112
GLOBAL NEGOTIATIONThe New Rules
#1. Accept only creative outcomes.#2. Understand cultures, especially your own.#3. Adjust to cultural differences.#4. Gather intelligence and reconnoiter the terrain.#5. Design the information flow and process of meetings.#6. Invest in personal relationships.#7. Persuade with questions.#8. Make no concessions until the end.#9. Use techniques of creativity.#10. Continue creativity after negotiations.
parable of the orange
Competitive negotiations (zero-sum, deal focused)
Competitive negotiations (zero-sum, deal focused)
Integrative negotiations (making the pie bigger,
still deal focused)
Competitive negotiations (zero-sum, deal focused)
Integrative negotiations (making the pie bigger,
still deal focused)
Creative negotiations(building a pie factory,
relationship focused)
OUR AGENDA
1. Background – trade causes peace2. The importance of cultural differences3. Learning to negotiate creatively4. Negotiation outcomes, including creative ones5. Planning and preparation6. Managing the negotiation process –
communication and creativity
The importance of cultural differences…
Oh, East is East and West is West, and never the twain shall meet…
HUMAN UNIVERSALS(The Myth of Diversity)
• Use metaphors• Have a system of status and roles• Are ethnocentric• Create groups antagonistic to outsiders• Imitate outside influences• Resist outside influences• Consider aspects of sexuality private• Express emotions with face• Reciprocate• Use mood altering drugs• Overestimate objectivity of thought• Fear of snakes Donald E. Brown (1991), anthropologist
THE JOHN WAYNE STYLE
I can go it aloneJust call me JohnPardon my FrenchCheck with the home officeGet to the pointLay your cards on the tableDon’t just sit there, speak upDon’t take no for an answerOne thing at a timeA deal is a dealI am what I am
The people we were advising (State Department) kept bumping their heads against an invisible barrier … We knew that what they were up against was a completely different way of organizing life, of thinking, and of conceiving the underlying assumptions about the family and state, the economic system, and even Man himself.
E.T. Hall, The Silent Language (1959)
S P E E D I S R E L A T I V E * R a n k o f 3 1 c o u n tr ie s fo r o v e ra l l p a c e o f l i fe [c o m b in a t io n o f th re e m e a s u re s : (1 ) m in u te s d o w n to w n p e d e s tr ia n s ta k e to w a lk 6 0 fe e t , (2 ) m in u te s i t ta k e s a p o s ta l c le rk to c o m p le te a s ta m p -p u rc h a s e t ra n s a c t io n , a n d (3 ) a c c u ra c y in m in u te s o f p u b lic c lo c k s ]
O v e ra l l P a c e C o u n tr y
W a lk in g 6 0 F e e t
P o s ta l S e r v ic e
P u b lic C lo c k s
1 S w itz e r la n d 3 2 12 I r e la n d 1 3 1 13 G e rm a n y 5 1 84 J a p a n 7 4 65 I ta ly 1 0 1 2 26 E n g la n d 4 9 1 37 S w e d e n 1 3 5 78 A u s tr ia 2 3 8 99 N e th e r la n d s 2 1 4 2 5
1 0 H o n g K o n g 1 4 6 1 41 1 F ra n c e 8 1 8 1 01 2 P o la n d 1 2 1 5 81 3 C o s ta R ic a 1 6 1 0 1 51 4 T a iw a n 1 8 7 2 11 5 S in g a p o re 2 5 1 1 41 6 U n ite d S ta te s 6 2 3 2 01 7 C a n a d a 1 1 2 1 2 21 8 S o u th K o re a 2 0 2 0 1 61 9 H u n g ry 1 9 1 9 1 82 0 C z e c h R e p u b lic 2 1 1 7 2 32 1 G re e c e 1 4 1 3 2 92 2 K e n y a 9 3 0 2 42 3 C h in a 2 4 2 5 1 22 4 B u lg a r ia 2 7 2 2 1 72 5 R o m a n ia 3 0 2 9 52 6 J o rd a n 2 8 2 7 1 92 7 S y r ia 2 9 2 8 2 72 8 E l S a lv a d o r 2 2 1 6 3 12 9 B ra z i l 3 1 2 4 2 83 0 In d o n e s ia 2 6 2 6 3 03 1 M e x ic o 1 7 3 1 2 6
* R o b e r t L e v in e , “ T h e P a c e o f L ife in 3 1 C o u n tr ie s ,” A m e r ic a n D e m o g r a p h ic s , 1 9 /1 1 , 1 9 9 7 , 2 0 -2 9 .
