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Final Research Paper

Cultural Factors in Negotiation

Table of Contents

Introduction

1. Short-term or Long-term

2. The Attitude

3. Formal or Informal

4. Direct or Indirect

5. Punctuality

6. Know who you are talking to

7. Conclusion

8. Stages of negotiation

References

Introduction

Cultural factors play a significant role in businesses across the world. Sometimes the lack of appreciation of such factors can lead to downturns of various kinds. In fact, the consideration of such factors implies a deeper knowledge of business activities.

In order to illustrate this point of view I would like to look into Wal-Mart. Wal-Mart is one of the largest retailers, which tries to provide its customers with the lowest possible prices. It has been indescribably successful in the USA. Analysts link this success to the fact that the US culture coincides with price strategies that manage to offer products on the lowest possible prices.

Wal-Mart started operating in 1962 and experienced a huge success at the time. However, every company has a life span and each life span involves different stages. Normally after growing to the necessary extends, companies have to go through a stage of maturity. The maturity stage is of great importance, as it can define the company's future in numerous ways. Usually, many choices are made during that stage and most of them are aiming at increasing the life span of a given organization. These choices and actions may involve: differentiation, expansion, innovation, etc. Wal-Mart had chosen to expand during the 90s. It entered Mexico and had to learn the lessons of doing business globally the hard way - through personal failure.

Expanding to Mexico was the first time Wal-Mart had to learn about cultural differences and the ways in which they could influence the consumers' buying patterns. This required very swift actions towards adaptation of the product line, the stores' size and location, etc. It is interesting to note that Mexico currently is the most successful destination that Wal-Mart pursued. After Wal-Mart stabilized its position in Mexico it decided to make a move to other places: mostly developed nations such as Germany, the UK, and South Korea. Unfortunately, in some occasions it takes more than one failure to learn. Wal-Mart did not consider the fact that established competitors were far stronger than they could outplay with a “low-cost” strategy. Soon Wal-Mart was forced to move out of these countries. Regardless of its failures Wal-Mart determined that it had to look for a culture that would have similar to the American buying patterns. They found their answer in China. Now the retail giant holds strong hopes for China and considers it “the center of its growth strategy”.

China is a proof that it is possible for Wal-Mart to expand. However, when doing so Wal-Mart should be very cautious of numerous aspects that are closely related to the prospect country's key influencers.

While researching for this work I determined interesting changes in Wal-Mart's expansion strategy that have been introduced recently. I would like to start with the name of the strategy. Wal-Mart refers to its expansions strategy, as “Wal-Mart's Globalization strategy”. I am strongly convinced that this speaks for itself. Globalization is a term that implies certain world-homogeneity and multinationals bring it closer to reality.

On one hand, we see the world becoming smaller, due to the expansion of multinationals and the growing similarity of products offered throughout the world. However, on the other hand we can clearly see that the change is not as drastic, as we claim it is. This is very well depicted in Wal-Mart's strategic outline.

Yet the fact that the world is becoming a smaller does not necessarily mean that the cultural peculiarities are becoming less relevant. On the contrary, when doing business with other countries we should always consider all possible differences in order to avoid making the wrong impression. Knowing these differences is likely to help us during important negotiations.

The cultural differences in negotiations are one of the key elements. There are numerous studies that were conducted on the basis of cross-cultural business issues that do involve negotiations with different nationalities.

1. Short-term or Long-term

When negotiating keep in mind that in Switzerland and Germany the communication process is purposefully and dry. Austrians do not like to say "no." The rapid denial, in their opinion, is unacceptable.

The purpose of negotiations can be viewed differently depending on the country. For some it is just a contract, for others it is the contract and the relationship. Therefore, it is of key importance to determine the goal of the other party prior to engaging into negotiations that may lead to unfavourable sequence of events. Determining this factor will help you play your game right and consequently help you seal the deal.

2. The Attitude

business cultural negotiation punctuality

There are different attitudes that one can obtain while negotiating. Sometimes these attitudes may even change during the negotiations. There are four types of negotiation attitudes.

It is important to note that people mostly stick to two of these styles: Win-Win and/or Win-Lose. This choice is normally made on cultural and character basis. A search was conducted among 400 participants, 100% of the Japanese would approach the “opponents” with a Win-Win attitude, whereas only 33% of the Spanish would use the same approach.

It is obvious that in this case it will be of key importance to determine the type of negotiator sitting in front of you. This is so because if the Japanese fail to determine what kind of a negotiator is sitting in front of them, they are likely to be abused, in one way or another.

