SEU Cultural Negotiation Discussion

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This week’s discussion will focus on cultural negotiation using the case study Danone’s Wrangle with Wahaha (p. 255).

This case is a cautionary tale of how important cultural differences are when forming strategic partnerships or joint ventures with companies from different countries.

Our content this week reflects on the impact of conflict on decision-making. As a decision-maker within your organization, it is important for you to deal with conflict in a skilled manner. Doing so can create positive outcomes and provide opportunities for improvement rather than undesirable results.

After reading the case, reflect on the following:

  • What was the problem in the joint venture that triggered the conflict between the two companies?
  • What were the differences of each company’s understanding of their own respective roles and responsibilities in this venture?
  • Did any aspect of organizational cultural or national culture affect this perspective?
  • As a leader, what are some ways you can handle conflict when it arises?

Embed course material concepts, principles, and theories, which require supporting citations along with two scholarly peer-reviewed references supporting your answer.

Be sure to support your statements with logic and argument, citing all sources referenced. Post your initial response early and check back often to continue the discussion. Be sure to respond to your peers’ posts as well.

You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.

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Module 7: Communication, Negotiation, and Decision-Making 1. Communication Process and Barriers Two very important areas of a global company are communication and negotiation, both of which can be derailed by cultural nuances. Luthans and Doh (2018) defined communication as the process of transferring meanings from the sender to the receiver (p. 210). Communication can be as simple as a quick conversation by employees in the hallway at the office to the large-scale knowledge sharing within an organization. When communicating with people from different cultures, it is important for both parties to understand the meaning of the communication. Barriers to cultural communication can impede the communication process. Communication efforts in a company go beyond just personal one-on-one or group communication. They also focus on the organizational knowledge exchange within a company. Watch this video to learn more about this aspect of communication: https://youtu.be/v3VCFuxz0l8 This video explores the importance of organizational knowledge within a company. There are recognized types of knowledge within an organization: • • • • • What: such as differences in customer preferences; Why: such as understanding how cultural differences affect cross-cultural understanding; How: such as management skills in delegating responsibilities; When: such as knowledge about the effect of timing; and Who: such as relationships created over the life of an assignment. A company should position itself to benefit from that enhanced management knowledge if it wants to develop a globally experienced management cadre, which is an essential ingredient for global competitiveness, in particular when there is a high degree of shared knowledge among the organization’s global managers (Deresky, 2017). Effective communication must extend to all types of communication to share knowledge within an organization. 2. Cross Cultural Negotiations Negotiation is defined by Luthans and Doh (2018) as “the process of bargaining with one or more parties to arrive at a solution that is acceptable to all” (p. 230). In some cultures, this can be as simple as negotiation for home goods or clothing at a local market, or as complex as negotiating for a new company in another country. Regardless of the commodity, it is an important skill for an international manager to develop, since culture also affects negotiations. Demiral (2018) held that the great diversity of the world’s cultures makes it impossible for international business negotiators, no matter how skilled and experienced they are, to understand fully all the cultures that they may encounter. In Demiral’s study of American and Turkish managers working in international firms, he has identified 10 aspects of negotiation tendencies. Look through this chart to learn more about each one. Negotiation Goal Building a trust-based relationship Attitude Win-lose or win-win Personal Style Formal, informal, high-low context Communication Style Direct or indirect Time Sensitivity Monochronic or polychronic work style Emotionalism Emotional factors vs. objective factors Agreement Form General/contracts vs. specific contracts Agreement-Building Process Top-down vs. bottom-up decision-making Team Organization Consensus vs. individual decision-making Risk-Taking Behavior Risk averse vs. risk taking Watch this video to learn more about different communication strategies in crosscultural negotiations: https://youtu.be/LC_EXd0uWnA This video explores how to overcome differences in communication in cross-cultural negotiations. Awareness + Preparation = Success! 