LAWYERS PER 100,000 RESIDENTS*South Korea
Malayasia
Hong Kong
France
Italy
Japan
England & Wales
Canada
Germany
United States
0 50 100 150 200 250
*Latest year available †Private practice only
Source: University of Wisconsin, Institute for Legal Studies
†
QUANTIFYING CULTUREManagement Values and Linguistic Distance
Country Individualism/Collectivism* Linguistic DistanceHofstede (1970s) House et al. (1990s) (from English)
USA 100 75 0UK 98 81 0Netherlands 87 94 1Italy 82 50 3France 76 70 3Switzerland 73 84 1,3 Germany 72 83 1Israel 56 59 5India 49 16 3Japan 47 61 4Russia 39 26 3Brazil 38 42 3Mexico 28 23 3Hong Kong 22 37 6China 16 20 6S. Korea 14 29 4____________________________________
*the scores for Individualism/Collectivism are standardized and correlated at r > 0.8, p < 0.05
Japan kids, M. Douglas
… led by an invisible hand to promote an end which was no part of his intention …By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.
Adam Smith (1776)The Wealth of Nations
HIGH CONTEXT (relationship-oriented)JapaneseArabian
Latin AmericanSpanishItalian
English (UK)French
North American (US)Scandinavian
GermanSwiss
LOW CONTEXT (information-oriented)
Learning to negotiate creatively…
CULTURES STUDIED
• Japan • China (4)• South Korea• Philippines• Vietnam• France• United Kingdom• Norway• Israel
• West Germany• Spain• Czechoslovakia• Soviet Union• Brazil• Canada (2)• Mexico• United States
Los mejores negociadores son los japoneses, capaces de pasarse dias intentando conocer a su oponente. Los peores, los norteamericanos, que piensan que las cosas funcionan igual que en su pais en todas partes.
Samfrits LepoolEl Pais, 1991
NEGOTIATIONS FRAMEWORK
BargainerCharacteristics
SituationalFactors
NegotiationProcesses
NegotiationOutcomes
Negotiation outcomes, including creative ones…
NEGOTIATION OUTCOMES1. Win-win2. Individualistic or integrative3. Equality or hierarchy4. Making a deal or creating a
relationship5. Short-term goals or long-term goals6. Creativity, getting to “yes” is not good
enough!
PROFIT SCHEDULESBuyer Prices Televisions Typewriters Vacuums
A 4000 2400 1600
B 3500 2100 1400
C 3000 1800 1200
D 2500 1500 1000
E 2000 1200 800
F 1500 900 600
G 1000 600 400
H 500 300 200
I 0 0 0
Seller Prices Televisions Typewriters Vacuums
A 0 0 0
B 200 300 500
C 400 600 1000
D 600 900 1500
E 800 1200 2000
F 1000 1500 2500
G 1200 1800 3000
H 1400 2100 3500
I 1600 2400 4000
PROFITS YIELDED
Solution EEE
Buyer’s profits = $4000Seller’s profits = $4000____________________
Joint profits = $8000
Solution AEI
Buyer’s profits = $5200Seller’s profits = $5200_____________________
Joint profits = $10,400
OUTCOME MEASURES (Means)Joint $
(Buyer $ + Seller $) Buyer $ Seller $
$ Difference (Buyer $
- Seller $)
Japan 9590
South Korea 8540
China (Mainland) 9230
China (Taiwan) 8440
France 9120
United Kingdom 9430
Germany 8180
Canada (Anglophones) 9040
Canada (Francophones) 8640
Israel 9060
Brazil 9280
Russia 8590
United States 9030
ALL GROUPS 8910*Difference is statistically significant (p<0.05)
OUTCOME MEASURES (Means)Joint $
(Buyer $ + Seller $) Buyer $ Seller $
$ Difference (Buyer $
- Seller $)
Japan 9590 5160 4430
South Korea 8540 4680 3860
China (Mainland) 9230 4560 4670
China (Taiwan) 8440 4430 4010
France 9120 4900 4220
United Kingdom 9430 5000 4430
Germany 8180 4280 3900
