Alpaslan Korkmaz

KOC UNIVERSITY - ISTANBUL

MIM
February 2014

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Negotiate to:

 Conclude business (deal-making negotiation)

Ex: in the market/ between 2 companies
 Make decisions (decision making negotiation)
Ex: Board of directors
 Solve arguments (dispute resolution negotiation)
Ex: HR / diplomats / politicians

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Negotiate = interactions of:

 Power
Material, financial, political, moral, religious, etc.

 Interest
Material, financial, political, geostrategical,
common, personal, etc.

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Goal of the course:
Give an insight of international, intercultural and
multicultural negotiation
to
the managers, who are evolving in an international,
intercultural and multicultural world

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Educational method
 Lecture (practical life)
 Theoretical Framework (analysis tools)
 Oral questionning (in every lecture - for 30%)
 Final examination (in written format - for 70%)

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The conceptual parts of the course:
1. Theoritical framework of negotiation (today)

2. Deal-making Negotiation

3. Dispute resolution Negotiation

4. Negotiate to make a decision & to solve managerial

conflicts in the multicultural teams social

5. Social Dilemmas & Governments “around the table”

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Introduction
Negotiation - Definition

“Process of resolution of a “conflict” (encounter of two

prospects), appearing during a potential bond of
interdependence between two or several parts”

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A. Negotiation – the 3 levels
1. … to conclude a business (Deal-making
negotiation)

2. … to make a decision (Decision-making

negotiation)

3. … to solve an argument (Dispute resolution

negotiation)

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A. Negotiation – the 3 levels
1. Deal-making Negotiation

A) Buyer – wants to pay as

little as possible
B) Seller – wants to receive
the best price possible

Deal-making
negotiation
(ex. An American company
which wants to buy a piece
of land that belongs to the
State (in non-US country))
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A. Negotiations – the 3 levels
2. Decision making Negotiation

If an agreement on “the transaction value” is

found, the contractual part and the
responsibilities related to the 2 parts, the
obligations, the rights, the implications, etc.
remain

Decision-making negotiation
(ex. US approach: very formal and legalist,
careful, based on fear)

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A. Negotiation – the 3 levels
3. Dispute resolution Negotiation

The agreement of the 2 parts is assured… but

emerges “an argument” (dissension)

Dispute resolution negotiation

(ex. At the last minute, a State body does not agree
to sell 2 plots of land, but 1 only!)

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B. In International Negotiations
The basic assumptions differ among the parts, in
terms of:

 Social interactions (e.g. Castes in India)

 Economic interests (e.g. Industrialized countries - >
oil zones)
 Legal Bases (e.g. Country of the GCC)
 Political realities (e.g. Israel)

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Attention to “faux amis”:
Same notion can have a different meaning
“to be punctual” Switzerland vs Middle East
“to be ethical” Germany vs China (concept
of copy “IP rights”)
“to be social” USA vs UAE (dormitories)
“to think ecology” Europe vs China
etc.

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C. To negotiate, it is a redistribution
of resources, in terms of values
A successful negotiation leads to a
DISTRIBUTIVE Agreement,
so that fixed resources are redistributed and thus
expectations of the 2 parts are satisfied

E.g. Buyer has 100 USD

exchange
Salesman has 1 object of this value

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...even better:
To create value during the negotiation process,
thus to redistribute more for the 2 parts.
=> INTEGRATIVE Agreement

Thus, any agreement is always DISTRIBUTIVE, but

it can be ameliorated if it becomes INTEGRATIVE
as well!

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Example
 An American couple living
in France wishes to
organize a festival of
Hallowen for the 30
children of the village in
the evening.

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Example (cont’d)
 The lady must buy 30 pumpkins.
She finds just 30 of them, in
only one farm!
 The farmer asks a reasonable
price for them.
 When the lady agrees to buy,
but all of a sudden the farmer
refuses!….

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Example (cont’d)
 The lady asks politely the reason why she
refuses

Try to understand while obtaining the maximum

information

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Example (cont’d)
 The farmer explains that if she sells them all, she will not
have any more seeds for the plantation of the next
season!

What to do?

Create value!

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Example (cont’d & finished)
 The lady then proposes to bring
back all seeds to farm the following
day.
 And the business is concluded!
It is an integrative agreement,
because by a frank question and a
sincere answer, value was created.
(A part needs pumpkins and the
other needs seeds).

Could /should the lady ask for a

price rebate?

