MINI-CASE: Arab-style negotiation Working in small groups, study the following situation and answer the question that follows. Each group may then make a brief presentation of its answer to the other groups for their comments. The focus of much research has been on examining the negotiating behav- iour of a few countries, notably the US, China and Japan. Only limited research has been done on how buying/selling negotiations are conducted in the Arab world (Weir, 2000). This is in spite of the fact that the Middle East is an impor- tant economic region due to its natural resources and its strategic importance. The World Investment Report (UNCTAD, 2011) ranks one country in the region, Saudi Arabia, twelfth in the top 20 host economies for FDI inflows. International business people need to have a good understanding of how culture affects the way in which negotiations are conducted and business deci- sions taken in such an important economic region. Khakhar & Rammal (2013) address this need by exploring key cultural and socioeconomic factors that influence the negotiation process between Arab negotiators and foreign coun- terparts. The researchers interviewed 30 Arab managers in Lebanon with experience in conducting international business negotiations. As English is widely spoken in the Lebanese business community, there was no need to conduct the interviews in Arabic. At the time of the interviews, political conflict and uncertainty was influ- encing business activities in Lebanon, and the managers said that sometimes they had to hold important commercial negotiations with foreign firms in another country in the Arab world, such as the United Arab Emirates, wherethere were no signs of political instability, and where there was a more favour- able climate for deal making and relationship building. Wasta at work In the Middle East, wasta (networks and connections) is similar to guanxi in Chinese business culture (Hutchings & Weir, 2006). The researchers found that using wasta is an accepted business practice in the Arab world, and that busi- ness relationships are strengthened by its use. In the Arab world, negotiations are conducted with several businesses simultaneously, and usually the organisa- tion with the strongest wasta connections is the one that secures the deal. One manager explained that the connections he had in the Ministry of Economy and Trade helped him speed up registration procedures for a foreign business partner that would normally take several weeks. Role of trust The interview data suggests that in the Arab world the concept of trust is linked to the size of company with which negotiations are being held. Many managers said they would trust a large foreign MNE more than they would a smaller company looking to enter the Arab region. The managers thought that trust precedes business in most countries in the Middle East, and the managers themselves tended to spend much time and effort at the pre-negotiation stage building a personal relationship with foreign negotiators, and considered this investment in relationship building as a vital part of the negotiation process. Several respondents made the point that they found it difficult create a trusting personal relationship with negotiators from the US and UK because of their business-like, time-conscious attitudes. This business-like approach allowed formal negotiations to begin quickly, but because of the lack of a personal rela- tionship and trust, the Arab negotiating team normally required much more detailed information about the options that were on the table before an agreement could be reached. As a result, more time was required to complete the negotiations than would have been the case had some time initially been spent on building a personal relationship between the negotiators. Decision-making The Arab negotiators interviewed by Khakhar & Rammal (2013) deviated sharply from the emotional pattern of decision-making and persuasion often ascribed to negotiators in the Middle East. Glenn et al. (1977), for instance, contrast the emotional persuasion styles used by negotiators in the Middle East with the rational styles used in the US. The Arab managers interviewed by Khakhar & Rammal (2013), however, made their decisions rationally rather than emotionally, and took into consideration the various contextual factors of negotiations. They carefully assessed business opportunities and potential financial outcomes. Direct communication The Arab negotiators also deviated from stereotype by using direct rather than indirect communication. In negotiations with a foreign negotiating team, they would, for instance, openly state the importance of their busi- ness networks and how their opponents could benefit from these networks. Information provided by the managers revealed that the concessions they made in international business negotiations were carefully planned. The managers made sure that they did not deviate too much from their desired outcomes and goals. Monochromic approach Unlike Hall’s (1966) classification of Arab countries as polychronic societies in which deadlines are not adhered to, the Arab managers – in another devia- tion from stereotype – tended to display monochronic attitudes about meeting negotiating deadlines. According to Hall, negotiators in polychronic societies engage in multiple activities simultaneously and view time schedules as flex- ible. For instance, they will permit a negotiating session to continue until every- thing has been covered. Source: Khakhar & Rammal (2013) Questions: 1. Arab managers conduct buying/selling negotiations with several companies simultaneously. What are the advantages of conducting simultaneous nego- tiations? What steps could a foreign sales team take to improve its chances of securing the deal? 2. When conducting buying/selling negotiations with Arab negotiators, the busi- ness-like approach adopted by many Western negotiators can be counterpro- ductive. Explain why. 3. “Using wasta is an accepted business practice in the Arab world.” What is wasta? What are the advantages of using it, as seen through the eyes of Arab managers? INT 660 Case Study: Arab-Style Negotiation Guidelines and Rubric AfterreviewingtheMini-Case:Arab-StyleNegotiation(foundonpages214–216 ofthetextbook),studentswillanswerthefollowingquestions: 1. When conducting negotiations with Arab negotiators, the Western style of negotiation can be counterproductive. Explain why. 2. Using wasta is an accepted business practice in the Arab world. What is wasta? What are the advantages of using it as seen through the eyes of Arab managers? 3. Describe some similarities and differences in negotiation styles between Arab-style negotiation and negotiation styles in your chosen country. Guidelines for Submission: Your case study should follow these formatting guidelines: Use of at least one source, one to two pages double-spaced, 12-point Times New Roman font, one-inch margins, and citations in APA format. 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