Study Guide for MGT 400 Final Exam (150 points)
You will have 75 minutes to complete the exam.
The exam will consist of 40-50 multiple choice and true-false questions.
About 70% of the exam will come from material covered since the midterm, including
chapters 11 and 13 and the Local Memoirs reading. Key areas are listed below.
Chapter 2 – Culture and Multinational Management
Levels of Culture:
National culture: the dominant culture within the political boundaries of the nation-state)
Business culture: norms, values, and beliefs that pertain to all aspects of doing business in a culture
Occupational culture: the norms, values, beliefs, and expected ways of behaving for people in the
same occupational group, regardless of employer
Organizational culture: the set of important understandings (often understated) that members of
an organization share.
Hofstede model of national culture
A model mainly based on differences in values and beliefs regarding work goals
oPower distance - how much inequality should there be among us?
oUncertainty avoidance - how afraid are we of unknown people and ideas?
oIndividualism - how dependent are we on our (extended) family?
oMasculinity - how should a man feel and behave, how a woman?
oLong-term orientation - ay we have fun or is life a serious matter?
How to apply Hofstede's model
1. Human resources management - training, evaluations, promotions
2. Leadership styles - how leaders behave
3. Motivational assumptions - beliefs about how people respond to work
4. Decision making and organizational design - how to make decisions and organize
teams/companies
5. Strategies - effects of culture on strategies
Power Distance:
Concerns how cultures deal with inequality and focuses on:
oNorms that tell superiors how much they can determine the behavior of their
subordinates
oThe belief that superiors and subordinates are fundamentally different kinds of
people
Low power distance societies look to hire on select management, maybe based on education,
they look at everyone like teammates
High power distance they are looking at social strata, most assume that people dislike
working
)Uncertainty Avoidance:
Norms, values, and beliefs regarding tolerance for ambiguity
oConflict should be avoided
oDeviant people and ideas should not be tolerated
oLaws are very important and should be followed
oExperts and authorities are usually correct
oConsensus is important
High uncertainty we are always about loyalty, in Japan it is not uncommon for a worker to
stay with the same company for their entire career
Low uncertainty, people are self motivated/ competitive, in the U.S. we job hop for
promotions/money
)Masculinity/Femineity:
Tendency of a culture to support traditional masculine orientations
High masculinity countries have beliefs such as:
oGender roles should be clearly distinguished.
oMachismo or exaggerated maleness in men is good.
oPeople - especially men - should be decisive.
oWork takes priority over other duties, such as family
Long term orientation:
Orientations towards the time that values patience
oManagers are selected based on the fit of their personal and educational
characteristics
oA prospective employee's particular skills have less importance in the hiring decision
Eastern cultures rank highest on long-term orientation
Value synthesis in organizational decisions rather than search for correct answer
Investment in long-term employment skills
Focus on long-term individual and company goals
Short term orientation:
Focus is on immediately usable skills
Western cultures, which tend to have short-term orientations, value logical analysis in their
approach to organizational decisions
Designed and managed purposefully to respond to immediate pressures from the
environment
Want immediate financial returns
Restraint vs. Indulgence
Refers to the degree to which societies enjoy life based on control or gratification of basic,
human desires
Indulgent societies tend to favor free satisfaction of human needs related to "enjoying life
and having fun"
Multinational managers cans have work environments to take advantage of such preferences
oMay we have fun or is life a serious matter?
Globe National Culture Framework
GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who
collected data from 17,000 managers in 62 countries
Globe's Two Unique Dimensions
oPerformance orientation - strive for excellence
oHumane orientation - the extent to which people are fair, altruistic, caring, and
generous
Performance Orientation
Refers to the degree to which the society encourages societal members to innovate, to
improve their performance, and to strive for excellence.
oUnited States and Singapore have high scores while Russia and Greece have low
scores on the dimension.
Humane Orientation
An indication of the extent to which individuals are expected to be fair, altruistic, caring,
and generous
oLess humane-oriented societies are more likely to value self-interest and self-
gratification
oMalaysia and Egypt have high humane orientation scores, while France and
Germany have low scores.
