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There Are Both Technical and Behavioural Difficulties in Dealing With Overseas Suppliers

There are technical and behavioral difficulties in international negotiations. Technically, parties must ensure agreements are clearly understood in a shared language. Behaviorally, cultural differences like business etiquette must be considered. Successful negotiations require planning including understanding the other party's culture, language, and business practices. Negotiators should prepare objectives and ensure all technical terms will be understood to facilitate clear agreements. Cultural awareness and respecting differences are important for positive relationships.
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0% found this document useful (0 votes)
57 views36 pages

There Are Both Technical and Behavioural Difficulties in Dealing With Overseas Suppliers

There are technical and behavioral difficulties in international negotiations. Technically, parties must ensure agreements are clearly understood in a shared language. Behaviorally, cultural differences like business etiquette must be considered. Successful negotiations require planning including understanding the other party's culture, language, and business practices. Negotiators should prepare objectives and ensure all technical terms will be understood to facilitate clear agreements. Cultural awareness and respecting differences are important for positive relationships.
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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UNIT 10

The International Dimension

Barriers to international negotiation

There are both technical and


behavioural difficulties in
dealing with overseas
suppliers.
Technical difficulties concern:
the issue of understanding
what is being offered and
accepted, and
what has eventually been
agreed.
Behavioural difficulties
concern how people
interact with each other and
form pleasant and
rewarding business
relations.
To deal first with the technical difficulty of
communication, it is clearly vital that agreements
once concluded are expressed in language that
both parties understand.

But before that stage is reached oral discussions


will take place.

Buyers must make every effort to ensure that such


discussions are unambiguous.
Native speakers of English are
in a fortunate position in that
their first language is widely
recognised as the standard
language of international trade.
But even if negotiations are
conducted in English, it is
important to ensure that the
supplier understands technical
terms and idioms in the same
way as the buyer.
Frank Acuff (How to Negotiate
Anything with Anyone
Anywhere in the World)
emphasises the importance of
body language in international
negotiations.
He states that facial
behaviours, hand gestures,
eye contact, touching and
other non-verbal
communication patterns are
culturally driven.
For an American, a firm
handshake is expected
and a limp handshake
may suggest lack of
assertiveness.
In other cultures, the
perception may be quite
different: the US
approach may appear
unduly aggressive.
This leads on naturally to the less
technical and more behavioural
problems of dealing with overseas
suppliers.
As in all negotiations, it is important
to make a positive impression on
one’s business partners.
This is more difficult in the case of
overseas partners because of cultural
differences.
For example, it is common to refer to
Japanese patterns of business
behaviour which can cause confusion
to British and American buyers.
One instance of this is the much
greater link between social and
business relations in Japan; social
communication forms a larger
part of the negotiation process
than is common in Britain or
America.
Buyers doing business in
Japan should not assume
that extensive entertaining
by their hosts is an
unimportant prelude to the
main talks.
Culture and negotiation
Research by Phatak and Habib
suggests that two overall contexts
have an influence on international
negotiations: the environmental
context and the immediate context.
The environmental context
includes factors that
influence the negotiation
but are outside the control
of the negotiators.
These include:
different political and legal systems;
factors in international economics;
the impact of foreign governments and bureaucracies;
instability (in political systems, and in infrastructure);
differences in ideology;
differences in culture (already discussed) and
the impact of external stakeholders, such as Chambers
of Commerce and trade unions.
The immediate context of international
negotiations is said to include five main
factors:
•relative bargaining power of the parties;
•levels of conflict between the parties;
•relationships between the negotiators;
•desired outcomes; and
•immediate stakeholders.
Geert Hofstede carried out a
cross-cultural study to identify the
similarities and differences among
a large number of employees
working for the same
multinational company but
located in 40 different countries.
He identified five
dimensions along
which the various
cultures differed from
each other.
Hofstede’s cultural dimensions
•Long-term vs. short-term
orientation. Long-term emphasizes
practice and practical value. Short-
term focus their content on truth
and the certainty of beliefs.
Femininity vs. masculinity. gender roles, not
physical characteristics. High-femininity
countries blur the lines between gender roles,
while high-masculinity countries display
traditional role expectations.
High-masculinity countries respond to Web sites
that speak directly to traditional gender roles.
High-masculinity: Japan, Low-masculinity:
Sweden.
Power-distance. differences in people accept
or expect access to power.
A high power-distance country, like Malaysia,
displays customers and average citizens less
prominently. Authority roles are enforced by
such images as official certification logos.
A low power-distance country would
emphasize equality among social and age
groupings.
• Collectivism vs. individualism.
• Collectivism: people integrated into strong groups that
protect them in exchange for unbridled loyalty.
• Individualism: a person’s strong sense of self and that of
his or her immediate blood relations.
• A collectivist country would show groups of people in
images,
• Individualistic countries would most likely find site content
and images with a single person accomplishing a challenge
more appealing. The United States is an example of an
individualistic country.
The following issues that may be affected
by our assessment of the ‘other’ culture.

