Analysis & Discussion and Recommendation

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THE INFLUENCE OF CULTURE

ON BUSINESS NEGOTIATIONS BETWEEN

VIETNAMESE AND JAPANESE COMPANIES

Subject: STRM059-DUMVT – Business Research Project

Student name: NGUYEN THI THANH TRA

ID: 16401222

Module Tutor: Dr. Holger Siemons

Word count:

May, 2017

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ABSTRACT

TABLE OF CONTENTS

1. Introduction ................................................................................................................. 3

1.1. Research objectives ............................................................................................ 3

1.2. Research questions............................................................................................. 3

2. Literature review ......................................................................................................... 3

2.1. Culture ................................................................................................................... 3

2.1.1. What is culture .............................................................................................. 3

2.1.2. Strength and challenges of diversity ......................................................... 4

2.2. Negotiation definition .......................................................................................... 5

2.3. Negotiation styles ................................................................................................ 5

2.4. Required skills in international negotiation ..................................................... 7

2.5. Difference between homogeneous and heterogeneous culture ................... 8

2.6. Company overview .............................................................................................. 9

2.6.1. Vietnamese companies ................................................................................ 9

2.6.2. Japanese companies .................................................................................. 10

2.7. Past and current negotiations.......................................................................... 10

2.8. Negotiation process .......................................................................................... 10

3. Brief overview of research ...................................................................................... 11

4. Data analysis and discussion ................................................................................. 12

5. Conclusion and recommendation .......................................................................... 12

5.1. Conclusion .......................................................................................................... 12

5.2. Recommendation ............................................................................................... 12

APPENDIX ........................................................................................................................ 13

REFERENCES .................................................................................................................. 13

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1. Introduction

1.1. Research objectives

The purpose of the thesis is to analyze the correlation of cultural elements

and business negotiation to acknowledge the way culture impacts negotiation in

an international business situation between Vietnamese and Japanese

companies.

This purpose can be separated into three sub-purposes:

To identify the culturally social setting in each country in question;

To understand the negotiation styles of the two countries;

To understand the way each country negotiating with each other based on

the analysis of cultural factors and negotiation styles.

1.2. Research questions

With the aim of making a more accurate and precise direction for the

report, the below questions are designed to identify and analyze the problem:

How does cultural element impact the negotiation style of companies of

Vietnamese and Japanese origin?

How do Vietnamese and Japanese deal with the issues in the business

negotiation with each other?

Though this research aims to provide a deeper understanding for

Vietnamese towards building and maintain business relationship with Japanese,

it will show by taking cultural influence into consideration on analyzing business

negotiation from both Vietnamese and Japanese points of views.

2. Literature review

2.1. Culture

2.1.1. What is culture

Culture is a complicated term to define and there is not only one particular

concept of it. In 1952, the American anthropologists, Kroeber and Kluckhohn

after studying a variety of definitions and concepts of culture sorted out a list of

over 164 varied concepts of culture. Then they proposed a compendious

definition about culture:

“Culture consists of patterns, explicit and implicit, of and for behavior

acquired and transmitted by symbols, constituting the distinctive achievements of

human groups, including their embodiment in artifacts; the essential core of

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culture consists of traditional (i.e. historically derived and selected) ideas and

especially their attached values; culture system may, on the one hand, be

considered as products of actions, on the other, as conditioning elements of

future action” (Kroeber & Kluckhohn, 1952)

There is one more recognized and noticeable definition is from Matsumoto

in 1996, who expressed culture as “the set of attitudes, values, beliefs, and

behaviors shared by a group of people, but different for each individual,

communicated from one generation to the next”. Culture under Matsumoto‟s

perspective is the value that is shared among a group. With the view from this

thesis, the two nations will be classified as a single group, in which each

individual share a common set of attitudes, values, beliefs. Thomas (1996) also

shared the same idea with Matsumoto on culture. He defines culture as “a

universal 'orientation system, which is typical for a society”. The membership can

be displayed within the social environment through the action and perception of

each member.