Universalism vs. Particularism
These concepts pertain to how people treat each other:
Universalism:
Based on abstract principles such as rules of law, religion, or cultural principles
Particularism:
Rules are only a rough guide, Each judgement represents a unique situation, which must
take into account who the person is, and his relationship to the one making the judgement.
Individualism vs. Collectivism
Collectivist Societies:
Focus on relationships
"deals" are flexible, based on situation and person
Contracts are easy to modify
Individualist Societies:
Focus on rules
"Deals" are obligations
Contracts are difficult to break
Caveats and Cautions
Cultural Paradoxes: when individual situations seem to contradict cultural prescriptions
Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same
Ethnocentrism: people from one culture believe that theirs are the only correct norms, values, and
beliefs
Cultural relativism: all cultures, no matter how different, are correct and moral for the people of
those cultures
Cultural intelligence: ability to interact effectively in multiple cultures,
- composed of three components:
1) A mental component
2) A motivational component
3) A behavior component
Chapter 14 – Motivation in Multinational Companies
Work centrality:
Importance that work has in the life on an individual vs. leisure and family
oDedicated workers
oMore work per week
oDiffers across cultures
oThe degree of importance of work in a persons life
oRepresents the degree to which a person is attached to work
Traditional attachment to work typical of most industrialized societies is changing
Work obligation norms:
Work is seen as an obligation or duty in society
oAdhere to the norm by working longer
oEmerging economies show very high levels of work obligation norms
What people value in work:
Intrinsic work values:
oOpenness to change, the pursuit of autonomy, growth, creativity, and the use of
initiative at work
Sense of achievement
Curiosity
Interest
pride
;
Extrinsic work values:
oSecurity, income, job security, and less demanding work.
Money
Grades
Career
Praise
Exams
Four most important things for workers by country:
United States:
oGenerous holidays
oJob respected
oGood hours
oUse initiative
Germany
oGenerous holidays
oJob respected
oResponsibility
oGood hours
Turkey
oGenerous holidays
oInteresting job
oResponsibility
oGood hours
Russia
oResponsibility
oUse initiative
oGenerous holidays
oGood hours
Japan
oJob respected
oUse initiative
oAchieve something
oGood hours
Motivational Strategies:
The first key to successful motivational strategies in multinational companies is:
oUnderstanding the difference regarding how people view the functions of work
oWork centrality - importance of work
Basic motivation process:
Motivation
Is a psychological process resulting in goal-directed behavior that satisfies human needs.
oA Need is a feeling of deficit
oA Goal-directed Behavior - the intention of satisfying a need
Reinforcement
Means that the consequences that follow a persons behavior encourage the person to
continue the behavior
oExample: bonus pay to encourage behavior
Punishment
Means that the consequences that follow a persons behavior discourage the behavior.
oExample: docking pay to discourage behavior
National Context and Work Motivation:
Cultural values, norms & supporting social institutions influence the priority that people
attach to work.
oExample: early education in collectivist societies encourage people to develop a need
to belong to groups
The national context influences reactions to goal-directed behavior, including ALL steps of
the motivational process
oExample: a Japanese worker who brags about his performance will be sanctioned by
his work group.