Canada (Anglophones) 9040 4790 4250
Canada (Francophones) 8640 4230 4410
Israel 9060 4620 4440
Brazil 9280 4790 4550
Russia 8590 4540 4050
United States 9030 4680 4350
ALL GROUPS 8910 4670 4240*Difference is statistically significant (p<0.05)
OUTCOME MEASURES (Means)Joint $
(Buyer $ + Seller $) Buyer $ Seller $
$ Difference (Buyer $
- Seller $)
Japan 9590 5160 4430 730*
South Korea 8540 4680 3860 820*
China (Mainland) 9230 4560 4670 -110
China (Taiwan) 8440 4430 4010 420
France 9120 4900 4220 680
United Kingdom 9430 5000 4430 570*
Germany 8180 4280 3900 380
Canada (Anglophones) 9040 4790 4250 540
Canada (Francophones) 8640 4230 4410 -180
Israel 9060 4620 4440 180
Brazil 9280 4790 4550 180
Russia 8590 4540 4050 490
United States 9030 4680 4350 330
ALL GROUPS 8910 4670 4240 430*Difference is statistically significant (p<0.05)
NEGOTIATION OUTCOMES
Integrative JIndividualistic A
Equality Hierarchy
CULTURAL DIFFERENCES IN COMPETITIVENESS AND EQUALITY
$10,000
9,500
9,000
8,500
8,000
48 49 50 51 5552 53 54 56 57
JOIN
T P
RO
FIT
S
COMPETITIVE
COOPERATIVE
PERCENTAGE OF PROFITS GOING TO BUYEREQUALITY HIERARCHY
ºJPN
ºCAN(F)
ºCHN(N)ºSPN
ºMEXºKOR
ºHGK
ºUSA
ºBRZ
ºCZH ºTWNºGER
ºPHIºCHN(S)
ºRUS
ºUKºFRN
ºCAN(A)ºISRL
Planning, preparation, and procedures …
KEY BARGAINER CHARACTERISTICS
• Listening ability• Interpersonal orientation• Willingness to use team assistance• Self-confidence• High aspirations• Social competence• Influence at headquarters
In general, women are more comfortable talking one-on-one. The situation of speaking up in a meeting is a lot closer to boys’ experience of using language to establish their position in a large group than it is the girls’ experience using language to maintain intimacy. That’s something that can be exploited. Don’t wait for the meeting; try to make your point in advance, one-to-one. This is what the Japanese do, and in many ways American women’s style is a lot closer to the Japanese style than to American men’s.
Deborah Tannen, author of You Just Don’t Understand: Men and Women in Conversation (1990, William Morrow) in Working
Women, July 1990.
SITUATIONAL FACTORS
Power (status) differencesGoalsStressesNumber of partiesCultural variation of the partiesLocation
MANIPULATION OF THE NEGOTIATION SETTING
• Location• Physical arrangements• Number of parties• Number of participants• Audiences• Communication channels• Time limits
PREPARTATIONS CHECKLIST• Assessment of the situation
– Other party’s goals– Your own goals– Best alternative to negotiation– Authority limits
• Facts to confirm at the negotiation table
• Agenda• Concession strategies• Team assignments
Managing the negotiation process –communication and creativity…
HIERARCHY OF PROBLEMS IN CROSS-CULTURAL NEGOTIATIONS
1. Verbal communication
2. Nonverbal communication
3. Values
4. Thinking processes
For their negotiations over construction of the tunnel under the English Channel, British and French representatives agreed to partition talks and alternate the site between Paris and London. At each site, the negotiators were to use established, local ways, including the language. The two approaches were thus clearly punctuated by time and space. Although each side was able to use its customary approach some of the time, it used the script of the other culture the rest of the time.
