Get cultural insights before negotiations
IT is a given that the business world is becoming globalised and communication lines between nations are open. Corporates are set to expand on a global scale. And for expansion across the world, they have to necessarily engage in cross-cultural negotiations, and herein lies the twist in our tale.
The fact is that cultural differences are still prevalent even in today's so-called technologically advanced world as they were in the past. Precisely for this reason corporates have to tread cautiously with regard to cross-cultural negotiations.
This is because the undercurrent of cultural differences can either seriously, subtly or at times even blatantly influence the outcome of the negotiations. Cultural differences can affect business dealings because the basis of any negotiation is trust, and when culture comes into play, differences make it difficult to understand the other's perspective. The ability to trust thereby takes a beating.
Trust is an imperative in any business deal because negotiation implies agreeing to certain commitments and promises and this is not possible unless the parties trust each other. In essence, the success of any negotiation is directly proportionate to the degree of trust that exists between the two parties. The parties that come to the negotiating table will obviously have an agenda in place before the meeting, which will reflect what they hope to gain from the deal. And each party has certain expectations from the other side. If the two sides trust each other, they will work on the premise that the negotiation will be ethical and their expectations will be met. Yet cultural differences can play spoilsport and the negotiation could fall through. Let us look at some of the differences that can affect the making of a deal.
The legal angle: A U.S based company lands in China to finalise a deal after several rounds of on line and telephonic discussions. A lawyer accompanies the American team to take care of the legal aspects of the agreement. The reaction of the Chinese team to this is negative and the deal falls apart, why? The Chinese seek legal help only when a relationship has gone into serious conflict and it is often the last resort. To resolve any disagreement they first have direct discussions or mediation through a common third party. The recourse to legal aid is interpreted as loss of personal or professional reputation and the breaking of the relationship beyond repair. This attitude to legal aid is common to most East Asian cultures.
In sharp contrast American and other western cultures resort to understanding the legal ramifications of the agreement at the initial stage itself. Such differences can create mistrust between the negotiating parties.
Degree of planning: Every negotiating party should understand that the cultural background determines the degree of planning in a business plan. For instance, developed nations like the U.S or U.K develop long term business plans because they have a stable and well-developed business environment. On the contrary, in developing nations like India or China business plans are mostly short term because the economy is fluid and the business environment uncertain.
Nepotism: In certain cultures businesses are a family affair where everyone and anyone in the family finds a place in the top levels mainly because of the trust factor. But for a negotiating party that comes from a country like Germany this might come as a shock because nepotism is not welcomed in their businesses. They may also find it difficult to trust the opposite party when they have to deal with people occupying positions not on the basis of their abilities but because of their relationships.
Differences among similarities: Even people from the same cultural background may have subtle cultural differences that can affect the outcome of the negotiations
Even on the personal level the differences in the style of the two people in the discussion can influence the outcome. For example, some have a direct and open method during discussions, which may not be agreeable to one who is reserved and speaks with caution.
Agreement details: Differences can crop up at the agreement stage too, since some negotiators focus on the specifics while others want an agreement on general principles and then move to the specifics.
Sometimes differences can affect the way an agreement is drawn up. For example,
businessmen from East Asia are usually happy with an agreement with a broad framework whereas those from European nations insist on a detailed contract. And for the Americans renegotiations on a contract are not done as they see the agreement as final with no room for contingencies. Whereas for most businesses in India or China the agreement is only the initial step in a growing relationship that can change its form as the relationship evolves. With so many grounds for differences to crop up in cross-cultural negotiation, it would be wise for the negotiators to keep certain points in mind before sitting down for a discussion:
Gather as much information about the company as possible before entering into deliberations especially its financial position
Find out about the culture of the foreign-based company you are going to deal with so that you can foresee issues that may crop up during the discussions
Seek professional advice if necessary on dealing with cultural differences
Try to gain prior knowledge of the persons you will be dealing with so that you can make a one-on-one connection with ease
People might hold different views on the whole negotiation process. Some may consider it a co-operative or win-win situation whereas others may view it as a competitive process. Some negotiators seek mutual advantage whereas some others look for all the advantages
Cross-cultural negotiations can succeed if the parties involved set aside their presumptions and have a clear understanding of the people and culture they are negotiating with. Negotiations can be smooth and successful, it's all in the planning.
HEMA GOPALAKRISHNAN
faqs@cnkonline.com
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