Basic Motivation Theories:
1. Need Theory
Assumes that people are motivated to work because their jobs satisfy basic needs and
higher-level needs
oMaslow's Hierarchy of Needs
oERG theory
oMotivator-hygiene theory
oAchievement motivation theory
Need based Theory — Maslow’s Hierarchy of Needs
People first seek to satisfy lower needs, then higher ones
Once a lower needs is satisfied it no longer motivates
Need based Theory — Alderfer’s ERG Theory (Existence, Relatedness, Growth)
A person who cannot satisfy a higher need will seek to satisfy lower-level needs
oExample: if the satisfaction of growth needs is impossible on the job,
relational needs become the prime motivator
Need based Theory — Motivation-Hygiene Theory
a. Motivators
oAre the characteristics of jobs that allow people to fulfill higher-level needs ;
Achievement
Recognition
The work itself
Responsibility
Advancement
Growth
b. Hygiene
oAre characteristics of jobs that allow people to fulfill lower-level needs
Company priorities
Supervision
Relationships
Work conditions
Remuneration
Salary
Security
Need based Theory — Achievement-Motivation Theory
Suggests that only some people (10% in U.S.) have the need to win or to exceed a standard
of excellence
oHigh achievement-motivated people set their own goals and seek challenging
situations
oHigh achievers desire immediate feedback
3 Key needs as the basis of motivation:
oPower
oAffiliation
oAchievement
2. Process Theory
Assumes that motivation arises from needs and values combined with an individual's beliefs
regarding the work
oExpectancy theory
oEquity theory
oGoal-setting theory
oReinforcement theory
Applying Need Theories in Multinational Settings:
Identify the basic functions of work
Identify the needs considered most important by workers
Note that sources of need fulfillment may differ for the same needs
Understand the limitations of available jobs to satisfy needs.
Process Theory — Expectancy Theory
Motivation that is more complex than simple need satisfaction
Holds that work motivation is a function of a persons needs, and also beliefs
regarding what happens if one works hard
Holds that the level of motivation also
depends on a persons beliefs regarding
whether their efforts at work will satisfy
their needs
Applying Expectancy Theory
Identify which outcomes people value in a
particular cultural setting; the multinational
manager must find ad use rewards with positive
variance (value)
Find culturally appropriate ways to convince employees that their efforts will lead to
desirable ends.
Process Theory — Equity Theory
Focuses on the fairness that people perceive in the rewards that they receive for their efforts
at work
oU.S. (individualistic) will emphasize achievement-oriented
oAsia (collectivist) emphasize ascription-oriented inputs such as equity
oEquality norms prevail over equity norms in collectivist cultures
Process Theory — Goal-setting Theory
Assumes that people want to achieve goals; the existence of a goal is motivating
oSet clear and specific goals
oAssign difficult but achievable goals
oIncrease employee acceptance of goals
oProvide incentives to achieve goals
oGive feedback on goal attainment
Goal-setting works to some degree, anywhere
In individualistic cultures,
osetting individual goals may be more effective
oPerformance drops off with the use of teamwork in individualistic cultures due
to:
People give their own work priority over work of the group
People do not feel responsible for group outcomes
People put in less effort when they work in groups
In collectivist cultures, workers will want to participate in goal-setting; participation may
have a greater chance of enhancing workers' commitment to the goal.
Process Theory — Reinforcement Theory
Focuses on operant conditioning, a model which proposes that behavior is a function of its
consequences
Positive Reinforcement
oA stimulus is presented, Behavior increases
Negative Reinforcement
oA stimulus is removed, Behavior increases
Positive Punishment
oA stimulus is presented, Behavior decreases
Negative Punishment
oA stimulus is removed, Behavior decreases
Multinational Applications Process Theories
Expectancy Theory:
Key is to identify appropriate rewards
Equity Theory:
Assess the meaning and principle of equity (fairness)
Goal-setting Theory:
Should goals be group/individual?
Should workers/leaders participate in goal setting?
Reinforcement Theory
Institutional environment and what people value
Chapter 15 – Leadership and Management Behavior in
Multinational Companies
Leadership
The ability of an individual to influence, motivate, and enable others to contribute towards
the effectiveness and success of the organizations of which they are members
oMNE more challenging
Leadership = act of one person guiding others toward the attainment of common goals or
objectives
The ability to inspire thinking, attitudes, and actions of a variety of individuals and cultures
Influencing, motivating, and assisting followers to desired levels of performance
The Global Leader
Must have the skills and abilities to interact with and manage people from diverse cultural
backgrounds in their multinational organization
oCosmopolitan (well traveled)
oSkilled at intercultural communication
oCulturally sensitive
oCapable of rapid acculturation (successful adaptation)
oUser of cultural synergies
oEmotionally intelligent
Models of Leadership
Leadership traits - Are leaders born or made?