3. Impact of Conflict on Decision-Making Conflict is not always a negative thing. It can provide opportunities for managers and leaders to make appropriate adjustments when needed. It can also allow for the correction of underlying issues which may be at the root of the conflict. However, conflict can affect decision-making, whether the conflict exists within a small group, within a team, or organization-wide. Many factors can influence conflict, and an international leader must be adept at addressing conflict in a skilled manner. Click through these tabs to learn more about conflict, why it happens, and how to manage it: When Conflict Arises: It is essential to understand the importance of addressing the issue rather than merely attempting to correct people. Well-meaning people are often adversely affected by an undesirable issue. Skilled managers and leaders understand this, and they do what’s necessary to address the underlying issue. This helps to create an environment that is more conducive to the success of all parties involved. Why Conflict Happens: Conflict can take place for a wide variety of reasons. Often, conflict can be a result of opposing interests between parties in an organization seeking to work toward goals and objectives. Conflict between leaders and followers can be devastating to the organization if there is friction between those who are in authority and the individuals who are affected. In today’s organizations, there may be disagreements between management personnel, departments throughout the organization, or even executive leadership who have different thoughts and ideas regarding process or objectives. Common Causes of Conflict: While there may be a wide array of reasons for conflict within an organization, there are some common occurrences that can take place as a result of different personalities, competing values, or differing ethical systems. Since conflict is quite common within the business environment, leaders should understand some of the core causes of employee conflict. Common causes can include poor communication, differences in personalities and opinions, allocation of resources, position, and control within the organization. Effectively Managing Conflict: Regardless of the cause, skilled leaders can avoid negative consequences by handling conflict effectively. If conflict is not addressed effectively, it can inhibit the organization and cause irreparable damage. Therefore, effective resolution strategies are necessary to keep the organization on task and moving forward. Simply ignoring the conflict is a sure recipe for negative consequences. Left alone, conflict can cause unnecessary stress, decrease employee morale, and adversely affect follower satisfaction within the organization. Such negative consequences can most certainly lead to poor organizational performance or even the loss of skilled and talented individuals who can bring an important contribution to the organization. When organizations are unable to arrive at an agreeable resolution for all parties involved, this can inhibit growth, decrease productivity, and sometimes create permanent damage. Managers and leaders within the organization should take the necessary steps to negotiate a resolution as efficiently and quickly as possible to mitigate potential damage. Doing so may open the door to creating positive outcomes, regardless of the difficult issues created by the conflict. Positive Effects of Conflict: Conflict is not always a bad thing. When handled correctly, it can have a positive effect. A skilled leader can view conflict as an opportunity for immediate correction, to bring about positive change. Quickly correcting the underlying cause of conflict can put leaders in a favorable position to negotiate a viable resolution. This requires effective communication skills and the ability to connect with conflicting parties to diffuse escalation. When negotiating a conflict, the leader serves as a type of mediator who focuses on the best interests of both parties, as well as those of the organization. An affirmation of the conflicting parties’ concerns and a demonstration of the initiative to seek resolution can promote a solution. A leader who is adept at managing conflict promotes the creation of positive outcomes and opportunities for improvement. 4. The Art of Negotiation Decisions Katie Shonk (2018) offered three strategies when facilitating conflict resolution: 1. The need for a resolution, 2. The importance of collaboration, and 3. Building a foundation of trust. Effective leaders who can guide conflicting parties through a collaborative process are in a better position to create an environment of increased satisfaction and help curb dysfunctional or counterproductive behavior. The art of negotiation in a difficult situation may assist the decision-maker in producing a desired result. Effective conflict and negotiation strategies can take two different approaches: 1. Disruptive bargaining: focused on short-term outcomes; or 2. Integrative bargaining: focused on solidifying long-lasting relationships by moving forward after a resolution has been reached. Key decision-makers within the organization should have a proper understanding of the negotiation process and effective negotiation strategies. Without such understanding, organizations can be greatly inhibited from future growth. It is important to note that the overarching goal of the organization is to maintain its momentum in moving forward toward its objectives, goals, and overall mission. Leaders who understand the art of successful negotiation are in a better position to assist their organizations in accomplishing this goal. Potential conflict is more likely to occur in multinational organizations that transcend varying cultures, which makes conflict negotiation skills vital. When MNCs are attempting to serve on a multinational scale, it is important to respect cultural differences, appreciate boundaries, and show respect to individuals who have varying viewpoints. An organizational leader who may be instrumental in making decisions across a wide array of international boundaries will have the opportunity