5 cultural aspects to take into account in an international negotiation
When negotiating with companies or individuals abroad, we must take into account all the differences between the nations of the actors, from the legal framework and divided, to the risks; having particular importance commercial customs.
That's why we want to explain the 5 cultural aspects to take into account in an international negotiation.
The lack of knowledge of the cultural aspects of the counterpart is the weak point of many internationalization plans.
Throughout this article, the main factors to consider in order to adapt your negotiating strategy will be presented and be successful in all your international negotiations.
Communication Guidelines
High and low context cultures
In high-context cultures, most information is subtracted from what is observable in the environment. When understanding the meaning of interactions, people rely heavily on the body communication and they feel comfortable without having too much explicit information.
These cultures are found in the Middle East, Africa and Latin America.
To a lesser extent, this is also the case with Mediterranean culture.
In low-context cultures, most information is conveyed clearly and through words.
They focus mainly on the verbal message and rarely is attention given to data that can be extracted from the physical environment.
This is the case of cultures located in North America and Western Europe, such as England and Germany.
Verbal or written commitment?
In certain countries, the oral commitment is not considered relevant, while in others The basis of the agreement is oral and constitutes a personal commitment.
For Japanese negotiators, a verbal agreement is of great importance and has the same weight as a signed contract.
In Anglo-Saxon cultures, written commitments are necessary.
China use memos that reflect the agreements reached at each meeting.
In Arab countries, contracts are considered guidelines rather than covenants that must be strictly adhered to.
Use of time
Negotiation is severely influenced by one's concept of time and how one uses it.
Depending on the culture, the time required to reach an agreement and expectations of obtaining results differ.
Negotiations with the Japanese and Chinese take a long time, but once a decision has been made, implementation is very fast.
On the other hand, Western companies make decisions more quickly, but take longer to implement them.
Monochronic and polychronic cultures
In cultures monochronic (known as “M-time”), tasks are carried out in a compartmentalized manner. People believe that one task must be completed before starting the next.
It works from methodically and at a regular pace.
The arguments are based on data and having a lot of information is valued.
Dates and deadlines are priority.
In addition, they respect established appointments and punctuality.
They remain committed to the task at hand. This is the case in Germany.
In cultures polychronic (called “P time”), several tasks are performed at the same time and one moves interchangeably from one to another without having to finish the previous one.
The work is intensive, but not at a sustained pace. Arguments are based on reasoning and there is less interest in obtaining information.
Dates and deadlines are a reviewable objective.
There is flexibility regarding appointments and punctuality.
They maintain their commitment to the people who have entrusted them with the task.
This is the case of France and Spain.
Negotiation styles: cooperative and competitive
The cooperative negotiators they have a focus win-win: They want both parties to win.They think that if both give in, the agreement will be better for everyone.
Maintaining a good relationship with the counterparty is important, as they have a long-term vision.
They believe that one deal can lead to another and they want to maintain stable relationships with their customers and suppliers.
They are not comfortable with moments of tension, so they tend to give in. They also do not like to haggle or obtain sudden concessions, as this will generate distrust.
Furthermore, the competitive negotiators they have a vision of win lose: When the other party loses, they win.. For them, results are paramount.
They maintain a short-term vision and in each negotiation we start from scratch.
They are comfortable in moments of tension and often add more pressure.
They consider it essential to haggling and think that if the other party has given in once, they can do so again.
Finally, they do not value loyalty: they do not mind negotiating the same agreement with several companies simultaneously and they are constantly looking for new clients/suppliers.
Cooperative and competitive countries
Cooperative countries in substance and form
This group brings together the most developed countries in the world, where negotiators are better trained and tend to work in teams.
The establishment of long-term relationships is sought and mutual benefit.
Canada, Japan and the Nordic countries belong to this category.
Competitive countries in form and cooperative in substance
These are countries where negotiators may appear aggressive and arrogant at the start of the negotiation process, although in reality their approach is cooperative.
Once the other party has shown itself to be cooperative, they will too.
For them, the Economic performance is the most important thing.
In this group we find countries such as the United States, the Netherlands and South Korea.