BARGAINING BEHAVIORS• Promises• Threats• Recommendations• Warnings• Rewards• Punishments• Normative appeals• Commitments• Self-disclosures• Questions• Commands
Negotiation Tactics (the“what” of communication)
CULTURESBARGAININGBEHAVIORS USA JPN BRZ RUS KOR CHN TWN ISRL FCAN ACAN
Promise 8Threat 4Recommendation 4Warning 1Reward 2Punishment 3Normative appeals 2Commitment 13Self-disclosure 36Question 20Command 6
Negotiation Tactics (the“what” of communication)
CULTURESBARGAININGBEHAVIORS USA JPN BRZ RUS KOR CHN TWN ISRL FCAN ACAN
Promise 8 7Threat 4 4Recommendation 4 7Warning 1 2Reward 2 1Punishment 3 1Normative appeals 2 4Commitment 13 15Self-disclosure 36 34Question 20 20Command 6 8
Negotiation Tactics (the“what” of communication)
CULTURESBARGAININGBEHAVIORS USA JPN BRZ RUS KOR CHN TWN ISRL FCAN ECAN
Promise 8 7 3 5 4 6 9 12 8 6Threat 4 4 2 3 2 1 2 4 3 0Recommendation 4 7 5 4 1 2 5 8 5 4Warning 1 2 1 0 0 1 3 1 5 0Reward 2 1 2 3 3 1 2 2 1 3Punishment 3 1 3 1 5 0 1 3 2 1Normative appeals 2 4 1 0 3 1 1 5 3 1Commitment 13 15 8 11 13 10 9 10 8 14Self-disclosure 36 34 39 40 36 36 42 30 42 34Question 20 20 22 27 21 34 14 20 19 26Command 6 8 14 7 13 7 11 9 5 10
Negotiation Tactics (the“what” of communication)
CULTURESBARGAININGBEHAVIORS USA JPN BRZ RUS KOR CHN TWN ISRL FCAN ECAN
Promise 8 12Threat 4 4Recommendation 4 8Warning 1 1Reward 2 2Punishment 3 3Normative appeals 2 5Commitment 13 10Self-disclosure 36 30Question 20 20Command 6 9
But there was a big difference between the Japanese on the one hand and the Americans and Australians on the other, in that the Japanese chose waiting for information more often. The silence was thus seen as signifying an uncommitted state – neither positive nor negative. It was a relatively passive acceptance of the other’s attitude or a neutral waiting meaning. The American and Australian subjects generally displayed a more emotional attitude toward the message of silence, such as sorrow, critique, obligation, or regret.
F. Poyatos (ed.), Cross-Cultural Perspectives in Nonverbal Communication, 1988, page 212.
STRUCTURAL ASPECTS OF LANGUAGE AND NONVERBAL BEHAVIORS
(“how” things are said)
BARGAINING BEHAVIORS (per 30 minutes)
Structural Aspects USA JPN BRZ“No’s” 4.5“You’s” 54.1
Nonverbal Behaviors USA JPN BRZSilent Periods 1.7Conversational Overlaps 5.1Facial Gazing (minutes) 10.0Touching (number of times) 0
STRUCTURAL ASPECTS OF LANGUAGE AND NONVERBAL BEHAVIORS
(“how” things are said)
BARGAINING BEHAVIORS (per 30 minutes)
Structural Aspects USA JPN BRZ“No’s” 4.5 1.9“You’s” 54.1 31.5
Nonverbal Behaviors USA JPN BRZSilent Periods 1.7 2.5Conversational Overlaps 5.1 6.2Facial Gazing (minutes) 10.0 3.9Touching (number of times) 0 0
STRUCTURAL ASPECTS OF LANGUAGE AND NONVERBAL BEHAVIORS
(“how” things are said)
BARGAINING BEHAVIORS (per 30 minutes)
Structural Aspects USA JPN BRZ“No’s” 4.5 1.9 41.9“You’s” 54.1 31.5 90.4
Nonverbal Behaviors USA JPN BRZSilent Periods 1.7 2.5 0Conversational Overlaps 5.1 6.2 14.3Facial Gazing (minutes) 10.0 3.9 15.6Touching (number of times) 0 0 4.7
STRUCTURAL ASPECTS OF LANGUAGE AND NONVERBAL BEHAVIORS
(“how” things are said)CULTURESBARGAINING
BEHAVIORS(per 30 minutes)
USA JPN BRZ RUS KOR CHN TWN ISRL FCAN ACAN
Structural Aspects
“No’s” 4.5 1.9 41.9 2.3 7.4 1.5 5.9 8.5 7.0 10.1
“You’s” 54.1 31.5 90.4 23.6 34.2 26.8 36.6 36.7 72.4 64.4
Nonverbal Behaviors
Silent Periods 1.7 2.5 0 3.7 0 2.3 0 1.9 0.2 2.9
