Management 77
Management 77
Success in international business environment depends largely, amongst others, on successful negotiation and skillful cross-cultural communication. This is of particular relevance, when we consider the increasing global marketplace. Furthermore, the sudden increase in mergers and acquisitions, not only in the promising BRIC (Brazil, Russia, India and China) countries, but in other countries, where economic development is becoming more obvious, demand that multinationals hone their skills in negotiation internationally. In light of the cultural and language challenges, it may be necessary to modify home country negotiation styles.
To complement the negotiation skills, it is becoming increasingly crucial that the international manager not only possess knowledge of the target country culture, but also knowledge of the language. As postulated by the Whorf hypothesis, language determines the nature of the culture. So, an astute international business manager must be able to understand the distinction between low-context language (in which expressions are stated directly and explicitly), examples of which you will find in most Northern European countries and the U.S., and high-context language (in which expressions are stated indirectly and implicitly), whose examples are Asian and Arab countries. The distinguishing factor is the extent to which people in these two language classifications use verbal and non-verbal communication. While, people in low-contest language culture use more verbal than non-verbal communication, the reverse is true for high-context language culture. Non-verbal communication are characterized mostly by: kinesics (communication through body movements), proxemics (communication by use of space), haptics (communication by touch), oculesics (communication by use of eye contact) and olfasics (communication by use of smells). The importance of understanding these low- and
high-context cultural variables must be underscored.
Considering the important role communication plays in the negotiation process, it is recommended that the
international negotiator use official interpreters. Effective interpretation would entail, at a minimum, knowing
the interpreter and letting him or her understand your accent, reviewing technical details of the deal, learning
about communication styles, and confirming all key components of the message being delivered prior to
concluding.
Although, many countries may have similarities in negotiation styles based on regional and cultural affinity,
there are common differences that the international negotiator must be knowledgeable of. Such differences
include the goal of negotiation (whether signing the contract first, or developing a relationship), formal or
informal communication style, direct or indirect communication, sensitivity to time (low or high), forms of
agreement (specific or general), team organization (team leadership or solo leader), attitude toward
negotiation (win-lose, zero-sum, or win-win), and high or low emotions.
At this juncture in the lesson, essential steps to be followed in international negotiation are important. First is
the preparation step. In the preparation stage, after collecting country- and company-specific research, the
negotiator must be able to answer in the affirmative a number of important questions. Is this negotiation
possible? Will my company get what it wants from the negotiation? Are there any compromises to be made?
Do I have sufficient knowledge of the negotiation styles and tricks of the other party? Does my company have an experienced team to handle the negotiation or any special, technical skills required? Do we have an
agreed-upon agenda? To answer these questions, the international negotiation in his research may need to
read extensively, visit the country ahead of time, create a mock negotiation or improvise one. With adequate
preparation, he or she should be able to successfully negotiate. Since, there is no deal that does have its own
risks, he or she must research into not only country- and company-specific risks, but also industry-specific
risks that may endanger consummating the deal for which the negotiation is to take place.
In the second stage, relationship building is important. In high-context, collectivist societies, there is a lot of
emphasis on building relationship, which is more important than signing a one-time contract. So, when a
Japanese negotiator picks up his or her U.S. counterpart at the airport and drives across town, spending half of the day attending to family obligations and social activities, such time spent should not be considered a
"waste of resources". The associates costs (travel and lodging) of negotiating the deal should include the time
spent on building relationship. In the high-context culture, the legalistic requirement to sign a legally binding
contract will be attended to later.
The third stage is when there is the exchange and perusal of task-related information. The specific details of
the contract are presented as an official proposal which is considered the first offer. Discussions are held to
clarify foggy areas of the contract, interpretation and document translations are conducted, attention is paid to
details, and emotions are addressed.
In the fourth stage, the persuasion stage, each negotiator presents their own position, engaging in multiple
negotiation tactics, which may be verbal (promise, reward, recommendation, warning, threat, or punishment), non-verbal (posture, grimace, or hand gestures) or "dirty" tactics.
In identifying dirty negotiation tricks, the astute international negotiator must be able to decipher whether there
is deliberate deception or bluffing by the other party, know whether the other party decides to stall the contract
signing time intentionally to frustrate him or her or escalate decision making to a higher authority. Other dirty
tricks include a member of the negotiation team playing the role of the "good guy" and another the "bad guy",
and pretending be "old friends". In general, to address the foreign negotiator's dirty tricks, a well-informed
negotiator must state directly what he or she feels is happening, clarify who the key decision-maker is, and
focus on mutual benefits of the agreement.