to use negotiation skills to facilitate both client and organizational constituency. As modern organizations are faced with competing interests, both locally and abroad, it is inevitable that conflicts will arise. Whether such conflict is on a small scale, such as a team or group setting, or on a large scale, such as in a multinational organization, effective leaders can mitigate potential damage created by conflict and bring about opportunities for improvement. Conflict should be viewed as an opportunity to address underlying issues, correct mistakes, and provide a resolution that will assist the organization in moving forward with a higher level of efficiency and performance. References Demiral, Ö. (2018). A research on the differences between business negotiation styles of Turkish and American managers. Ege Akademik Bakis, 18(2), 273–288. Deresky, H. (2017). Managing across borders and cultures text and cases (9th ed.). Pearson Education, Inc. Hoboken, NJ. Luthans, F., & Doh, J. P. (2018). International management: Culture, strategy, and behavior (10th ed.). McGraw-Hill Education, New York, NY. Shonk, K. (2018). 3 negotiation strategies for conflict resolution. Reach a peaceful end to your dispute by following these proven negotiation and conflict resolution strategies. Retrieved from https://www.pon.harvard.edu/daily/dispute-resolution/3-negotiationstrategies-for-conflict-resolution/ © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 7 Cross-Cultural Communication and Negotiation © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Learning Objectives • Define the term communication, examine some examples of verbal communication styles, and explain the importance of message interpretation • Analyze the common downward and upward communication flows used in international communication © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Learning Objectives (continued 1) • Examine the language, perception, culture of communication and nonverbal barriers to effective international communications • Present the steps that can be taken to overcome international communication problems © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Learning Objectives (continued 2) • Develop approaches to international negotiations that respond to differences in culture • Review different negotiating and bargaining behaviors that may improve negotiations and outcomes © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. World of International Management Netflix's Negotiations • Faces setbacks due to negotiation and communication difficulties in: – China - Setbacks due to a long negotiation process – Russia - Setbacks because of Netflix’s lack of communication and negotiation prior to entry © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Communication • Process of transferring meanings from sender to receiver • Advent of the telephone, Internet, and personal communication devices has influenced the way people communicate • Types - Verbal or nonverbal © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Verbal Communication Styles - Context • Information that surrounds a communication and helps convey the message – Plays a key role in explaining many communication differences • High-context societies – Messages are often highly coded and implicit • Low-context societies – Messages are often explicit and speaker says precisely what s/he means © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Table 7.1 - Major Characteristics of Verbal Styles © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Indirect and Direct Styles • High-context cultures - Messages are implicit and indirect – Voice intonation, timing, facial expressions play important roles in conveying information • Low-context cultures - People often meet only to accomplish objectives – Direct and focused in their communications © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Degrees of Communication Quantity • Elaborate style - Most popular in high-context cultures that have a moderate degree of uncertainty avoidance – Widely used in Arabic countries – Involves talking, detailed descriptions, and repetition • Exacting style - Focuses on precision and use of the right amount of words to convey message © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Degrees of Communication Quantity (continued) – More common in low-context, low-uncertaintyavoidance cultures • Used in England, Germany, and Sweden, etc. • Succinct style – More common in high-context cultures with considerable uncertainty avoidance – People say few words and allow understatements, pauses, and silence to convey meaning – Most common in Asia © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Contextual Styles • Focus on the speaker and the relationship of parties – Associated with high-power-distance, collective, and high-context cultures – Speakers choose words that indicate their status relative to the status of the others © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Personal Styles • Focus on the speaker and the reduction of barriers between the parties – More popular in low-power-distance, individualistic, and low-context cultures – Speaker uses first names while addressing others © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Affective Styles • Characterized by language that requires the listener to carefully note what is said and to observe how the message is presented – Meaning is conveyed nonverbally and requires the receiver to use intuitive skills to decipher the message – Common in collective, high-context cultures • Middle East, Latin America, and Asia © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Instrumental Styles • Goal-oriented • Focuses