Question

1. Describe and define the 5 primary steps of the negotiation process. Why are successful negotiation skills critical to International Human Resource Professionals? Choose three (3) of the following demographics and define at least (6 negotiation attributes common to each group: American Negotiators; Indian Negotiators; Middle Eastern Negotiators; Swedish Negotiators; Chinese Negotiators. What are some of the tactics successful negotiators use in arguing business?

Answer 1

Meaning of negotiation process

A negotiation is a formal discussion to reach agreement about an issue. It is an important method to reduce conflict, and to get things done.

It is an open process for two parties to find an acceptable solution to a complicated conflict. There are some specific conditions where negotiation will achieve the best results:

• When the conflict consists of two or more parties or groups
• A major conflict of interest exists between both parties
• All parties feel that the negotiation will lead to a better outcome
• All parties want to work together, instead of having a dysfunctional conflict situation

Examples:

• Two hostile nations both claim a piece of territory. They may go to war over it. Or, they may negotiate some agreement. The agreement would be written down, and both governments would agree to keep the agreement.
• A football club wishes to buy a player from another club. A series of negotiations would take place between the clubs, the player and the player's agent. If the negotiations succeed, the player gets moved. In this case, and in many others, success is followed by a legal contract, or a court decision, which makes the agreement legal.
• In less formal circumstances, a negotiation is just bargaining or haggling over, for example, money.

The 5 steps of the negotiation process are;

• Preparation and Planning.
• Definition of Ground Rules.
• Clarification and Justification.
• Bargaining and Problem Solving.
• Closure and Implementation.

Preparation and Planning

Before the start of negations, one must be aware of the conflict, the history leading to the negotiation of the people involved and their perception of the conflict expectations from the negotiations etc.

Before starting the negotiation, it needs to do homework.

What’s the nature of the conflict? What’s the history leading up to this negotiation?

Who’s involved and what are their perceptions of the conflict? Moreover before any negotiation takes place; a decision needs to be taken as to when and where a meeting will take place to discuss the problem and who will attend.

Setting a limited time-scale can also be helpful to prevent disagreement from continuing. This stage involves ensuring all the pertinent facts of the situation are known in order to clarify own position.

It also needs to prepare an assessment of what the other parties’ negotiation’s goals are. What are they likely to ask for?

Definition of Ground Rules

Once the planning and strategy are developed, one has to begin defining the ground rules and procedures with the other party over the negotiation itself that will do the negotiation. Where will it take place?

What time constraints, if any will apply? To what issues will negotiations be limited? Will, there be a specific procedure to follow in an impasse is reached? During this phase, the parties will also exchange their initial proposals or demands.

Clarification and Justification

When initial positions have been exchanged both the parties will explain amplify, clarify, bolster and justify their original demands. This need not be confrontational.

Rather it is an opportunity for educating and informing each other on the issues why they are important and how each arrived at their initial demands.

This is the point where one party might want to provide the other party with any documentation that helps support its position.

Bargaining and Problem Solving

The essence of the negotiation process is the actual give and take in trying to hash out an agreement, a proper bargain. It is here where concessions will undoubtedly need to be made by both parties.

Closure and Implementation

The final step in the negotiation process is formalization the agreement that has been worked out and developing and procedures that are necessary for implementation and monitoring.

For major negotiations – this will require hammering out the specifics in a formal contract.

Negotiation Process has five stages. In all steps of a negotiation process, the involved parties bargain at a systematic way to decide how to allocate scarce resources and maintain each other’s interest.

What are some important negotiation skills, and why are they so critical?

• Confidence. Don’t be intimidated; bullies know how to get their way. The business world has its fair share of tyrants, as some people intimidate their way to success. Feeling intimidated means you’re already on your way to defeat. People can sense when you’re emotionally not up for the fight, and they take advantage of it.

In the business world, this can mean lost profits, promotions, and opportunities. Don’t allow yourself to be intimidated during negotiation. If the other person appears more confident, understand it’s typically not because they deserve something more than you do; they’re just convinced they do. By bringing this conviction to the table, you can win a negotiation.