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To obtain an integrative agreement
It is necessary to have:

 Difference in the preferences of the negotiators

(pumpkins vs seeds / timing)

 Compatibility of these differences

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If the lady had accepted the first irrefutable fact, it
would have taken what is given to her =>
distributive agreement

The integrated agreement is always better!

 It satisfies the lady best, because she has 30
pumpkins. It satisfies the farmer best, because she
earns more money and she has her seeds back.
 This negotiation could also have ended in a failure!
They could have stopped the process without
succeeding.
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Advantages of the integrative
agreement
 More value created, therefore more possibility of
redistributing
 To make succeed a negotiation positively, when it
could have failed

We can carry out integration only if we know the real

interests and preferences (and not the supposed
ones) of the interlocutor.

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D. Interactions of the culture on
the negotiation process

 Interests: needs or reasons which underline the

position of the negotiator

 Priorities: relative weightings of these interests

 Strategies: beams of attitudes, words and

behaviours adopted in order to lead to the objective
of the negotiation

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D. Interactions of the culture on the
negotiation process
1. Culture - Definition

 Psychological elements: values and standards,

shared by the members of the same relatively
homogeneous group
&
 Socio-structural elements: such as the economic,
social, political and religious institutions which
constitute the context of the social interactions

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D. Interactions of the culture on the
negotiation process
2. Definitions

 Cultural values: show what is important for the

negotiator and the influence.

E.g. Honor of the group/ people

Personal profit
Etc.

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D. Interactions of the culture on the
negotiation process
3. Definitions
 Cultural standards: show the
appropriate and inappropriate
behaviours of the negotiator,
which influence also his/her
strategy

E.g. We don’t laugh vs we laugh

We speak about the family
vs we don’t speak about it
We “do not tackle” the subject at
once vs “we pass to the action
without wasting time”

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D. Interactions of the culture on the
negotiation process
4. Definitions

 Cultural institutions: preserve and promote the

values and standards (“structuring structures” Pierre
Bourdieu)

E.g. Family
Educational system
Company
Church (Religion & Religious institutions)
Etc.
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D. Interactions of the culture on the
negotiation process
5. Definitions
 Ideologies: shared standards by a group
allowing to interpret the situations (“IF I am in
negotiations… then…”) and the behaviors of the
others (“IF he threatens me…then …”)

E.g. Warlike vs pacifist “negotiators”

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E. Culture affects:
 Interests and priorities
E.g. Traditionalist approach vs progressist approach

Eurodisney Paris: difficulties that the Americans

experienced in convincing the farmers of the Val de
Marne. Despite important unemployment rate!

Never treat the other part as irrational! Better to

understand in order to convince it.

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E1. Culture affects:
 Negotiation strategies

The culture generates standards, which

themselves, from their structuring functions, can
limit the behaviour choice of the negotiator.

E.g. Not to lose the face (the Far East)

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E2-1. Confrontation
 Direct or indirect

Certain cultures do not accept

direct confrontation! Completely
counter-productive!
E.g. Japan/China vs Europe/USA

The international negotiator must

integrate this concept in his strategy.
E.g. to avoid the shock
to avoid the argument

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E2-2. Motivation
It is related to
 Own interests
 Interests of the others
 Collective interests … of the negotiator

Ex: at the time of privatizations, the State has

collective interests (return of money + preserving a
profitable activity + preserving employment). The
acquiring company has its own interests.

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E2-3 Influences
 The power is our capacity of influencing someone
so that he acts upon our will.

 There exist various manners of measuring the

capacity in the social interactions, but we will retain
2 of them, which will evolve differently according to
the cultures

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 E2-3 Measure of influences - 1
 BATNA (Best Alternative to a negotiated agreement)

Worse the BATNA of a negotiator, less he has negotiation

power and more he is obliged to proceed positively (little
room for maneuver!)

E.g. The lady vs the farmer. The BATNA of the lady would
have been 30 melons (not super!) instead of 30 pumpkins!
Thus difficult for her to influence the farmer in her direction!

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E2-3 Measures of influences - 2
 Fairness standards
Are rules, contracts, laws or precedents, social
statuses (age, experiment, etc) or social
ideologies (equity, equality, need).

E.g. If the lady had said to the farmer that she

needed pumkins, would she have succeeded?
According to the analysts, the “BATNA” is relatively
better as a measure.

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E2-4 Information
 Information is the currency of the negotiation.