Leadership Behavior - task vs. people centered
Contingency (Situational) Leadership
ofielders theory of leadership
oPath-goal theory
Leadership Traits
Great-person Theory is the idea that leaders are born with unique characteristics that make
them quite different from ordinary people
US successful leaders:
oHigh intelligence & self-confidence
oGreat initiative
oAssertiveness & persistence
oA great desire for responsibility and the opportunity to influence others
oA high awareness of the needs of others
Leadership Behaviors
Task-centered leader gives specific directions to subordinates so that they can complete
tasks
oWants high performance and accomplishment of all the tasks
oGetting the job done is first priority
Person-centered leader focuses on meeting the social and emotional needs of employees
oWants to be liked and get along well with subordinates
oGetting the job done is a second priority
Leadership Styles:
Autocratic leadership style makes all major decisions themselves
Consultive and participative leadership styles fall midway between the autocratic and
democratic styles
Democratic leadership style delegate the decision-making subordinates
Performance-Maintenance (PM) Theory of Leadership
Performance (similar to task-centered)
oPlanning component: develop procedures
oPressure component: pressures employees to put forth more effort and to do good
work
Maintenance (similar to person-centered)
oPromote behaviors that promote group stability
Contingency Theory
Fielder's theory of leadership (Task or people-centered)
oRelationship between leader and subordinates
oThe degree to which subordinates' tasks are clearly defined
oOfficially granted power of the leader
Effective leadership occurs when the leadership style matches the situation
Modern leadership theory tells us leaders are more made than born - TRUE
;
Autocratic leadership styles would work better in countries with - HIGH POWER
DISTANCE
;
Contingency (Situational) Theories
Path-goal theory: a leader might adopt one of four leadership styles, depending on the
situation
oDirective (give subordinates specific goals)
oSupportive ( show concern for their needs)
oParticipative ( consult with them and encourage)
oAchievement-oriented (set goals and reward goal accomplishments)
Traits, Behaviors & Contingencies Summary
Leaders have a variety or behaviors they can use to get the job done
Most experts now believe that no one leadership trait or behavior works best in all situations
A successful leader must diagnose the situation, pick the behaviors and develop the
leadership traits that fits best
National Context of Contingency Model of Leadership
Affected by the national context:
oLeader behaviors and traits
oSubordinates’ characteristics and expectations work setting
People prefer certain traits and behaviors in their leaders depending on their cultural
backgrounds, through some behaviors and traits are cultural universals
GLOBE Study - Leadership styles vary by country
Team-oriented leaders
oPreferred in Latin European, East European, and Southern Asian societies
Participative leaders
oPreferred by Anglo, Nordic European, and Germanic European cultures
Humane Leaders
oPreferred in Southern Asian Cultures
All agreed that autonomous leaders and self-protective leaders universally impeded
leadership
Leadership Influence Tactics
Logical Appeals
oAssertiveness
oReasoning
oSanctioning
Emotional Appeals
oFriendliness
oAppeals to a higher power
Cooperative appeals
oBargaining
oCoalitions
Subordinates Expectations
Power Distance -
oHigh power-distance countries - autocratic leadership is expected
oLow power-distance countries - leaders should forgo status, symbols, and
involve subordinates in decision-making
Masculinity -
oacceptance of more authoritarian leadership
Uncertainty-avoidance -
oexpect leader to provide more detailed directions
Contemporary approaches to Leadership
Attribution approach - leader makes an attribution, the leader responds to the subordinate
based on that assumption
oIf a leader notices a behavior, the leader may attribute that person doesn’t care
Transformational Leadership
oArticulates a vision
oBreaks from the statues quo
oProvides goals and a plan
oGives meaning or a purpose to goals
oTakes risk
oIs motivated to lead
oBuilds a power base
oDemonstrates high ethical and moral standards
The GLOBE study found that Transformational Leadership was considered superior
in almost all societies
Attributions and Leadership
Attributions
oOnce leaders make an attribution, the leader responds to the subordinate based
on that assumption
Internal attribution:
Behavior corrected or rewarded
External attribution
Modify the work environment
Fundamental attribution error:
oAn assumption by a manager that people behave in certain ways because of
internal motivations, rather than outside factors
Contingency Views of Leadership
Suggests that managers cannot assume that successful home leadership styles or traits will
result in equally successful leadership in a foreign country
Modify and adapt leadership styles to be congruent with the cultural setting
oBecause of the extreme variability among cultures and nations, there are few
prescriptive theories of multicultural leadership
Cultural Context: Low power distance and low uncertainty avoidance
Leader Type: The democrat
Recommended Leadership Styles: Supportive, participative, and achievement
Example Country: Great Britain
;
Cultural Context: High power distance and low uncertainty avoidance
Leader Type: The master
Recommended Leadership Styles: Directive and supportive
Example Country: China
;
Cultural Context: Low power distance and high uncertainty avoidance
Leader Type: The professional
Recommended Leadership Styles: Directive, supportive, and participative
Example Country: Germany
;
Cultural Context: High power distance and high uncertainty avoidance
Leader Type: The boss
Recommended Leadership Style: Directive
Example Country: France
;
Because of the extreme variability among cultures and nations, there are few prescriptive
theories of multicultural leadership.
