International Management - Essay Example

1. Introduction The process of globalization has changed the dynamics of international business. The emerging new economies of the developing world have made the global market more competitive, challenging and interesting. It is for these reasons that the business houses need to become less rigid and change their business and market strategy as per the socio- economic compulsions of the host countries. They must adopt versatility in the work ideology and functioning to meet the challenges international business negotiations with efficiency and unmatched proficiency. Therefore, it becomes imperative to look at the factors that have significant impact on the business negotiations. Analysis of those factors for their role and impact on the company’s marketing policies and strategies in such market conditions is important because market strategies need to be tailored according to the environmental conditions of the place. 2. Definition of Negotiation Business negotiations are intrinsic part of market strategies and can be broadly defined as dialogues between two business partners to resolve differences in opinion and perspectives regarding various business issues, vis-à-vis financial outcome, terms and conditions, scope etc. so that each comes out to be the winner. Effective negotiations improve and improvise mutual interests for optimal advantage between business partners, thus promoting confidence and mutual respect. Negotiations in the international business demand more careful considerations because of diversity of issues like different value system, socio-cultural perspective, currency, legal paradigms and market conditions. 3. Cross Cultural Negotiation In the fast changing global equation of socio economic development, it is important that efforts are made to ensure that better understanding of cross cultural values and business practices are developed. The need of the hour is that a comprehensive study of factors which may hinder the business negotiations are undertaken and efforts are made to mitigate the influence of those factors in furthering the mutual business development of the global community. The imperatives of the global business environment have transformed the traditional business practices to suit the business and cultural compulsions of the host business partners. The international business practices must take cognizance of the changed equation of business practice with reference to the changing socio cultural background of the country, where one needs to establish the business interests. National cultures are known to determine the negotiator’s assumptions and thoughts which help to form business strategy and behavioral pattern (Cohen, 1993; Rubin & Sander, 1991). It is therefore, important that overseas business representatives must make efforts to understand the wider implications of the emerging multicultural society, particularly that of their host country and improvise techniques and skills to encompass traits and behavioral pattern that facilitates better perception and understanding of people. 4. Process of Negotiation 4.1 Preparation Negotiations primarily involve six major steps: defining goals and objectives; understanding socio-cultural values of one’s business partner; identify main variables in the negotiation processes; gaining comprehensive knowledge of country’s legal framework and political compulsion which may have significant impact on business outcome; develop mutual trust and confidence building; thrashing out differences to achieve common goals and work out implementation details; and closing the deal with written contract. 4.1.1 Profile development Profile development of business partners from different countries helps to determine the variables and factors which need to be understood and addressed accordingly for fruitful negotiations. China China offers to be a goldmine of opportunities for the West and the wide scope of business interests, not only make it a strategic business partner but the diversity of culture makes it a highly interesting study. While on one hand, it offers business opportunities, the path to successful business alliance is not so smooth. The socio-cultural value systems are vastly different and business practices are very sensitive to behavioural pattern and intrinsically linked to their socio-cultural value system. America Americans are very professional in their business deals and money and punctuality are their priority. Building personal relationship in business environment is strictly not promoted. They like to adhere to schedules and go through legally defined business contracts in toto. 4.1.2 Variables in negotiations The vast differences in the socio cultural values of the eastern countries and the western countries have complicated the business negotiation techniques which need to be further explored for better understanding of cross cultural values and business ethics. Culture is important aspect that defines one’s values and beliefs that are carried through generations and distinctly characterize one’s nationality, ethnicity, behaviour etc. One can state that people from different nationalities have their own distinct culture (Hofstede, 1984). Researchers and academicians have agreed that various factors influence business negotiation. Researcher Usunier (1996) found that factors like language, value system, communication, institutional and legal system etc. have strong impact on success or failure of business negotiations. The awareness of socio-political paradigms and legal system greatly enhances the understanding of business modalities and facilitates setting up of realistic goals. 4.1.3 Negotiation Issues and Interests Apart from financial considerations as major interest, the international business negotiations are greatly influenced by the socio-political stability cultural paradigms. Mutual trust, cultural noise constituting diversity issues, translation and interpretation and national character as vital factors that give distinct identity to the business proposal (Fisher, 1980). 4.2 Relationship building Effective communication becomes the most important tool to overcome the barrier of socio-psychological paradigms that is increasingly becoming a major factor in the competitive global market. The rapid globalization has created a pluralistic society which has diverse needs and requirement. Understanding of these values helps to promote mutual trust building and interests. 4.3 Exchange task related information The business proposal and exchange of related information is integral part of business negotiations. Strategic goals and objectives are important business paradigms which promote expansion of business interests across the globe. These are important business documents or information that state well defined business goals and objectives to exploit business potential of the region. With huge market potential and relatively low competition, global community is looking forward to tapping the emerging new market with zeal and interest. The recent times have seen a floodgate of foreign investors and business houses, eagerly exploring the opportunities in these countries. Exchange of information regarding business interests provides the partners with business details ad each party then, tries to get maximum leverage for its benefits and interests through negotiations. 4.4 Persuasion This is important part of negotiation skills and mainly involves diplomacy and understanding of mutual values. Understanding of socio-psychological needs and requirements of the prospective business partner is an important aspect of business negotiations. Kublin (1995) says that globalization has forced the global players to incorporate the modules of international business negotiations as integral part of the corporate policy and lack of knowledge regarding ‘culture and cultural competencies’ have remained the biggest hindrance to successful international business negotiation. Through effective communication, differences are resolved and common goals are achieved. 4.5 Concession and Agreement Emerging markets are crucial in the era of globalization and can be defined as the new area with high income and where the demand for the product can be created with relative success. Understanding of cross cultural values facilitates exploitation of huge business opportunities in China. Awareness of legal constraints helps to sort out hurdles which could adversely impact the running of the business in the host country. Once the negotiations are finalized, the finer points of concessions and agreement should be drafted and contract signed. (1218) Reference Cohen, R. (1993). An advocates view. In G. O. Faure & J. Z. Rubin (Eds.), Culture and negotiation: The resolution of water disputes (pp. 22-37). London: Sage. Fisher, Glen. (1980).International Negotiation: A Cross Cultural perspective. Intercultural Press. Yarmouth, ME. Hofstede, G. (1984). Cultures consequences: International differences in work-related values. Beverly Hills, CA: Sage. Kublin, M. (1995). International negotiating: A primer for American business professionals. New York, NY: International Business Press. Usunier, J.-C. (1996). Cultural aspects of international business negotiations. In P. N. Ghauri and J.-C. Usunier (Eds.), International business negotiation (pp. 91118). Oxford, U.K.: Pergamon. Read More