According to Hostede‟s (1997), culture is considered as “the collective

programming of the mind which distinguishes the members of the group or

category of people from another”. It means that people in the same society will

learn and share culture with others in the same group. Hall (1959) not only

agreed with this idea but also added that culture reflects how human learn.

2.1.2. Strength and challenges of diversity

Strength

Cultural diversity brings benefits to both labors and enterprises. Different

culture can contribute to productivity increase by providing various strategies to

address company‟s issues (David Ingram, 2013). Diversity can also enhance

marketing opportunities, creative capability and organization image (Esty et al.

1995). New culture can bring on new ideas and perspectives for each individual

to acquire as well as learning about global environment hence both employees

and companies‟ integration capability will be remarkably boosted.

Challenges

Cultural diversity raised various challenges in workplace as well as in

international negotiation. Handling diversity is not simply acknowledging the

distinction from people. It includes appreciating the imbalance, fighting with

discrimination and encouraging comprehensiveness. Companies are faced with

discrimination and prejudice as well as negative feedback against the enterprise

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(Devoe, 1999). Negative behaviors may become obstacles to the organization

since they can make harm to business relations and loss in work productivity.

(Esty et al. 1995).

2.2. Negotiation definition

Negotiation exists in everybody‟s daily activities. Negotiation is an

essential part not only in daily interactions but also in business transactions of

any companies and countries. According to Pruitt (1981), negotiation is “a form of

decision making in which two or more parties talks with one another in an effort

to resolve their opposing interests”

Anjan Dasgupta (2005) stated that negotiation is “the process of

communicating back and forth for the purpose of reaching a joint agreement

about differing needs or ideas”. He also focused on the persuasion practice

rather than using power to tackle the problems. Faure and Gunnar (1993) shared

a little bit different view about negotiation, which is a settlement to resolve an

argument to make advantages to ourselves as much as possible to achieve a

mutual agreement. Faure and Sjöstedt (1993) also added in that “negotiation is a

joint decision-making process through which negotiating parties accommodate

their conflicting interests into a mutually acceptable settlement”. The indication is

that all parties need to be in agreement with the approved process for the best

result.

P.H. Gulliver (1979) also extended the concept as a discussion among

arguing parties, with or without a facilitator by another party, they strive for

reaching an outcome which gain the agreement on the disputing problems of

them. This final decision is both agreed and acceptable to all parties after an

influencing and persuading process or both already experienced impacts from

other references. It usually shows a part of original requirement and anticipation

and there are some added terms and conditions created after the discussion.

Gulliver‟s definition not only combines all the above concepts but also

includes other crucial perspectives. For instance, negotiations consist of

influencing and persuading factors as well as discussion and learning in the

proceedings and structure.

2.3. Negotiation styles

Salacuse (2004) defines that negotiation style is how participants from

different culture interact in negotiations. According to Straker‟s study in 2006,

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negotiation style can be classified into three groups: competitive, collaborative

and concession styles, which are described in detail by Horst (2007) as follows.

The competitive style is considered as asserting, putting pressure on the

other negotiator or stating the value that maximizing the own position. This style

is regularly referred as “win-lose” situation. In the collaborative style, both parties

try to resolve the issues by creating fair values and gain the agreement that are

acceptable and maximizing the benefits and objectives of all parties, which leads

to “win-win” setting in negotiation. The last style is concession style or usually

known as yielding style, in which one party puts down their position and highly

emphasize the importance of the other party to achieve their goals. This style is

known as lose-win approach. In our practical setting, negotiators can be flexible

to use or combine these styles in the negotiation process to obtain their

objectives.

Besides the study from Straker, the TKI model developed by Kenneth W.

Thomas and Ralph H. Kilmann (1988) was also designed to identify the styles of

resolving the conflict and in negotiation. This study helps individual in being more

aware of their personality as well as their negotiation styles. The researchers

review the styles on the theory about the interest of oneself needs and the

concern for others. In TKI model, five particular styles of negotiation are defined

as below. The competing style: people of this style are determined and

unaccommodating. This person only concerns his own needs without caring for

the other party. In this style, one person uses whatever power and pressure on

the other side to win the situation and get their goals. The second style is the

accommodating one. The person belonging to this style is unassertive and

collaborative. In negotiation, the individual ignores his own demand and position

to meet the needs and expectation of the other party. The next style is avoiding

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style, which is unassertive and uncollaborated. The negotiator does not make

any attempt to face with the problem or to have a discussion with other parties.

