How Various Cultural Differences May Affect the Success of International Business Negotiations - Essay Example

? Discuss how various cultural differences may affect the success of international business negotiations. Evaluate several strategies that negotiators can use to manage successfully these cultural differences The global business scenario has passed through different phases, and opportunities of international business have grown over the years. Negotiation is one of the primary aspects of doing business although cross-cultural barriers often pose serious difficulties in conducting successful business or creating a win-win situation from which both sides get equal benefits. In order to understand this aspect more closely, the meaning of the term negotiation has to be understood in an appropriate manner as applicable in international business. The origin of the word negotiation goes back to the Roman word ‘negotiari’, which implies continuing business (Hendon and Herbig, 1996, p.1). As a matter of fact, the word negotiation has a multi-layered structure wherein the common interests and conflicts of business organizations are to be managed for obtaining a favorable situation. How Does Culture affect Business Deals? Thus, an effective business can be compared with a fruit bearing tree and lack of communication suddenly leads to a situation in which this tree stops bearing fruits any longer. In short, communication is a significant part of successful business negotiations. The question that can be raised here is whether culture can be a possible impediment in the way of a successful business? A majority of people are sensitive about their beliefs, values, experiences and knowledge all of which constitute their culture. Therefore, there is a distinct flavor about the culture of different nations.(Silkenat, Aresty and Klosek, 2009, p.48) Arousal of Conflicts during Business Negotiations In fact, the following points establish clearly how conflicts may arise in business negotiations owing to cultural differences (Hendon and Herbig, 1996, p.2): The core of a disagreement primarily erupts due to differences in requirements. Thus, a business might fail to proceed as one of the negotiators may not prefer the opinion of the other side. The misfortune here is that there are no laws or rules for arriving at a consensus in business negotiations until one of the parties agree to change their opinion and break the barriers for better business prospects. Regardless of differences, both parties in a business avoid engaging in a direct business duel and instead prefer to keep quiet for future references. Broadly speaking, the world of business is filled with ironies and the worst of enemies often unite for common benefits. The crux of the matter is that in a successful business negotiation, it is important for both parties to propel each other towards a conclusion. Since, the process involves skilful communications; cultural barriers emerge as an evil particularly when one party tries to establish supremacy over the other. Such challenges inhibit the business process to a great extent, raising its ugly head in the form of traditions and beliefs (Gannon, 2009, p.xiv ) Although, cultural hindrances seem tricky initially, they are nothing more than idiosyncrasies that are to be eliminated through proper and careful planning. In other words, a successful business must have the power to mow down the unconventional aspects of a nation that is more popularly referred to as the culture of the people residing in a country (Hendon and Herbig, 1996, p.4) Communication: The Fundamentals of Business Deals Communication is essentially cultural whether expressions are verbal or non-verbal in nature. China is one of the most forwarding countries conducting extensive business internationally, which is largely due to the reforms and policies. China has vehemently proved that poor communication leads to diminishing efforts for converting a business into a successful deal and eventually weakens the status of a company in the market. It is no wonder that cross-cultural negotiation training enable a company to score over its competitor and companies are engaging trained personnel in order to reform the strategies of the staff of sales and marketing department (Huang,2010, p.2) How to Deal with Cultural Differences during Business Deals? In the next set of arguments, we will delve deeper into the reasons for which cultural differences pose a difficulty that are often described as black clouds and each party fumbles for the silver lining. What are the different steps of negotiation that helps in evading cultural differences? Let us arrange them in the following points (Hendon and Herbig, 1996, p.4): The first step is to acquire information about a company and its location. The power of information provides a constructive beginning for spearheading the initial issues at first. It doesn’t take much to understand that in European and American countries, direct eye contact helps in establishing trustworthiness. On the other hand, in Japan, such a gesture must be avoided as it is considered rude. Similarly, punctuality is another game changing aspect, which is strictly adhered to the people living in Western countries. For business deals that are to be held in foreign countries, the host country should allow the guests to acclimatize with the location and the adversities of weather if any. As a matter of fact, a local representative should be appointed for this purpose. While all this may sound simple apparently, it is necessary to conduct a thorough research of the venue of meeting before the negotiations begin (Jung, 2007) It is necessary to build or create a platform of trust for better and more effective communication. While carrying out business negotiations, none of the parties should have mind blocks; rather they must be able to exhibit their willingness to convert it into a successful business deal. There are several instances of conflicting interests that may arise during business negotiations that are to be converted into reconciling interests despite some hard bargaining and persuasion. (Margaret, 1995, p.42) Other Factors or Influences Affecting a Deal A majority of international business negotiations involve third parties including consultants, government, agents and subcontractors. These parties usually have considerable influence on business negotiations. For instance, the government representatives