;
Chapter 11 – International Human Resources Management
INTERNATIONAL HUMAN RESOURCES MANAGEMENT
What is human resource management?
Deals with the overall relationship of the employee with the organization
Major goals of HRM are managing and developing human assets
Basic HRM features:
Recruitment: identification of qualified individuals for a vacant position
Selection: process of filling vacant positions in the organization
Training: providing opportunities to help the individual to perform
Performance Appraisal: assessing the individual’s performance
Compensation: providing the adequate reward package
Labor Relations: the relationship between the individual and the company
International Challenges -
Recruitment/Selection
In the international arena, the basic HRM activities take on an added complexity, for two
reasons:
1. Employees of MNCs include a mixture of workers of different nationalities/cultures.
2. HR Managers must decide the necessary extent of adaption to local business & national
cultures.
Multinational Organizations - Types of Employees
1. Expatriate - employees who come from a country that is different from the one in which
they are working
2. Home Country Nationals - Expats come from the parent firm's home country
3. Third Country Nationals - Expats from neither the host nor the home country
4. Host Country Nationals - Local workers who come from the host country
5. Inpatriate - Employees from foreign countries who work in the country where the parent
company is located.
6. Flexpatriates - Employees who are sent on frequent but short-term international
assignments
7. International Cadre (Globals) - Managers who specialize in international assignments.
8. Commuter Assignments Employees - Employees who live in one country, but spend part
of the work week in another country.
Self-initiated expatriates - Employees who independently decide to move to another country to
work
They are professionals or managers who seek work in other countries and decide to stay
there for an indefinite amount of time
They provide many advantages.
Advantages:
They are experts in the local culture. High CQ
They do not require the same expensive packages as regular expatriates. Less Costly
Many of the emerging markets have severe shortages of qualified locals, so using self-
initiated expatriates may provide the multinational with local experts at minimal costs ;
Are expatriates worth it?
