must come prepared before entering a negotiation situation. Just like an exam or interview, you study beforehand so you dont enter the situation without any beneficial knowledge to help you succeed.
ReplyDeleteWe have discussed that having a clear understanding of culture is vital to negotiating. In addition to that, I also agree with Nate's post above about relationships. The two concepts go hand in hand and with international business there is a tendency to not learn from our successes and our mistakes. Continuing off of what Tayler said, due to an increase in the involvement of businesses negotiating internationally and they need to understand all of the aspects that go along with that. Each culture is different and if one has hopes of maintaing a positive relationship with them then they must put forth the effort to understand how to most effectively negotiate. In each chapter of "The New Rules of International Negotiation", there is a quick overview of a different country and these snapshots show that it is important to understand how each culture has various features.
ReplyDeleteThe business negotiation was a lot different from the first negotiation. I think there were more factors to make it more complex. A business coming into a country has to take into consideration culture, benefits, cost, government, and people. In my opinion, the most important aspect of international business negotiation is to be able to produce a win-win scenario! If you only thing about the country, you may go broke. If you only think about your business, you may end up not being allowed in this country.
ReplyDeleteWhat stands out from the reading are two things: complexity of the negotiations and having to compromise in order to reach an agreement. Unlike the first negotiation, almost all groups of the negotiations came in with a flexible mentality. That is why we did not see the tense atmosphere we saw in the first negotiation.
The biggest challenges business investors face nowadays is probably culture and corrupt governments. As for culture, people will refuse the development if that means changing a valued way of living or changing a language spoken for centuries. As for corrupt governments, the business may not succeed if the government will tax it too much. Also, even if the business is acceptable by people but threatens the stability of the ruling few, it may be denied.
There are many important aspects to consider when entering into international business negotiations. The video clips we have looked at in and out of class seem to put special emphasis on understanding the cultural background of the negotiations from holistic viewpoint. It is true that the world is becoming more and more connected via globalization and such, but there are still important cultural aspects that parties hold on to, regardless of how "modern" they seem or claim to be. Because of this it is crucial to maintain an open mindset when dealing with businesses on an international level. The second simulation was a perfect example of this. Good Grains Inc. was extremely considerate of the culture they were effecting by potentially bringing their business. This is what also may have proved to be their downfall, as they were conforming to the point that it became a relatively poor business move and they were shut down by the bank. Despite this minor lapse in judgement, Good Grains Inc. was a good model for how businesses should go about understanding and conforming too, to some extent, the culture of those they are dealing with on an international level.
ReplyDeleteAn IBN defined is an encounter between two firms or organizations representing different nationalities concerned with the goal of reaching agreements to provide economic gain. I would say the most important aspect of an IBN is the cultural aspect. Knowing and understanding another culture shows respect in the sense that you can and are able to cooperate in an international business setting. Showing respect for the others’ cultural identity and deeply held values is a way of building a trustworthy relationship with your partners. A lack of respect for cultural norms and values can result in an unsatisfied party that is involved in the negotiation. For example in the second simulation, Breaking Bread, Good Grains Inc. thought it was financially irresponsible to continue the long standing tradition of taking a month off of factory time to celebrate the Inamlian independence month. But the Ministry of Language, Culture, and Education, thought otherwise, thus resulting in a distributive style of bargaining. Some of the major challenges IBN’s have are the challenges of adapting to the cultural norms. For example in a low context culture like the US, we are more accustomed to shorter relationships, written agreements, and showing up on time. In high context cultures like Japan, relationships are long lasting and their agreements are respectfully spoken. The factors that warrant attention are the factors dealing with the respect of all parties involved. A happy trustworthy business partner is a good business partner.
ReplyDeleteUnderstanding that what we see from the outside of other cultures is just the tip of the iceberg, as Brett describes. We are only seeing what the behaviors and institutions are on the surface, but what lies beneath the surface is backing those institutions and behaviors. I feel this is one of the more important tactics in international business, because the trust must be built in order to make the parties feel comfortable in any negotiation. To show another culture (country) that you want to better understand them and build the relationship together, will help in "breaking the ice" in further negotiations.
ReplyDeleteAs far as all of the material that was presented in this class on international business negotiations I felt like the video that was presented during the first few weeks of lecture was the most beneficial. I have personally never conducted business abroad but I have traveled abroad and agree that much of the issues that were brought up in the video were things that are very important to understand while doing business abroad. It is important to prepare, to research the culture you will be doing business and negotiations with as much as possible beforehand. Knowing that nation's particular concept of time orientation, whether or not they are a contact culture, what their culture values (quality above quantity, family over business, etc.) can make or break a business relationship. I have found just by knowing a few important phrases and the basics of their communication style will go a long way in interacting with people from other nations. Just showing that you have made the effort to understand their country and their ways usually gains a little more respect.
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