3. Formal or Informal

Often people rush into the conclusion that they are allowed to switch to an informal style, when it is obvious that in certain cultures that would be unacceptable.

The failure of keeping the formal tone of negotiations can lead to coming across as unprofessional, which sometimes can cost you the deal. For instance, for an American using the first name would imply that you consider the person your friend and consequently you trust him, whereas for a Japanese person that can be a sign of disrespect.

4. Direct or Indirect

The complexity of communication will depend on the culture. Representatives of certain cultures may prefer direct communication, which implies that they are willing to lay their cards on the table and tell you what exactly it is that they would like to receive, whereas, other prefer to use methods that are hiding their desires under longer lines and metaphors. Americans and Germans are very straightforward, yet Russian and Japanese people are much more likely to use gestures, vague comments, etc. in order to communicate their ideas.

Therefore, it is important to sometimes wait until you determine whether the person is willing to open up and give you all the necessary factors in order to avoid being abused for you openness.

5. Punctuality

The sensitivity to time will vary depending on where you come from. It is widely believed that the countries that are close to the sound will be less time conscious; therefore a degree of lateness is likely to be present. Russians, Germans, British, and Americans are likely to be very punctual or even early, whereas the Spanish, the Italian are likely to be late.

6. Know who you are talking to

Due to the increasing intensity of international contacts, special attention is directed toward the study of the process of communication between representatives of different nationalities. Cultural identity has a huge impact on the effectiveness of communication. When representatives of different national cultures enter into contact, even speaking the same language, each representative acts on its national model of behaviour, sometimes quite dramatically different from the behaviours of another representative.

Many people are mistaken in thinking that in order to come to an understanding with other cultures, it is enough to talk with them in the same language. According to experts, knowledge of the language - is only a 30% success rate.

In every country and in every nation, there are traditions and customs of communication and ethics. There are two points of view on the existence of national characteristics. First, every nation recognizes its features in the sphere of ethics and etiquette, assigns national circumstances a central place in international relations, in particular in the negotiations, which form the basis of communication. Second, the intensity of business communication in the modern world leads to a "blurring" of national borders and creates the formation of uniform rules and regulations. The increase in the number of business and leisure travellers who visit foreign countries, learn about their culture, leads to a gradual convergence of customs, manners and etiquette peoples of different countries.

Therefore, the participants of international communication must adhere to uniform rules and regulations, however national and cultural differences can be very significant in a business relationship. Modern businessman should be aware, respect and be able to apply a form of communication adopted in the country of his interlocutor. Thus, for example, in Spain business negotiations traditionally begin with a discussion of the weather, sports, and local attractions. The Spaniards distinguished by verbosity, and business negotiations with them are not going too fast. They prefer that the negotiations were conducted between the parties, approximately equal to its position in the business world or in society. During the conversation, the Spaniards prefer to be in close proximity to the interlocutor.

Depending on the culture both of the person and the organization you may find yourself in a position where you spend a lot of time in negotiations and then the person tell you that he/she has to take the decision to a higher instance.

Japanese, Chinese, and Russian people are likely to be working for a hierarchically organized company, which implies that in many occasions it is likely that unless you are speaking to the highest instance, the efforts put into the negotiation are likely to be irrelevant. This cannot be said regarding most Western countries, as their organizational structures are flattening more and more.

7. Conclusion

To conclude, knowing these aspects can contribute a lot to a negotiator's development in the sphere. It can enhance the process of negotiations and help the negotiator go through the five stages of negotiations with ease.

8. Stages of negotiation

This paper looks into the different aspects of cultural influences in negotiations. It has made it clear that being responsible when it comes to the research of each culture is of key importance.

Preparation is of severe value to negotiations. Research has shown that most of the successful negotiators spend more time on the preparation and evaluation of results than the average negotiators. This can only mean that as negotiations are a form of communication the more you know about a person the more empowered you are.

Looking into the cultural peculiarities of a person is likely to mean that you will be able to make a positive impression, communicate in the appropriate manner, and meet the cultural requirements of the other party. All these aspects combined together can boost the performance of any negotiator.

References

1. http://www.kwintessential.co.uk/cultural-services/articles/cross-cultural-negotiation.html

2. http://www.mindtools.com/CommSkll/NegotiationSkills.htm

3. http://www.forbes.com/fdc/welcome_mjx.shtml

4. http://www.businessballs.com/negotiation.htm

5. http://www.moneycrashers.com/negotiation-techniques-to-score-a-great-deal/

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