High costs
3-4 times higher than home-based salary
Relocation and safety costs
High failure rate - of US expats vs. Europe and Japan
Reasons for failure
Lack of technical proficiency, no motivation
Family concerns - failure to adapt, unhappiness
Expatriates success strategies
Adapt to local culture
Find a peer from the host country within the first 6 months
Develop a relationship with key people - network
Overcome organizational challenges
Difficult/misunderstood responsibilities - performance ambiguity
Language and cultural training
Selection benefits to Expatriates –
Management development - building leadership pipeline
Corporate control and coordination
Vision and strategy communication
Gain local market understanding
Develop networks in country )
)
International HRM - Selection - Expatriate Selection
Expatriate: Employees who come from a country that is different from the one in which they are
working
Selecting the wrong person can cost more than $1 million
Domestic performance doesn’t predict expatriate
Can "damage" the firm - reputation, mistakes, poor relationships
Technical and managerial skills
Personality traits (flexible, willing to learn)
Family situation (spouse & family willingness to go)
Stress tolerance (ability to maintain composure)
Language ability (speak, read & write the language)
Emotional intelligence (empathize, relate to others)
)
Cross Cultural Social Intelligence - CQ
The ability of an individual to gauge and understand verbal and non-verbal cues from a
variety of cultures
Silent Language of Business
Language of time - form of communication
Appointment scheduling
Importance of being on time
Deadlines and urgency
Language of space - office placement, personal space
Sizes of the office
Conversations distance between people
Language of things - materialism
English (UK) - dependability and respectability (old fashioned)
Common practice in the US to buy loyalties with high salaries which doesn’t equate globally
Language of friendship
US - quick to form friendships and acquaintances
Latin America and Middle East - Friends sense your feelings
)
International HRM - Training
Predeparture cross-cultural training reduces expatriate failure rates and increases job
performance
Training rigor: the extent of effort by both trainees and trainers to prepare the expatriate for
work abroad
Host country mentors:
Positively impact expatriates' organizational knowledge, job performance,
profitability, and teamwork
International HRM - Performance Appraisal
Conducting reliable performance appraisal for the expatriate is very challenging
Challenges:
Fit of international operation in multinational strategy
Unreliable data - accounting standards
Complex and volatile environments - currency exchange
Time differences and distance separation
Without intensive and direct contact, performance appraisals can fail to demonstrate a
comprehensive understanding of the expatriate manager's situation.
Fit the evaluation criteria to the strategy
Fine-tune the evaluation criteria
Use multiple sources of evaluation with varying periods of evaluation
International HRM - Compensation
Balance-sheet approach: compensation package that attempts to balance purchasing power
in the host country with that in the home country
Foreign service premiums (often 10-20%) of base pay
Hardship allowance (extra money for difficult postings)
Relocation allowance (miscellaneous costs of move)
Home-leave allowance (transportation costs to return home once or twice a year)
Headquarter-based compensation: paying home country wages regardless of location
Host-based compensation: adjusting wages to local lifestyles and costs of living
Global pay systems: worldwide job evaluations, performance appraisal methods, and salary scales
International HRM - Repatriation
Repatriation Problem: the difficulties that managers face coming back to their home countries and
reconnecting with their old jobs
Three cultural problems "reverse culture shocks:"
Adapting to new work environment and culture of home office
Relearning to communicate with others in home and organizational cultures
Adapting to their basic living environment
Process:
Provide a strategic purpose for the repatriation
Establish a team to aid the expatriate
Provide parent country information sources
Provide training and preparation for the return
International HRM Strategy
Ethnocentric Staffing - hire management from home country (loyalty, control)
Polycentric staffing - host country workers to top positions (host country differences)
Regiocentric staffing - host country national staff subsidiaries (treated separately)
Global staffing - integrating global talent - recruiting worldwide (bigger talent pool)
Summary
Expatriates present special challenges for MNCs
Successful HRM is a 21st century challenge
Globalization allows for MNCs to hire from a worldwide pool of talent
It is important for multinationals to find ways to properly manage expatriates successfully
Chapter 13 – International Negotiation and Cross-cultural
Communication
How do we address challenges of cross-cultural communication?
How does culture impact communication, and negotiation?
What are the steps to a successful international negotiation?
International Negotiation:
Consistent and thorough communication
The process of making business deals across cultures; it precedes any multinational project
Without successful negotiation and the accompanying cross-cultural communication, there
are seldom successful business transactions
As world becomes increasingly global, companies will need to become adept at such
negotiations
Successful international negotiation requires successful cross-cultural
communication.
Negotiators must understand:
All components of culturally different communication styles, both verbal and nonverbal
including:
Subtle gestures of hand and face
The use of Silence
What is said and not said
Major issues in cross-cultural communication:
Relationship between language and culture
Cultural differences in communication styles
Nonverbal communication
How and when to use interpreters
Speaking to nonnative speakers of your language
Cross-cultural communication errors from faculty attributions
Faculty Attributions:
The tendency people have to overemphasize personal characteristics (or culture) and ignore
situational factors in judging others' behavior.