• The importance of negotiation skills includes knowing when to walk away. Some battles are not worth fighting. When business decisions hang in the balance, it’s imperative to be willing to — and know when to — walk away. If someone is transparently trying to get their way with no concessions to you, it’s best to exit the negotiation.

• Playing fair. In most negotiations, the goal is to be fair. If both parties can understand this and be sympathetic to the others’ needs, both stand to benefit far more. A competition for money or business resources isn’t a true negotiation. In any negotiation, each side has something to offer, and some things they can reasonably concede. Be open, fair, and honest, and you can gain the most from business negotiations.

• People skills. More often than not, it’s not what you say – it’s how you say it. By presenting your case in the right light, you stand to gain much more from any negotiation. Approaching a negotiation nervously or aggressively gives the other party the upper hand. Be calm, civil, and direct. A good sense of humor and open demeanor, as well as being a good listener, go a long way to realize a successful negotiation.

The importance of negotiation skills cannot be overstated. That’s why, as a business skill, negotiation is here to stay. But by not only understanding why negotiation is important in business, and prioritizing having good negotiators on your team, you create the perfect environment for business success. Remember, negotiation should be approached not as a competition, but as a compromise in which everyone leaves satisfied.

Negotiation Styles: Chinese vs American

Cross-Cultural Comparative Analysis of Chinese and American Negotiation Styles

Due to cultural differences, negotiations in the global arena are fraught with pitfalls. In this article, we examine the characteristics prevalent in the negotiation styles of Americans (USA) and Chinese (China).

Although some argue that it is as difficult to identify the American negotiation style, several characteristics have been mentioned in different studies. Americans are frequently associated with arrogance; however, this quality may not be a strictly American characteristic, simply often associated with them due to their unique status as the ‘global hegemon’. They are often viewed as ‘risk-takers’ due to their willingness to make decisions on their own. They are also known to be impatient, which stems from the American tendency to get straight to the point and go for the goal. They focus on the contract and usually find anything outside the boundaries of the contract superfluous.

China has a long and rich history that has shaped the minds, values, and beliefs of its people. Face, which refers to a person’s reputation, is a crucial factor in Chinese negotiating style. The importance of guan-xi is founded on the collectivist feature of Chinese culture, where the welfare of the group is valued higher than the welfare of the individual. Further, hierarchy is strictly followed. Moreover, the Chinese think in terms of the whole, so will address all issues in the negotiation simultaneously with no apparent order, and seemingly not resolving anything. All this consumes a tremendous amount of time to conclude negotiations with the Chinese. Finally, after signing the contract, the Chinese will demand more than is stated in the contract.

Conflicts and misunderstandings arise due to conflicting significance placed on relationship building, and the manner in which information is exchanged. Further, a failure to understand the decision-making mechanism leads to unnecessary tension and frustration. Finally, failure to recognize the nature of the relationship forged from successful negotiations to deal with the post-agreement demands will cause tension amongst the parties.

Despite the many cultural differences between China and the USA, successful cross-cultural negotiations is possible by adhering to three key points.

• Building personal relationships, particularly in China.
• Being patient, therefore, understanding of the decision-making process and hierarchical interpersonal system of China.
• Being conscious of face, which oftentimes simply means being aware that more is being communicated than what is uttered, and being mindful of how the message is delivered to the other party.

Negotiation Styles: India vs American

Negotiating with Indians is an exercise in ingenuity management. The complex, imaginative Indian negotiator can pose all kind of problems for the unaccustomed, inexperienced North American, even though that may not necessarily have been the intention of the Indian negotiator. The North American may find it difficult to discern the intention of his Indian counterpart, and/or may get frustrated by the slowness of the process or the excessive demand for all kinds of information. So what should the North American negotiator do?