He does not join in tackling the issues until a better point of time or the simplest

action is to withdraw from the conflict. Another style is the collaborating style.

This person in negotiation is contrary to avoiding one. He will have high

assertiveness and cooperation. The collaborating style includes the effort to

interact with other parties to reach out some approaches that fulfill the

expectations from both sides. They try to work in depth on the problem to identify

each implication and find a solution which meets all the concern. The final style in

the TKI model is the compromising style. The style is a combination of assertive

and cooperative characteristic. The main intention is to achieve some beneficial

and agreeable alternatives that satisfy the other negotiators to some extent. This

individual will keep the intermediate attitudes and point of view that can be

demonstrated between competing and accommodating style. People of this style

will go more straight into the problem than avoiding style but do not dig into it like

in the collaborating one. Compromising can be understood as making

concession and quickly finding a middle area

2.4. Required skills in international negotiation

Musial (2001) stated that negotiation skills are crucial for all levels;

especially it is essential for all managerial levels. However, the ability to negotiate

effectively needs a combination of communication, problem analysis and active

listening skills to gain an expected outcome.

Communication skills

Communication includes both verbal and non-verbal interaction. According

to Bywaters (1999), actions and words are at the same importance level on

negotiating. Negotiators must have a capability of clear communication to the

other party in the negotiation process. The goals and perspectives may be

misunderstood if one side does not perform his idea clearly. During the

procedure, a successful dealer must have the ability to stress his desired result

together with his rationale.

Problem solving skills

Micheal et al (2005) stated that with the problem solving skills, all parties

should discuss together to reach out an agreement that is acceptable, which is

better for both sides than no agreement is set up. The problem solving method

focuses on both negotiators‟ underlying concerns, encourage all parties to

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establish and develop their business relationship even if they are in dispute

rather than making a contradictory decision. One should explore the best way to

take advantage and fairly allocate the benefits of the agreement.

Active listening skills

Negotiators should own the skill to listen actively to the other side during

the discussion, which means that one not only has the capability to understand

the verbal interaction but also the body language. It is crucial to listen to the other

negotiators to find out a zone to compromise in the debate. An effective listener

will spend more time for the other negotiator‟s concerns rather than wasting a lot

of time standing in his point, thus he can successfully reach an alternative to

satisfy both parties.

2.5. Difference between homogeneous and heterogeneous culture

Homogeneous culture

A variety of countries across the world are popular with comparatively

homogeneous community. A homogeneous culture is the one that people shared

the same meanings and customs, there is little difference in beliefs. In

homogeneous society, people hold the way of thinking and behaving in common.

The level of consensus is overwhelming and the power of core values is made up

in the company of an upper power who own homogeneousness of beliefs. In

these cultures, different groups within the countries may keep their own values

but they still refer to the supreme to orient and control the organization and may

get into difficulty in reforming the situation. The value may not be shared

widespread but the culture leaders and decision makers are still consistent and

are accepted to have domination right. After a long time, the most influential party

validates their beliefs and core values, which will be then reflected in the whole

social and political environment. Taking South Africa as an example, the white

ethnic minority manages the government as well as the social regulations and

consequently makes up the law system with many restrictions namely as the

race discrimination.

In homogeneous culture, the core principles and values shown in the

political policy, economy situation and business environment belong to the group

who dominate and institutionalize the society. In these countries, an integration of

beliefs and values direct the attitudes and behaviors. Some specific examples of

countries with homogeneous culture are China, Japan or Saudi Arabia. Societies

are reflected by a set of behaviors with particular meanings. Moreover, these

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meanings are also applied in the environment of the economy. These values

have long-lasting lifespan and subsequently have a significant influence the

operation of business in a country. In a society with cultural homogeneity, the

way of thinking and acting is represented in the legal and economic structure and

will be difficult in changing or revising.