Language and Culture:
A common language is needed for negotiations
Common languages allow foreign direct investment and international trade to flourish
Languages are powerful in that they have the capacity of lowering transaction costs for
people from different countries by facilitating understanding between people.
It is therefore critical for multinationals to assess the language proficiency of their
employees.
English is widely recognized as the international language of business, but of the roughly
one billion English speakers in the world, only 50% speak English as their native language.
Context and Culture:
-Different cultures use the context or the situation in which communication takes place to
understand what people are saying.
Low context – languages in which people state things directly and explicitly
oThe words provide most of the meaning and you do not have to understand the
situation
High context – languages in which people state thing indirectly and implicitly.
oCommunications have multiple meanings that one can interpret only by reading the
situation
Communication between;high- and low-context;people is a challenge. Translated words that
have explicit meanings to a low-context;speaker may have a multitude of meanings to a;high-
context;speaker.
Communication and Culture:
Direct Communication:
Communication that asks questions, states opinions, comes to the point and lacks
ambiguity
Indirect Communication
People attempt to state their opinions or ask questions by implied meaning, believing
direct communication is impolite
Non-verbal Communication
Means communicating without words.
One may communicate without speaking; people gesture, smile, hug, and
engage in other behaviors that supplement or enhance spoken communication
Such nonverbal communication includes:
Kinesics – use of personal space
Proxemics – forms of communication that relies on senses
Haptics - touching
Oculesics – eye contact
Olfactics - smell
NEGOTIATORS MUST BE AWARE OF THESE PERSPECTIVES AND BE
ABLE TO ADAPT TO THEM
Practical Issues in Cross-Cultural Business Communication:
- Language barriers
- International managers are always at an advantage if they speak more than one language
fluently
- Even if negotiation is in English, communication and understanding of the culture always
improves if you speak the local language.
Using Interpreters:
The role of an interpreter is to provide a simultaneous translation of a foreign language
This requires greater linguistic skills than speaking a language or translating written
documents
The interpreter must have the technical knowledge and vocabulary to deal with
technical details common in business transactions
Even if a negotiator understands both languages, its best to have an interpreter to
ensure the accuracy and common understanding of agreements
Tips for Communicating Across Cultures: (NONNATIVE SPEAKERS)
Use the most common words with their most common meanings
Select words with few alternative meanings
Speak with clear breaks between words
Strictly follow the rules of grammar
Avoid sports words or words borrowed from literature
Avoid slang
Aspects of Negotiation affecting by cross-cultural differences:
The purpose of the negotiation
Risk taking
Communication styles
Form agreements
Emotions
Negotiation style
Steps in International Negotiation:
1. Preparation:
Essential questions and issues to consider before Negotiation:
Determine if the negotiation is possible
Know exactly what your company wants
Be aware of what can be compromised
Know the other side
Send the proper team
Understand the agenda
Prepare for a long negotiation
Key Negotiation style differences among cultures:
what is the negotiation goal - signing the contract or forming a relationship?
Should you use a formal or informal personal communication style?
Should you use a direct or indirect communication style?
Is sensitivity to time low or high?
What form of agreement - specific or general?
What is the team organization - a team or one leader?
What is the attitude towards negotiation - win-lose or win-win?
What is the appropriate emotional display - high or low emotions?
Latin Americans and the Spanish show their emotions through negotiations
Japanese and Germans tend to be more reserved
2. Building the Relationship:
At this stage, negotiators do not focus on the business issues, but on the social and
interpersonal matters
Negotiation partners get to know one another
They develop opinions regarding the personalities of the negotiators, including whether they
can be trusted.