on the sender who clearly lets the other party know what s/he wants the other party to know – Found in individualistic, low-context cultures • Switzerland, Denmark, and the United States © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Table 7.2 - Verbal Styles Used in 10 Select Countries Source: Anne Marie Francesco and Barry Allen Gold, International Organizational Behavior: Text, Readings, Cases, and Skills, 1st ed. (Upper Saddle River, NJ: Prentice Hall, 1998). © 1998. Reproduced by permission of Barry Allen Gold. © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Interpretation of Communications • Effectiveness of communication is determined by how closely the sender and receiver have the same meaning for the same message – If the meaning is different, effective communication will not take place © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downward Communication • Transmission of information from manager to subordinate • Purpose - Convey orders or information – Managers use this channel for instructions and performance feedback – Channel facilitates the flow of information to those who need it for operational purposes – Sending mixed signals is never helpful in communication © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Downward Communication (continued) • Challenges posed by downward communication in an international context – Communication is direct and extends beyond business matters in European countries – Communication is less direct in Asian countries © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Upward Communication • Transfer of information from subordinate to superior • Purpose - Provide feedback, ask questions, or obtain assistance from higher-level management – Upward communication is not popular outside Asian countries © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Communication Barriers - Language • Knowledge of the language used at the headquarters of an MNC is essential for personnel placed in a foreign assignment • Fluency, technical knowledge, and writing skills • Misinterpretations often result from unskilled use of a language • Inadequate language training © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Cultural Barriers in Language • Geographic, cultural, and institutional distance challenge international managers • Native speakers might deviate from the standard business communication practices of other cultures © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Perceptual Barriers • Perception – Person’s view of reality • Advertising messages – Misunderstandings caused when words are misinterpreted by others • View of others – May be different from what one thinks – Perceptions influence how individuals see others © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Nonverbal Communication • Transfer of meaning through means such as body language and use of physical space • Types – Kinesics – Proxemics – Chronemics – Chromatics © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Table 7.7 - Common Forms of Nonverbal Communication Source: Adapted from Kendra Cherry, “Types of Non-Verbal Communication,” VeryWell, December 17, 2015,  ->https://www.verywell.com/types-of-nonverbal-communication-2795397 -->. © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Kinesics • Study of communication through body movement and facial expression • Areas of concern - Eye contact, posture, and gestures • Oculesics: Area of communicating through the use of eye contact and gaze • Haptics: Communicating through the use of bodily contact © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Proxemics • Study of the way people use physical space to convey messages – Intimate distance: Used for very confidential communications – Personal distance: Used for talking with family and close friends – Social distance: Used to handle most business transactions – Public distance: Used when calling across room or giving a talk to a group © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Figure 7.2 - Personal Space Categories for Those in the U.S. © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chronemics • Way in which time is used in a culture • Types – Monochronic time schedule: Things done in linear fashion • Used in societies which consider time schedules important and time to be a controllable factor that needs to be used wisely © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chronemics (continued) – Polychronic time schedule: Several things are done at the same time • Place higher value on personal involvement than on getting things done on time • Consider personal relationships more important than time schedules © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chromatics Use of color to communicate messages Knowing the importance and the specifics of chromatics helps avoid embarrassing situations © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Achieving Communication Effectiveness • Open feedback systems – Personal - Face-to-face, phone, or e-mail – Impersonal - Reports, budgets, or plans • Provide language training – Non-native speakers of English need to be provided training to aid them in making face-toface conversations and telephonic conversations – Written communication is important in achieving effectiveness © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Achieving Communication Effectiveness (continued) • Provide cultural training – At least one party has to understand the other’s culture • Increase flexibility and cooperation – Improves effectiveness in communication and understanding and cooperation © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation • Process of bargaining with one or more parties to