• Definition of what is negotiable and


what the process consists of
• Distributive or integrative approach
• Selection of negotiators
• Protocol (use of first name vs use of
formal titles etc)
• Communication, including body
language
• Time sensitivity (some cultures are used
to more leisurely approaches than we
favour in Britain and the US)
• Risk propensity
•Team negotiation versus individual
negotiators
• Nature of agreements (eg whether or
not a written memorandum is binding)
• Extent to which emotion is used in the
negotiation
Many commentators suggest a policy of
‘When in Rome, do as the Romans do’. In
other words, the advice is to modify our
negotiation behaviour so as to take
account of cultural differences.
However, this may not be the most
sensible course of action.
There are several reasons why negotiators might be
better advised to stick to their normal style of doing
business.

• They may not be able to modify their style effectively.


• Even if they can, it may not lead to a better outcome.
• Research suggests that moderate adaptation of
behaviour may be more effective than wholesale
adoption of the other party’s presumed style.
Preparing for cross-cultural negotiations

One vital factor in the growth of global


sourcing has been the development of
communications technology.
This has made it possible for buyers and
suppliers to communicate more rapidly
and effectively than ever before.
The key to successful negotiation is advance planning. The
buyer must take account of numerous factors that impact
particularly on international negotiations.
• The local language of the supplier
• The culture (both social and business) in the supplier’s
country
• The political system in the supplier’s country
• The infrastructure (transportation modes,manufacturing
facilities, distribution networks etc) in the supplier’s country
• Any local restrictions on trading with overseas partners
• Export regulations
The buyer is then in a position to prepare a negotiating plan incorporating a
carefully defined objective: what are we trying to achieve in the negotiation? He
should consider such matters as the following.

• Product specification
• International quality standards
• Delivery mode and lead time
• Payment method and how to fund it
• The currency in which the agreement will be framed
• The use of Incoterms 2000 (standard terms of international trade)
• Any risk areas and how they can be managed
• The applicable law and any provisions for dispute resolution
Alan Branch has a helpful list of hints for conducting an
international negotiation.

• Provide each team member with a written brief summarising


the objectives and agenda of the negotiation.
• Ensure that each team member has a business card,
preferably printed front and back, in the two relevant
languages.
• Ensure that initial greetings respect the traditions of the host
country.
• Establish a personal relationship with the members of the
supplier’s team.
• Avoid discussing contentious points in the early stages of the
relationship.
• Ensure that all members of the team are professional in appearance
and demeanour.
• In some cultures it is customary to evade difficult questions or to
respond with silence. In such cases, it is preferable not to pursue the
point immediately, but to reflect on why the point caused such a
response.
• Start each session with a review of the main points agreed in
previous sessions.
• Communicate in clear language, avoiding slang or idiomatic phrases.
• Avoid discussing business matters in social meetings.

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