Conversational Overlaps
5.1 6.2 14.3 13.3 22.8 17.1 12.3 30.1 24.0 17.0
Facial Gazing 10.0 3.9 15.6 8.7 9.9 11.1 19.7 15.3 18.8 10.4
Touching 0 0 4.7 0 0 0 0 0 0 0
STRUCTURAL ASPECTS OF LANGUAGE AND NONVERBAL BEHAVIORS
(“how” things are said)CULTURESBARGAINING
BEHAVIORS(per 30 minutes)
USA JPN BRZ RUS KOR CHN TWN ISRL FCAN ACAN
Structural Aspects
“No’s” 4.5 8.5
“You’s” 54.1 36.7
Nonverbal Behaviors
Silent Periods 1.7 1.9
Conversational Overlaps
5.1 30.1
Facial Gazing 10.0 15.3
Touching 0 0
CONTRASTS IN VALUES
1. Collectivism vs. individualism
2. Hierarchy vs. egalitarianism3. Amae vs. independence4. Long term vs. short term5. Freier and doogri
That’s his problem, Barry says. That’s life. I do that a lot. It’s not personal.
But Barry, I say. We’re people. It is personal.
It isn’t personal, Barry says.
Peter Richmondinterviewing Barry Bonds.
GQ, April 1994, pages174-181
Although Westerners are able to separate attacks on their ideas from attacks on them personally, Japanese find that difficult and thus shun confrontation.
Tsutomu Hamoaka, ManagerFuji Photo Film Company
Japanese feel that if you disagree with their theories, you are disagreeing with their personalities
Michiniro Matsumoto, PresidentManagement Development Institute
Both in Teresa Watanabe’s articleLos Angeles Times, March 11, 1994.
American Chineseindividualistic collectivistic
egalitarian hierarchicalinformation oriented relationship oriented
reductionist holisticsequential circular
seeks the truth seeks the waythe argument culture the haggling culture
CULTURAL VALUES AND WAYS OF THINKING
THE NEGOTIATION PROCESS
1. Nontask sounding
2. Information exchange
3. Persuasion
4. Concessions and agreement
American Chinese
1. Nontask Soundingquick meetings long courting process
informal formalmake cold calls draw on intermediaries
2. Information Exchangefull authority limited authority
direct indirectproposals first explanations first
3. Means of Persuasionaggressive questioningimpatient enduring
4. Terms of Agreementforging a “good deal” forging a long-term relationship
THE NEGOTIATION PROCESS
CAUSES OF TENSION
Americans said: Chinese said:
they were tough on price they were tough on price
they reopen closed issues they disagree, are stubborn
they are pushy, insulting (cell phone)
we threaten, challenge
we get aggressive, terse, raise voice
they threaten, express anger
they go silent our prices are unreasonable
they interrupt
AMERICAN COMMENTS We felt that once an area had been agreed to, we moved
from that point forward. We found ourselves starting over two or three times.
They went back to warranty after we thought the issue resolved.
We bargained back and forth, without any real progress. More wasted time.
Frustration – I felt that we had made at least one concession, them zero and still pounding away for more.
We felt that they wanted to not concede anything. We felt we were making all the concessions.
CHINESE COMMENTS
After negotiated for almost half an hour little progress what made and discussion still confined in a few issues.
They were very straight and kept pushing for 60 days.
They kept repeating about their time constraint…trying to pressure us into a counteroffer. We kept delaying giving them a counteroffer on price.
They had no patience to proceed further.The buying team (Americans) felt annoyed and
insisting and persistently ask for that.Saying things offend the selling team (Chinese).