Information on the BATNA, the fairness standards

 effects on distributive agreements
Information on the interests and priorities =>
effects on integrated agreements
Attention: if the negotiator does not understand
the information given by the counter party, any
chance of integrated agreement disappears!
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 In order to collect information, it is necessary
to listen and to be patient!
E.g. To let make the great introductions

 In order to make information operational, it

is necessary to know how to use it

E.g. The “Eastern” indecisive boss, who is

flattered, but made understood that he is the
one who decides (since he explained during
a long introduction all that he had done for
his company)

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 Culture influences the way of issuing information :

 Direct, with the meaning in the remarks :

E.g. A banker who informs his customer that his business

plan will not be supported financially.

 Indirect, with the meaning given in the context of

the message:

E.g. The same banker who asks the customer to provide

additional information and data so that the business
plan is analyzed in-depth (in fact the customer will not
be able to provide them!)

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F. Culture affects the
negotiation strategy
 Hofstede’s 5-D model of culture: All behavior determined by culture

5+1 dimensions of culture

1 • Power distance

2 • Individualism vs. Collectivism

3 • Masculinity vs. Femininity

4 • Uncertainty avoidance

5 • Long-term orientation

+1 • High context vs. Low context culture

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 F1. Power Distance Index
 Focuses on the degree of equality, or inequality,
between people in the country's society.

 A High Power Distance ranking indicates that inequalities

of power and wealth have been allowed to grow within
the society. These societies are more likely to follow a
hierarchy that does not allow significant upward mobility
of its citizens.

 A Low Power Distance ranking indicates the society de-

emphasizes the differences between citizen's power and
wealth. In these societies equality and opportunity for
everyone is stressed.
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 F1. Power Distance Index
Characteristics Tips
High Power Distance • Centralized companies • Acknowledge a
• Strong hierarchies leader’s power
• Large gaps in • Be aware that you
compensation, authority may need to go to
and respect the top for answer

Low Power Distance • Flatter organizations. • Use teamwork

• Supervisors and • Involve as many
employees are people as possible in
considered as almost decision making
equal

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 Hierarchy vs Egalitarianism
In the hierarchical cultures:
Importance of the social status, implying the
power!
Obligation of obedience from the “bottom of
the scale” towards the top.
Paternalist approach (patriarchal) “Top-
Down”.

We avoid conflict, which is a lack of respect

and which is likely to threathen the social
structure

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The norm in this cultural approach is not to defy
the superior.
If a conflict appears, a third part, above the fray
(higher statute) can intervene and solve the
conflict
 he reinforces his position

 he doesn’t allow any form of humiliation

to appear

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 In the egalitarian cultures:
A success in a negotiation does not mean a
better permanent social position
The power used during a negotiation is
transitory and situational

Acceptance of the challenge, which allows a

handing-over (remise en question)

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Ex: additional explanation of the low price of
Japanese cars between 1960 and 1980 and of
their increase afterwards

Hierarchical culture, feeling inferior compared to

American cars

But after 1980, the reinforcement of the Japanese

economy placed them on the same level as the
American cars => increase in prices

Parallel with Korean cars (… Chinese?)

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F2. Culture affects the negotiation
strategy

 Individualism vs collectivism

The most studied cultural value! A classic!

Individual above the company (State, Society) or

Company (State, Society) above the individual?

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F2. Individualism vs. Collectivism
 Focuses on the degree the society reinforces individual or
collective, achievement and interpersonal relationships.

 Individualism ranking indicates that individuality and

individual rights are paramount within the society.
Individuals in these societies may tend to form number of
“independent” relationships.

 Collectivism typifies societies of a more collectivist nature

with close ties between individuals. These cultures
reinforce extended families and collectivities where
everyone takes responsibility for fellow members of their
group.
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F2. Individualism vs. Collectivism
Characteristics Tips

Individualism • High valuation on • Acknowledge

people’s time and their accomplishments
need for independence • Don’t ask for too much
• Enjoyment of personal information
challenges and • Encourage debates and
expectation of rewards expression of own ideas
for hard work
• Respect for privacy

Collectivism • Emphasis on building • Show respect for age

skills on becoming and wisdom
masters of something • Suppress feelings and
• Work for intrinsic emotions to work in
rewards harmony
• Harmony more • Respect traditions and
important than honesty introduce change slowly
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 In the individualistic cultures:

The norms promote the autonomy of the individual.

The social and economic institutions reward the

personal achievement.

The legal structures protect the individual rights.

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 In the collectivist cultures:

The norms promote the

interdependence of the
individuals by putting the
importance on the social
obligations.

