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How to Manage International Business Negotiations

As all business owners can tell you, there’s more than just the domestic market. Negotiating with companies overseas involves a lot more than just a simple discussion; it’s also about understanding new cultures. While businesses in some countries value quick negotiations to get deals over the line, others may emphasise the importance of earning trust and taking one’s time. And it’s important to understand and know all of this when entering into an international negotiation.

Successful negotiations begin with an understanding of the opposition’s beliefs, culture, and way of life.

Negotiations

As most business people would know, negotiation is merely a means of conflict resolution. The global market is now coming into play as product markets, businesses, and corporations expand their interest to include foreign businesses and customers.

There are numerous different ways that international relations form - through export/import, sales, finance, marketing, management - depending on the size of your business. And at each stage, it’s likely that you’ll need to negotiate in some form.

It’s important to choose the correct strategy to adopt, depending on the person you are negotiating with, particularly when it comes to different cultures.

There are four main negotiation styles:

Hard negotiation - The most rigid position will work

Soft negotiation - Emphasises building and sustaining a good relationship to build trust

Good cop/bad cop - One negotiator drops the hard stance while the other takes on a softer persona

Boulwarism - A refusal to discuss any option. One party’s position is explained and the other is expected to either take it or leave it.

What you need to know

There are several different factors you need to consider when negotiating with other cultures and countries:

What’s your goal?

While some cultures view the purpose of a negotiation to be a signed contract between the parties, others prioritise the creation of a relationship between the two. It’s important to understand how the other party views the negotiation, and work with that.

Formal or informal?

How do you talk to others? How do you dress? These are all aspects that may impact a negotiation. Formal negotiators generally address counterparts by titles and refrain from small talk while informal negotiators like to get to know the other person and usually refer to them on a first name basis. For example, while in some Western cultures calling someone by their given name is considered friendly and approachable, in Japan it is disrespectful.

How long is too long?

Negotiations take time, but it’s how you deal with that time that’s important. For some cultures, time is money, so deals need to made quickly and directly. For others, it goes back to the initial goal of forming a relationship, so they’re happy to take their time forming a deal in order to also form a relationship.

The written agreement

All formal agreements will be encapsulated in some sort of written document. But how does one’s culture affect the form the document takes? For example, Americans prefer very detailed contracts that outline all possible problems and how they can be handled. On the other hand, the Chinese look to the relationship rather than the contract to deal with issues that may arise post-agreement.

Risky business

The extent that a culture takes risk is also a large factor in negotiating internationally. Some studies have found that certain cultures are more likely to take risks than others. This includes the willingness to divulge information and try new approaches. If a culture emphasises information, and a lot of it, then the likelihood of them being open to risk-taking is slim. They need all the information possible before they can make a decision.

What to do

When facing an international negotiation there are several key skills you’ll need to get the best outcome, whether that be a signed contract or a long-lasting relationships.

Respect other cultures - Appreciate the other culture. Learn about it so that you can better understand where your counterpart is coming from, and what he or she prioritises in business.

Understand the language - The most successful international negotiators are multilingual. Make an effort to learn the language and ensure that when you speak English to a non-English native that you are clear and concise so that they can understand.

Things can change - Understanding that things can change at any moment due to a sometimes volatile international market is key. You’ll need to formulate strategies and systems to ensure you’re capable of dealing with this effectively.

The business world is growing smaller, and the need for international negotiation is increasing. Navigating the often complex world of negotiation is tricky, especially when you throw in international markets.

You should never approach a negotiation blind; always make a strategic choice based on the parties and their goals, situations, and cultural influences.

Learn strategies, develop cultural sensitivity, and make sure that you understand the communication methods required. Try to look at the person behind the problem and understand how they work. Prepare, prepare, prepare in order to properly appreciate the style and personality of your counterpart and respect their cultural beliefs before making any form of bargaining plea.

Image: http://www.shutterstock.com/pic.mhtml?id=105970766&src=id

Posted on Oct 29, 2015 | Tags: Blog

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