PERSUASIVE TACTICS THAT WORK
1. Ask more questions2. Educate3. Silence4. Informal channels5. Aggressive tactics (be careful here06. Time7. Intermediary8. Reconvene top executives
KEYS TO CREATIVE NEGOTIATIONS
1. Establish common goals.2. Establish the rules of engagement. 3. Trust is key – offsite, physical proximity.4. Add diversity to the group.5. Use storytelling.6. Work in small groups. Add physical movement, fun.7. Work holistically, use visuals, encourage crazy ideas.8. Sleep on it, take breaks.9. Repeat this process over several sessions.10. The process yields proposals and relationships.
GLOBAL NEGOTIATIONThe New Rules
#1. Accept only creative outcomes.#2. Understand cultures, especially your own.#3. Adjust to cultural differences.#4. Gather intelligence and reconnoiter the terrain.#5. Design the information flow and process of meetings.#6. Invest in personal relationships.#7. Persuade with questions.#8. Make no concessions until the end.#9. Use techniques of creativity.#10. Continue creativity after negotiations.
KEY NEGOTIATION TACTICS
1. Manipulate the situation
2. Maximize questions
3. Minimize commitments
4. Start High
5. Use time
6. Creative solutions
Oh, East is East, and West is West,and never the twain shall meet,
‘Til Earth and Sky stand presently at God’s great Judgment seat:
But there is neither East nor West,border, nor breed, nor birth,
When two strong men stand face to facethough they come from the ends of theearth.
Rudyard Kipling, 1889
I’d been in China a couple of weeks. I was tired. The fog had delayed my flight from Xian to Shanghai by four hours. I was standing in a long line at the counter to check in again. I started chatting with the fellow in line ahead of me. Juhani Kari introduced himself as a Finnish sales manager at ABB. He asked me what I did for a living. I responded, “I teach international business.” He replied, “There is not such thing as international business. There’s only interpersonal business.” A wise man, indeed!
A people is a mirror in which each travelercontemplates his own image.
Andre Maurois
the end of all exploringwill be to arrive where we startedand know the place for the first time.t.s. eliot
And what should they know of England who only England knows?
Rudyard Kipling
JOHN WAYNE STYLE EIGHT ELEMENTS
I can go it alone Guanxi (connections)Just call me John IntermediariesPardon my French Social statusCheck with the home office HarmonyGet to the point Holistic thinkingLay your cards on the table ThriftDon’t just sit there, speak up FaceDon’t take no for an answer Endurance, relentlessnessOne thing at a timeA deal is a dealI am what I am
SELECTED COUNTRIES*Individualism/Collectivism
*Source: Geert Hofstede, 2001
COUNTRY INDEX RANK COUNTRY INDEX RANK COUNTRY INDEX
1 United States 912 Australia 903 UK (Great
Britain)89
4 Canada 804 Hungary 804 Netherlands 807 New Zealand 798 Italy 768 Yugoslavia 7610 Belgium 7511 Denmark 7412 France 7112 Sweden 7114 Ireland 7015 Norway 6916 Switzerland 6817 Germany 6718 South Africa 6519 Finland 6320 Estonia 6020 Luxembourg 6020 Poland 6023 Malta 59
24 Czech Republic 5825 Austria 5526 Israel 5427 Slovakia 5228 Spain 5129 India 4830 Surinam 4731 Argentina 4631 Japan 4631 Morocco 4634 Iran 4135 Jamaica 3935 Russia 3937 Arab countries 3837 Brazil 3839 Turkey 3740 Uruguay 3641 Greece 3542 Philippines 3243 Bulgaria 3043 Mexico 3043 Romania 3046 East Africa 2746 Portugal 27
48 Malaysia 2649 Hong Kong 2550 Chile 2351 Bangladesh 2051 China 20
51 Singapore 2051 Thailand 2051 Vietnam 2051 West Africa 2057 Salvador 1958 Korea (South) 1859 Taiwan 1760 Peru 1660 Trinidad 1662 Costa Rica 1563 Indonesia 1463 Pakistan 1465 Columbia 1366 Venezuela 1267 Panama 1168 Ecuador 869 Guatemala 6