may often discuss about harmonious objectives related to infrastructure, employment and foreign exchange that are mutually beneficially and offer good prospects to both countries (Ghauri and Usunier, 2003, p.6). Thus, negotiating a successful business deal is extremely crucial for any business organization. If we consider the example of Rolls Royce, the negotiators of this company ended up giving incessant concessions while trying to grab a contract for engine. In a desperate bid to acquire this deal, they went much lower beyond their targeted margins within a contract of fixed rate. Soon, the company officials realized that each engine was sold in a lesser price than the cost of manufacturing the same. In this manner, a company of repute and an engineering firm with far fetched standing ran into bankruptcy in no time (Hendon and Herbig, 1996, p.3) Who is a good negotiator? Whether it is cultural differences or mind blocks of individuals who are actively involved in the process of business negotiation, there are various aspects that are to be followed by those individuals within a company who are actively involved in it. A good negotiator is one who has the proficiency of viewing every problem as a challenge and able to convert it into a win-win situation. For this, an individual should have strong power of observation and listen to the competitor. Furthermore, a successful negotiator tries to create a congenial ambience through open communication which is of great help when the actual negotiations begin. In short, the attributes that have been mentioned above allow a negotiator to understand the nuances of culture and also understand or read the mind of the competitors. In fact, small traits such as the voice modulation of the competitors, the time taken for consuming a cup of coffee or smiling faces are visible features that should also be observed over a period of time in order to understand the ways in which negotiation should be carried out successfully (Sarkar, 2010. P.32-35). According to the historical interpretations that date back to 17th and 18th century, a good negotiator should be able to pick up the issues instantly without getting impulsive throughout the process of clinching a deal. Culture: Is it a Trivial Issue in Business Negotiation? As far as the cultural attributes are concerned, it is important to understand the sensitivity associated with the same. Thus, a blow to one’s culture or belief is to be strictly avoided during a business negotiation and make it work favorably towards a positive outcome. For instance, a business group visiting a foreign location would find themselves in a comfortable position during a business negotiation by expressing interest towards the culture and historical backgrounds or by following some of the rituals that are specific of the people residing in that country e.g. bowing in front of Japanese people is a sign of respect that will be appreciated by the people of that country (Hendon and Herbig, 1996, p. 6-9). With changing minds and business principles particularly globalization, the cultural adaptations have become easier for people irrespective of their language and faith. In other words, the business organizations have learnt to understand that a successful deal must never be impeded by trivial cultural issues or peculiarities and it is difficult for people of any country to completely shrug off their responsibilities towards their culture along with the significance of a mutually beneficial business deal (Gesteland, 1996, p.126). The skills of negotiation also incorporate such aspects that may appear as useful or something that adds to the value of the other side who are involved in a deal. Additionally, there are various issues that influence the decisions of a negotiator such as the position of the organization, the resources that are available for completion of the deal, the power and level of trust in case such deals have already been established with the company or more is awaited. Furthermore, if a company is involved in frequent business deals with other business organizations across the globe, reviewing each deal is extremely important as the imprints of the previous deals are considered as learning experiences and also allow the negotiators to avoid repeating the same mistakes over and over again( Dhungel, 2008, p.4) The general strategies that are to be followed by negotiators during a business deal should be like a free flowing conversation such as patience, expression of interests about the business as a whole, the art of dealing with conflicting interests, resisting the approaches of the other side in case of situations in which the executives pose themselves as intimidating (Sarkar, 2010, P. 12). A Final Tip The psychology and attitude of negotiators play an extremely important role in making a deal as successful in without allowing the cultural interferences to dominate the requirements of a business organization. In short, a business survives on the basis of profits that are achieved when successful business deals are struck with several organizations for better outcome. As a matter of fact, conflict of interests is bound to happen during a business negotiation. It is not possible to eliminate that even after a specific deal is described as successful. The fundamental philosophy of every business organization is to continue with business negotiations by successfully adapting to the milieu of the business world and the cultural beliefs of different nations. References Dhungel B,(2008) Negotiation Skills, Germany: GRIN Verlag Gesteland R.R. (1996), Cross Culture Business Behavior, California Gannon, M. J (2004) Understanding Global Cultures, London: SAGE Ghauri, P.N. and Usunier, J.C. (2003), International Business Negotiations, New York: Emerald Group Hendon D.W., Hendon R.A., Herbig P, (1996), Cross Cultural Business Negotiations, USA: Praeger Huan l., 2010, Cross-cultural Communication in Business Negotiations, International Journal of Economics and Finance, Vol. 2, pp.196-199 Jung T. T (2007)., Impact of Culture On International Business Negotiation, Lynn University. Margaret.A. N. (1995), Business Week’s Guide to Cross-Cultural Negotiating, New York: Tata Mc Graw Hill. Sarkar A.N., 2010, Global Business Negotiation, New Delhi. Silkenat J. R., Aresty J.M., Klosek J, (2009) The ABA Guide to International Business Negotiations, United States of America: American Bar Association. Read More