The duration, importance of this stage vary by culture
U.S. negotiators are notorious in their attempts to get down to business after brief socializing
3. Exchanging information and 1st offer:
-3 key differences in most global Negotiations:
1. Time sensitivity
2. Power distance
3. Collectivism vs Individualism
Parties exchange task-related information on their needs for the agreement, which pertains
to the actual details of the proposed agreement
Typically, both sides make a formal presentation of what they desire out of the relationship
Then, both sides usually present their first offer, which is their first proposal of what they
expect from the agreement
Information exchange varies
In Arab countries and Mexico - relationships are a key
In the U.S. - information is key
First offers vary
In Arab countries - first offer might exceed the goal by as much as 50%
In Russia - common to start with their first offer that is extreme
Making the first offer is often an effective way of taking control of a negotiation. (This
is known as anchoring.) A good first offer can influence the other side's perception of
your reservation price. However, the effectiveness of making the first offer depends on
two things…
1. The first offer must be somewhat reasonable (except in Russia)
2. Your opponent's vulnerability to anchoring increases when they are less
prepared
Final comment about first offers:
Only make the first offer if you are well-informed about all aspects of the
negotiation. Otherwise, it is best to let your opponent open first.
4. Persuasion:
Each side in the negotiation attempts to get the other side to agree to its position
This is the heart of the negotiation process
Numerous tactics are used, but two general types:
Standard verbal and nonverbal negotiations tactics
Dirty tricks
Verbal and Nonverbal Negotiation Tactics:
Promise
Threat
Recommendation
Warning
Reward
Punishment
Normative appeal
Commitment
Self disclosure
Question
Command
Refusal
Interruption
Dirty Tricks in International Negotiations:
All negotiators want to get the best deal for their company, and they use a range of tactics to
do that.
However, people from different cultures consider some negotiating tactics dirty tricks:
negotiation tactics that pressure opponents to accept unfair or undesirable agreements or
concessions
Cultures differ on the norms and values that determine acceptable strategies for negotiation;
Deliberate deception or bluffing - point out what you believe is happening
Stalling - don’t reveal when you plan to leave
Escalating authority - clarify decision making authority
You are wealthy, we are poor - ignore the ploy and focus on the mutual benefits of
potential agreement
Old friends - keep a psychological distance
Good-guy, bad-guy routine - call them on it.
5 and 6. Concessions and Agreement:
Concession making - requires that each side relax some of its demands to meet the other
party's needs
Styles of concession may differ among cultures:
Sequential approach - each side reciprocates concessions made by the other side
(Common in North America)
Holistic Approach: Each side makes very few, if any, concessions until the end of
the negotiation. (Common in Asia)
Successful negotiations result in the Final agreement, the signed contract, agreeable to all
sides
The agreement must be consistent with the chosen legal systems or systems
The safest contracts are legally binding in the legal systems of all the signers
Most important, people from different national and business cultures must understand
the contract in principle, and have a true commitment beyond legal.
7. Postagreement:
A commonly ignored step by U.S. negotiators is the postagreement phase, which
consists of an evaluation of the success of a completed negotiation
Postagreement analysis can be beneficial because it allows the garnering of insights into the
strengths and weaknesses of the approach used during negotiation
Postagreement analysis can also enable members of the negotiating team to develop a closer
relationship with their counterparts
Personal success characteristics enhance negotiators abilities to adjust to cross-cultural
negotiations:
Tolerance of ambiguity
Flexibility and creativity
Humor
Stamina
Empathy
Curiosity
Bilingualism
Successful International Negotiator’s Personal Characteristics:
A final key personal skill that international negotiators need to succeed is cultural
intelligence, which is the ability to successfully deal with uncertainties and adapt to the
challenges in a new cross-cultural setting.
A person with high cultural intelligence has the skills to learn aspects of a new culture and
willing to challenge their own assumptions about the new cultures and ultimately behave
differently based on new mental frameworks appropriate for the new culture
Key Takeaways
Ch 13 examined the negotiating process and other elements of cross-cultural communication
International negotiation involves several steps, including preparation, building the
relationship, persuasion, making concessions and reaching agreement
Successful negotiators prepare and understand these steps and adapt them to local host
country.
Coursepack readings
Understand the key takeaways from all coursepack readings, with particular emphasis on Local
Memoirs of a Global Manager. Four to six questions will come from the Local Memoirs reading.