In stage five, a final agreement is signed in accordance with chosen legal system. In certain cases, some
unfinished business in third and fourth stages may be addressed. Concession making takes place in stage
six. Concession making may either be sequential approach (each side reciprocates a concession made by
the order) or holistic approach (each side makes very few concessions or none at all). It is important to
remember that concession making runs parallel with negotiation strategies of competitive negotiation (each side tries to yield very little in an attempt to win maximum benefits), using dirty tricks, or problem-solving
(seeking mutually beneficial ground for both negotiators While not often traditionally considered, the last stage, stage 7, is of paramount importance. In this stage, the
post-agreement stage, an evaluation of the success of the negotiation is conducted and doing so can be
beneficial. First, post-agreement evaluation allows the collection of valuable data that tell us the strengths and
weaknesses of the negotiation. Second, areas in need of improvements are presented. Lastly, postagreement
analysis can create an opportunity for fostering relationships with counterparts. U.S. multinationals
intending on engaging in business relationships with high-context collectivist societies like China, India, and
Japan would appreciate this last benefit. The successful international negotiator must have certain unique
characteristics viz-a-viz high tolerance for ambiguity, flexibility, creativity, humor, stamina (physical and
emotional), empathy, and bilingualism.
As we read Chapter 14, we begin to discuss an important aspect of work: motivation. While financial rewards
are compensations for work done, multinationals continue to appreciate the importance of motivation in the
work environment, as they embed motivational philosophies in their management decision making. We
continue to see that work centrality (the overall value of work in a person's life when compared to other
activities including religion, leisure, family, and community) and work obligation norms (degree to which work
is considered as an obligation) continue to be the primary focus of multinational management. However, the
key reasons for why people work can be dichotomized into two categories: extrinsic values (preference for the security aspects of jobs, such as money and job security) and intrinsic values (preferences for openness to
change, pursuit of autonomy, growth, creativity and use of initiative). Knowledge of such differences in
peoples' preferences will always help multinationals design effective strategies appropriate for local hiring.
We now turn to the theories of motivation categorized as the need theory of motivation and process and
reinforcement theories. Let's briefly discuss them. There are four types of need theory of motivation. First,
according to Thomas Maslow's hierarchy of needs, individuals have five basic types of needs: psychological,
security, affiliation, esteem, and self-actualization. According to Maslow, these needs are fulfilled according to
a hierarchy from the lowest to the highest levels. Second, Alderfer’s ERG Theory presents a simplified
hierarchy of needs similar to Maslow's: growth needs, relatedness needs and existence needs. Third, we
have the motivator-hygiene theory, which states that the two characteristics of job are motivators (factors that
allow the fulfillment of higher-level needs (e.g., having a challenging task which leads to greater levels of
achievement) and hygiene (factors that allow the fulfillment of lower-level needs, e.g., good benefits and
better working conditions). Finally, the achievement-motivation theory states that only a given percentage of
people have the need to win in a competitive environment or exceed a standard of excellence.
But what are the implications of the needs theories for multinational management? In adapting the needs
theory, multinational managers should be able to (a) identify basic functions of work in the national or local
culture (b) identify the most important needs and focus on providing jobs that meet those needs (c)
understand that jobs available to satisfy workers' needs have limitations that cannot be addressed given cultural, political or socio-economic economic environment.
There are three process and reinforcement theories of motivation: expectancy theory, equity theory and goalsetting
theory. Basically, the process theories assert that motivation is a function of needs and values
combined with individuals' beliefs regarding work environment. According to Victor Vroom, the expectancy
theory assumes that people are motivated to work, if there is a connection between their needs and values for
work and the results of their hard work. Equity theory states that people perceive the fairness of rewards on
work efforts mainly as pay, benefits, recognition, job perquisites, and prestige, when their age, educational
qualifications, seniority, and social status are also considered. Simplistically, goal-setting theory states that
the mere setting of a goal is the motivating force for work. Finally, the reinforcement theory, focusing on
operant conditioning, advanced by B.F. Skinner, proposes that if a pleasurable consequence follows a
behavior, the behavior will continue. However, if an unpleasant consequence follows a behavior, the behavior
will not.
What are the implications for multinationals based on knowledge of the expectancy theory? Multinationals
armed with knowledge of the expectancy theory should be able to identify specific outcomes people value and
reward them positively accordingly. Moreover, the former should also be able to find essential cultural ways to
assure employees that their work efforts will generate expected results. With regards to the equity theory,
multinationals must assess basic principles of equity, and provide motivational factors accordingly.
Concerning goal-setting, multinationals must be able to set clear and specific goals, assign difficult, but attainable goals, increase employee acceptance of goals, and provide effective feedbacks. Finally, for the
reinforcement theory, a slew of research in this areas shows that positive reinforcement improves employee productivity. The challenge multinationals have is whether certain punishments should be introduced and
what kinds would be appropriate for certain undesirable work behavior or performances, especially when we
consider different national cultures and social institutions.
We have been able to see how important it is that multinationals develop essential negotiation skills and how
those skills can be helpful in not only successfully negotiating across borders, but also in developing
relationships with their international counterparts. An exposure of the different skills and pitfalls has been
presented to illuminate us in understanding the different cultural challenges that we might experience. Our
reviews and discussions on motivational theories have helped to educate us about the importance of
motivation and the related challenges we might face when dealing with foreign multinationals and their
employees. Our knowledge of motivational tools should help in preparing us for challenges we might