Competitive countries in substance and cooperative in form
This group is made up of countries whose negotiators they appear kind and hospitality, when really their focus is win loseHere we find the countries of Latin America, Africa and the Arab countries.
We can also include the countries of Mediterranean Europe in this category, but to a lesser extent.
Competitive countries in substance and form
In the countries of this group we find negotiators very competitive and aggressive. It is common to encounter behaviors whose basic objective is to weaken the counterpart. These are countries like China, Russia or Israel.
Relationship Focus
Professional or personal relationships
In certain countries, establishing personal relationships is essential when closing a deal, such as in Asia, Latin America and Arab countries.
However, in others, a strictly professional relationship prevails, as in the United States and Western Europe, where the people in charge of the negotiation focus on the companies they represent.
We must be aware that when we negotiate with cooperatives, they prefer to keep their relationships on a strictly professional level.
They are found in individualistic cultures, where personal and professional life do not mix. It is important to preserve privacy.
Competitive negotiators, on the other hand, will look for a personal and emotional bond that provides sufficient trust. These are clan cultures.
For them, agreements are not only closed with the company but also with the person with whom the negotiation is held.
To learn more: Export process: how to negotiate with other cultures?
Power distance
In countries with great power distance, managers in any company make decisions and their subordinates execute them without questioning them.
The structure of organizations is vertical and there is little individual responsibility. This is the case in Asia, Latin America and Africa.
In countries with moderate or low power distance, managers consult with subordinates about their decisions.
The organization is flatter: each manager supervises a certain number of employees and there is a degree of independence and responsibility among employees.
There is low power distance in the United States, Canada and the European Union.
Negotiation margin
Before sitting down to negotiate, each party will establish an optimal position (PO) and a breakout position (PR) in the form of a monetary amount.
The first is the most favorable position and the one that each party would ideally choose; the second is the point at which it is preferable to abandon the negotiation rather than accept the deal.
The interval between the importer's PO and the exporter's PR is what is known as Room for maneuver.
The following image illustrates the margin of manoeuvre in a purchase and sale contract, located between €80 and €100.
At the end of the negotiation process, agreement will be reached at any point within this interval.
View: Ins and outs of international negotiations: the negotiating process
Negotiation margin in different countries
What has been explained in this section does not change for the moment with respect to a national negotiation, but we will soon see that the way of approaching the counterparty's position varies greatly from one country to another.
During the negotiation process, according to the country's own commercial customs, a certain percentage will be given up with respect to the proposed offer.
Below we show you the difference in the trading margins from each group of countries:
Group 1. Germany, Nordic Countries, Canada and Japan
These countries do not negotiate any percentage on the price proposed in the first offer.
During the second and third rounds, they may not negotiate at all or may negotiate up to 5%. These are negotiators who do not haggle and are explicit in expressing what they want from the agreement.
Group 2. France, United Kingdom, Netherlands, United States and Australia
These countries make concessions at the beginning of the negotiations.
In the first offer they will negotiate between 5% and 10%. During the next negotiations, they may not negotiate or negotiate up to 5%.
Group 3. Spain, Italy, Czech Republic, Poland and Russia
Countries in this group make concessions throughout the negotiation process. They will negotiate between 5% and 10% in the first offer.
In the second, they can negotiate up to 10% if they choose to do so. Again, in the third, they will negotiate from 5% to 10%.
Group 4. Argentina, Brazil and Mexico
From this group we can expect concessions of 10% on the price proposed in the first offer.
In the second 10-15% and in the third 10-20%.
With them, concessions are delayed until the final stage of the negotiation process.
Group 5. China, India, Indonesia, Türkiye and the Arab countries
These are the countries where we can find a greater difference between the price proposed at the beginning of the negotiation and the one that they are actually willing to accept.
In the first offer, they will negotiate 20%.
In the second, 10-15% and in the third, the percentage rises to 20-30%.
Now that you know the different business cultures that exist, you can delve deeper into the one that interests you particularly.
For this we recommend you visit Global Negotiator, where you can access negotiation and protocol guides from 70 countries.
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