arrive at a solution that is acceptable to all • Follows assessing political environments • Used in creating joint ventures with local firms – Once a firm starts operating, additional areas of negotiation are included © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Types of Negotiations • Distributive negotiation: Occurs when two parties with opposing goals compete over a set value • Integrative negotiation: Involves cooperation between two groups to integrate interests, create value, and invest in an agreement © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Table 7.8 - Negotiating Types and Characteristics Source: Adapted from Harvard Business Essentials: Negotiation (Boston: Harvard Business School Press, 2003), pp. 2–6. © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation Process • Planning – Involves identifying objectives, exploring options to attain objectives, and finding areas of common ground between parties • Interpersonal relationship building – Getting to know people on the other side • Exchanging task-related information – Parties setting forth its position on critical issues © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation Process (continued) • Persuasion – Success of a negotiation depends on: • • • • Understanding each parties’ position Identifying areas of similarity and difference Creating new options Working toward a solution • Agreement – Granting of concessions and hammering out of a final agreement © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Understanding Cultural Differences • Counterpart’s home culture should not be identified too quickly • Western bias toward doing should be approached with caution • Tendency to formulate simple, consistent, and stable images should be counteracted © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Understanding Cultural Differences (continued) • Significance of all aspects of the culture should not be assumed to be equal • Differences might exist between the norms for interactions involving outsiders and between the compatriots • Familiarity with counterpart's culture should not be overestimated © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation Tactics • Location – Businesses choose a neutral site to avoid gaining advantage of a location and to finish negotiations soon due to the cost of staying at site • Time limits – Important negotiation tactic when one party is under a time constraint © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation Tactics (continued) • Buyer-seller relationship – Different for certain countries • Americans believe in trading favors • Japanese believe they should get most out of a purchase • Brazilians are deceptive and self-interested © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation Tactics - Five General Principles Separate the people from the problem • Understand other’s position, avoid blame, stay positive, and recognize emotions Focus on interests over positions • Gives one insight into the motivation behind why a particular position was chosen Generate a variety of options before settling on an agreement • Includes brainstorming and shifting thought focus about the problems © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Negotiation Tactics - Five General Principles (continued) Insist that the agreement be based on objective criteria • Emphasize the communal nature of the process Stand ground • Neither side should agree to terms that will leave it worse off than its best alternative to a negotiated agreement, or BATNA © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Bargaining Behaviors • Verbal and nonverbal – Verbal behaviors are important as they improve the final outcome and are critical to the success of a negotiation • Use of extreme behaviors – Some begin with an extreme offer or request, while some begin with an initial initial position that is close to the one they are seeking © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Bargaining Behaviors (continued) • Promises, threats, and other behaviors – Influenced by culture, and is designed to influence the other party • Nonverbal behaviors – Silent language (silent period, facial gazing, touching, and conversational overlaps) © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Be the International Management Consultant - China • If you are working as a consultant for Coca Cola, how does the dismissal of the deal by the Chinese government affect your continued investment in the country? • What more could private business, like Coca Cola, do to convince the government that new enterprise can bring positive economic development to the country? © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Be the International Management Consultant - China (continued) • Is the prospect of China’s sheer volume of potential customers too good to pass up? – Do the actions of the government and the country’s recent stock market woes indicate a signal that investment should be reconsidered? © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss • How does explicit communication differ from implicit communication? Which is one culture that makes wide use of explicit communication? Implicit communication? Describe how one would go about conveying the following message in each of the two cultures you identified: “You are trying very hard, but you are still making too many mistakes” © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 1) • One of the major reasons that foreign expatriates have difficulty doing business in the United States is that they do not understand American slang – A business executive recently gave the authors the following three examples of statements that had no direct