The social and economic

institutions reward for the
classes of people rather than
of the individuals.

The legal institutions support

the collective interests rather
than the individual rights.

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 F3. Masculinity vs. Femininity
 Focuses on the degree the society reinforces, or does not
reinforce, the traditional masculine work role model of
achievement, control, wealth and power.

 Masculinity ranking indicates the country experiences a

high degree of the masculin values. In these cultures,
male values like achievement, success, rewards, etc.
dominate a significant portion of the society and power
structure (ex. Japan, Italy, Switzerland, USA, etc)

 Femininity indicates the country has more feminin values

like responsibility, quality of life, care, safety and
harmony (Sweden, Norway, Finland, Thailand, etc)
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 F3. Masculinity vs. Femininity
Characteristics Tips

Masculinity • High valuation on • Acknowledge

people’s achievements accomplishments
and success • Encourage debate and
• An enjoyment of try to show the individual
challenges and an benefit for the
expectation of rewards counterpart
for hard work

Femininity • Emphasis on building • Express feelings and

relationships emotions to work
• Caring about each towards a solution with
other benefits for both sides
• Harmony more
important than personal
success
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 F4. Uncertainty Avoidance
 Focuses on the level of tolerance for uncertainty and
ambiguity within the society - i.e. Unstructured
situations.
 A High Uncertainty Avoidance ranking indicates the
country has a low tolerance for uncertainty and
ambiguity. This creates a rule-oriented society that
institutes laws, rules, regulations and controls in order to
reduce the amount of uncertainty.
 A Low Uncertainty Avoidance ranking indicates the
country has less concern about ambiguity and
uncertainty and has more tolerance for a variety of
opinions. This is reflected in a society that is less rule-
oriented, more readily accepts change and takes more
and greater risks.
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 F4. Uncertainty Avoidance
Characteristics Tips
High Uncertainty • Very formal business • Be clear and concise about
avoidance conduct with lots of rules your expectations and
and policies. parameters.
• Need and expect • Plan and prepare,
structure. communicate often and
• Sense of nervousness early, provide detailed plans
spurns high levels of and focus on the tactical
emotion and aspects of a project
expression.
• Differences are avoided.

Low Uncertainty • Informal business attitude. •Do not impose rules or

avoidance • More concern with long structure unnecessarily.
term strategy than what is • Minimize your emotional
happening on a daily basis. response by being calm and
• Accepting of change and contemplating situations
risk before speaking.
• Express curiosity when
you discover differences.

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 F5. Long-Term Orientation
 Focuses on the degree the society embraces, or does not
embrace, long-term devotion to traditional, forward thinking
values. This value was mainly created to understand the long-
term orientation of mainly Asian cultures who orient
themselves on the values of Confucius

 High Long-Term Orientation ranking indicates the country

prescribes to the values of long-term commitments and
respect for tradition. This is thought to support a strong work
ethic where long-term rewards are expected as a result of
today's hard work. However, business may take longer to
develop in this society, particularly for an "outsider".

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F6. Low contextual communication vs High
contextual communication

In cultures with low contextual communication:

Information is given in a direct way, explicitly, without

nuance and relatively detached of the context. Direct
conflict is not inevitably avoided.

Ex: Germany, Scandinavian countries, Switzerland, the USA

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 F6. Low contextual communication vs High
contextual communication
In the cultures with high contextual communication:

Information is given in an indirect way, contains formulas,

gestures, attitudes => it must be decoded
Silence, withdrawal, “one will refer about it to the hierarchy”,
etc…

Ex: Arabian countries, France, Japan, China, Mediterranean

countries, Russia

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G. Culture and Negotiation:
A complex link
 There are no mechanical bonds between a given
culture and its negotiation strategy
=> all people of the same culture do not act exactly
in the same way

=> the cultures interpenetrate (more and more!)

(Some Indians are more british than British people)

=> the cultures are not monolithic (underlain by

multitudes of constitutive layers)
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 Do not forget:
 The strategy of the negotiator evolves according to his
counterpart (we are not the only ones to take account
of the other, our counterpart is doing it too!)

 When a negotiation takes place between 2 parts of the

“same culture”
reinforcement of the cultural normative attitudes
between 2 parts of different cultures
adjustment of the strategies according to the other

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A good international negotiator:
 Knows the culture of the other part, but does not
consider his knowledge as unchangeable
 Proceeds carefully and listens to the other part
 Adapts to all circumstances, therefore can change
his negotiation strategy during the process, but
without losing sight of his objective

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