(a) Be patient but firm

An ample supply of patience is an essential ingredient for negotiating in India. Lack of patience will only create frustration and anger, adding to the stress of conducting negotiations in a faraway land. Frustration and anger may, in turn, lead the North American negotiator to become aggressive, and this may not go down well in a culture where nationalistic sentiments are high. That said, there are areas where the North American negotiator can most definitely make his influence felt. If, for example, there are certain procedural issues with which the North American negotiator is unhappy, he or she can certainly try to exert some influence. As one Western manager has remarked, “…and I remember the first clashes we had really were when we had the meetings with the Indians who came one hour, up to two hours late, and they did just that….We said that if we can’t even agree on a meeting time, then there’s no hope of us setting up a joint venture together. Afterwards there were no problems.”

(b)Work with the Indian’s high aspiration levels rather than against it

Unrestrained imagination may be a problem in a business setting, but a focused imagination may well work to the advantage of everyone. It allows negotiators to be creative and exploratory but in a disciplined way. When a North American negotiator is confronted with highly idealized thinking on the part of the Indians, he or she can either reject it outright or seek to channel it in ways that might be mutually beneficial. Outright rejection may cause the Indian negotiator to become bitter and resentful. The Indians are highly sensitive people which, when combined with the legacy of imperialism, makes it easy for them to dismiss suggestions made by Western counterparts. An alternative might be to work with the Indian negotiator to reframe the problem in ways that may be mutually beneficial. This would have to be done in a subtle way and will take time, but in the long run it will be beneficial for the project and allow you to earn the trust of the Indian negotiator.

(c) Recognize the virtues of flexibility

The idea of a legally binding contract will not advance North Americans’ cause in doing business in India. In an imperfect and ever changing institutional environment, a North American’s best guarantor of success is his or her willingness to be flexible. This flexibility must be made manifest in cultural, political and social spheres. Contractual provisions are the starting point of a process that, by definition, will entail changes as situations evolve. Our argument does not carry the implication, of course, that the North Americans should accept all the changes that come their way. It is only that the need for changes should not be rejected in a reflexive way. The other point worth remembering is that flexibility may also work in favour of the North Americans.

(d) Induce the Indian negotiators to behave differently

It would also be helpful if the North Americans were to create incentives for the Indians to change their behaviour. The sensitivity and moral righteousness that Indians often display are not conducive to creative problem solving. It makes the Indians rather defensive, and critical comments end up being taken personally rather than as encouragement to make constructive changes. The one way to do this would be to make the Indians feel a little more secure. This security, I feel, is likely to be bolstered by behaviour that borders on being humble. Ideological arguments are best avoided altogether and the use of pressure tactics may not be able to yield dividends over the longer term. Scandinavian firms have somewhat of an advantage in this regard for they are far less aggressive than their North American counterparts, especially the Americans. The success of Finnish companies like Nokia and Wartsila Diesel in India is a testament to this behaviour.

(e) Be prepared to accept that negotiated agreements may not be implemented in a timely way

In addition to the fact that the Indian negotiators have a different conception of contracts, it is also important to note that the negotiated agreements may sometimes not be implemented in a timely way. This is likely to cause confusion and perhaps anger in the North American negotiator, and while that is inevitable, it should not obscure the larger context of the negotiations. Delayed implementation may, on occasion, be a deliberate act, but it may also be a product of last-minute contingencies such as bureaucratic obstacles. The cultural challenge for the North American negotiator is to identify when there is deliberate opposition to implementation, and when the implementation is being impeded by factors over which the local partner may have little control.

Negotiating in India poses a unique set of challenges for the North American negotiator. North Americans are goal-oriented and time-conscious negotiators whose interest, above all, is in coming to an agreement in a timely way. This style may encounter problems in the Indian context and I have attempted to outline why this may often be the case. This does not imply in any way that all North American negotiators will experience problems, or that all of these problems will always arise in all negotiations. My purpose has been merely to identify what these problems are and the strategies that might prove effective for the North American negotiator in coping with the cultural challenges in India.

Although the negotiation style in India may be different from that in North America, North American negotiators can cope with these challenges if they understand the skills needed to operate in the Indian business environment, are prepared to make the effort to learn new ways of doing things, and appreciate the constraints of doing business in a still-emerging economy. As the Western expatriate manager, Silvio Napoli once put it, “To succeed in India you have to be one-half monk and one-half warrior. So far, I’ve learnt to develop my monk part.”