meaning for her because she was unfamiliar with slang © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 2) – “He was laughing like hell” – “Don’t worry. It’s a piece of cake” – “Let’s throw these ideas up against the wall and see if any of them stick” – Why did the foreign expat have trouble understanding these statements, and what could be said instead? © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 3) • Yamamoto Iron & Steel is considering setting up a minimill outside Atlanta, Georgia – At present, the company is planning to send a group of executives to the area to talk with local and state officials regarding this plant • In what way might misperception be a barrier to effective communication between the representatives for both sides? Identify and discuss two examples © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 4) • Diaz Brothers is a winery in Barcelona – The company would like to expand operations to the United States and begin distributing its products in the Chicago area • If things work out well, the company then will expand to both coasts. In its business dealings in the Midwest, how might culture prove to be a communication barrier for the company’s representatives from Barcelona? Identify and discuss two examples © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 5) • Why is nonverbal communication a barrier to effective communication? Would this barrier be greater for Yamamoto Iron & Steel (question 3) or Diaz Brothers (question 4)? Defend your answer • For U.S. companies going abroad for the first time, which form of nonverbal communication barrier would be the greatest, kinesics or proxemics? Why? Defend your answer © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 6) • If a company new to the international arena was negotiating an agreement with a potential partner in an overseas country, what basic steps should it be prepared to implement? Identify and describe them • Which elements of the negotiation process should be done with only your group? Which events should take place with all sides present? Why? © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 7) • An American manager is trying to close a deal with a Brazilian manager, but has not heard back from him for quite some time – The American is getting very nervous that if he waits too long, he is going to miss out on any backup options lost while waiting for the Brazilian • What should the American do? How can the American tell it is time to drop the deal? Give some signs that suggest negotiations will go no further © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Review and Discuss (continued 8) • Wilsten Inc. has been approached by a Japanese firm that wants exclusive production and selling rights for one of Wilsten’s new high-tech products – What does Wilsten need to know about Japanese bargaining behaviors to strike the best possible deal with this company? Identify and describe five © 2018 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Discussion ( 1 ) The decade-long partnership turned sour early in 2007, when Danone publicly accused Wahaha of illegally selling Wahaha-branded products by using distributors outside of the ones selected by their joint ventures. The dispute became even more dramatic when Danone filed a lawsuit in Los Angeles against two companies linked to Wahaha founder Zong Qinghou's wife and daughter, claiming that these companies had cheated Danone to the tune of $100 million in lost business. Danone's complaints accused against Hangzhou Wahaha of breaching the joint-venture contract, which, it said, required the Chinese side to supply its well-known trademark, while the French partner put up capital, expertise and technology. Danone also filed for arbitration in Hangzhou and at a branch of the Stockholm Chamber of Commerce to resolve the trademark dispute. At the end of this long-running battle, it seems, Danone was the company that had to give up some ground (Zhang,Van Deusen,2010). According to Bu (2011) both parties Danone and Wahaha had their own interests. Danone had the need to develop a growth strategy that would satisfy their stakeholders because the domestic markets were already saturated. They chose as part of their growth strategy to use IJVs to enter fast-growing emerging markets. In addition Danone had the need in 1996 to work with a partner for legal reasons. Wahaha on the other hand was in need for cash for growth. They were interested in the transfer of technology and processes from Danone. For example, they had the need to receive timely technical support for product quality development, which was a very important issue on the Chinese market. To be competitive and distinguish from other suppliers implementing measures to ensure and improve quality was a must for them. In Chinese culture the trust towards the family is much higher compared to the western culture and therefore for Chinese businesses it is a logical consequence that family members are deeply involved in the business. Although Zong had breached the JV agreement with the setup of the non- joint venture subsidiaries the action against his wife and his daughter was most likely perceived by him as a personal attack. In case of the Wahaha dispute it seems that this differences in business culture perhaps led to a misunderstanding in that Wahaha felt outsmarted by Danone. In that case it was even more tricky since Danane didn’t have the 51% share from the beginning but only a 25,5% share. Only when they bought the 25,5% share from Bai Fuqin did they have the full control in their opinion. Wahaha did never have the chance to become the major shareholder since they haven’t been given the chance to bid for the shares from Bai Fuqin (Munro-Smith.2008) As a leader when making decisions on daily bases there must be some risks or uncertainties, whether by making them individually or by a group, making that decision harder to select the best appropriate option (Sevastyanova, Stegniy,. 2015). The whole decision making process seems to be easy and simple to apply, but that is not the case when it comes to clarifying the selection criteria and include all the information that has led to that simple decision, that is why the leader needs to be up to date with the decision making process owning an awareness of decision regarding an important role to follow and make sure that organizational activity is running smoothly aligning with the desired organizational goals and objectives in order to handle the conflicts when it arises. References: Bu, Q. (2011). Danone v Wahaha: Who Laughs Last?. Business Law Review, 32(6). Munro-Smith, N. (2008). Danone and Wahaha in China The Interaction of Strategy, Cultural Differences and Organization Design in International Joint Venture Conflict. Proceedings of the Northeast Business & Economics Association. Sevastyanova, I., & Stegniy, V. (2015). Managerial decision making oriented towards achieving results. Asian Social Science, 11(7), 371-375. Zhang, P., & Van Deusen, C. (2010). French Danone and Chinese Wahaha: Yet another example of an unsuccessful international joint venture. International Business: Research, Teaching and Practice, 4(1), 82-100. Discussion ( 2 ) In the late 1980s, Danone spread to the Chinese market. Nevertheless, due to lack of market knowledge, Danone faced challenges in China. In 2000, Danone bought Robust, the Chinese beverage industry's then-second largest business. In 1999, Robust's revenue had reached RMB2 million. Danone fired the original management after the acquisition and directly supervised Robust. Robust failed because his new management was not acquainted with the Chinese drink market. It almost disappeared from the market its tea and milk products. So, the company lost RMB150 million between 2005 and 2006. In 1996, in a joint venture, Danone Group, Bai Fu Qin and Wahaha Group joined forces. Danone acquired Bai Fu Qin's interests and with 51 percent of the shares gained legal control of the joint venture. While, members of the JV have the right to use the trademark of Wahaha. Due to Danone's lack of knowledge of the Chinese market, the company can make better market decisions through the joint venture and established China's largest beverage company. The issue is that wahaha used its trademark to open branches in other countries, but Danone claims that the Wahaha trademark belongs to the joint venture and that Wahaha is not permitted to use the trademark for its own purposes. The difference in understanding the role in the joint venture between Danone and Wahaha is that Danone claims he owns 51 percent of the shares so he has the right to control the decisions of Wahaha. Nevertheless, Wahaha claims that under its own trademark it can open new businesses and does not need the permission of any other corporation. Therefore, Wahaha's national culture has not grasped what joint venture means. So it influenced Danone and Wahaha's organizational culture. Indeed, Danone filed over 30 lawsuits against Wahaha in other countries for breaching the agreement and unlawfully using the Wahaha logo of the JV. Most of those cases, though, are in favor of Wahaha. Therefore, in 2009, Danone agreed to end the two companies ' cooperative relationship. Once entering the Chinese market, the main lessons from this case are Danone's need to consider business culture and industry. It is a good choice to form a joint venture with a Chinese company to make better consumer and business decisions. But it's not easy to get along well with the Chinese company as there is always a distance between understandings. Furthermore, the recommendation was not pursued by Danone. Danone expected that 51 percent of ownership would be able to gain effective control, and on a clear and certain legal basis it did not form a JV. It also anticipated that, instead of using understanding and cooperative relationships, it would use technology to claim or gain control in a JV. And on a day-to-day management basis, their agreement was not established. References Bu, Q. (2011). Danone v Wahaha: Who Laughs Last?. Business Law Review, 32(6). Munro-Smith, N. (2008). Danone and Wahaha in China The Interaction of Strategy, Cultural Differences and Organization Design in International Joint Venture Conflict. Proceedings of the Northeast Business & Economics Association. Zhang, P., & Van Deusen, C. (2010). French Danone and Chinese Wahaha: Yet another example of an unsuccessful international joint venture. International Business: Research, Teaching and Practice, 4(1), 82-100.
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CULTURAL NEGOTIATION

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Cultural Negotiation
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CULTURAL NEGOTIATION

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Cultural Negotiation

Joint ventures usually bring together companies with similar interests, forming a new
company on an agreed percentage of ownership. Significant differences in the management of
joint ventures may arise, as the parent companies may have different motives when joining the
venture (Westman & Thorgren, 2016). Worst of all, joint ventures may experience further
conflicts when the parent companies are cross-cultural, as evident in the Danone and Wahaha
Group Joint Venture (Luthans & Doh, ...


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