Heterogeneous cultures

A heterogeneous cultural society is the one in which various community

association have specified and different values and notions. In this culture, the

society is made up from various shared meanings and understandings. Many

known concepts are popular with these organizations but totally unrelated in

other‟s understandings. A variety of beliefs coexisting in the same community

make up a specific characteristic of heterogeneous culture. In both homogenous

and heterogeneous culture, a dominant set of value are still in existence but the

difference is that in homogenous culture, only one or some value settings are

acceptable. And in heterogeneous society, there can be a variety core values

and beliefs so there is much greater diversification. The influence of

heterogeneity was also mentioned in Time magazine by an article related to the

immigration group to the United States. This viewpoint concentrated on the

diversity of origin that shapes the heterogeneity. Greenwald (1985) in another

article stated that: „What country is this?‟ Many bemused Americans might ask

that question as they go about their work and play. ... Americans are increasingly

finding that entire businesses have acquired a foreignborn flavor.” Joel Garreau

(1981) also characterized the features of heterogeneous culture. He noted that

North America has various areas that can be represented in nine different

cultures. The developed countries are more likely in the list of heterogeneous

culture than other nations. Some countries owning heterogenous cultural society

can be listed as Australia or Canada. On considering the level of cultural diversity

in countries with heterogeneity, one would anticipate that the political and

economic structures would also perform the diversity, and relatively include

greater variations in the systems.

2.6. Company overview

2.6.1. Vietnamese companies

Vietnamese companies are local companies that often have commercial

activities with Japan. The business can be importing goods or products from

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Japan to provide the domestic market, exporting the commodity to Japanese

market or using the service from Japanese companies.

2.6.2. Japanese companies

Japanese companies can be understood as companies invested and

operated by Japanese members. These companies are manufacturing or service

companies, locating either in Japan or Vietnam and often have trading business

with Vietnamese companies.

2.7. Past and current negotiations

2.8. Negotiation process

Graham (1984) said that negotiations include four main stages: buidling

relationship, exchanging information about the negotiating issues, compromising

and persuading, and finally reaching an agreement. Meanwhile, according to

Weiss (1993), the process consists of pre-negotiation, negotiation and

application of the post-negotiation in the end. To be specific, the negotiation

process can be described in the below chart:

The first step in the negotiation process is gathering all information about

the arguing issue and the other negotiator. Information is a competitive

Gathering background information

Assessing negotiation tactics

Creating the negotiation plan

Engaging in negotiation

Closing the negotiation

Contracting the agreement

Enforcing what is agreed happen

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advantage and can bring significant benefits to negotiators. The benefits can be

understanding clearly our goals and interests to the topic or the capability to

identify and analyze the other parties strengths and wekanesses and the

objectives that they strive for. The importance of information was stated by

Cohen (1980) as: “it would give you a big advantage if you could learn what the

other side really wants, their limit, and their deadline”.

After understanding clearly about ourselves and the other negotiators, we

should assessing the negotiation tactics to achieve our goals. The appropriate

negotiation style will be applied after analyzing the negotiating problems and the

characteristics of the other parties. Designing a detailed negotiation plan will be

essential step before negotiation. With the strategy in details, many scenarios are

proposed to react to the response of the other party.

Whether both negotiators work collaboratively or be opposed each other,

all engaging in the negotiation with the objective of reaching an agreement.

Focusing on the wishes of the others can accelerate the chance to obtain a

better deal through considerable flexibility (Gunia, 2011). People should also

consider the situation in which an agreement is not achieved, which is called

BATNA. One without a strong BATNA may have difficulty in negotiating with the

others who owns radical alternatives to the agreement, as they will debate

assertively and force you take an inadequate result just due to your alternative

shortage (Lewicki et al., 2010).

After reaching an agreement, all parties need to record their outcome and

get the confirmation on it. The implementation of action plan should be followed

by both sides after the discusion meeting.

3. Brief overview of research

Structure

This section will study the influence of cultural factors on negotiation

between Vietnamese and Japanese companies. This section will begin with a

discussion about the research design and then is followed by the limitations and

challenges of the research. The next part will outline data collection procedures

and brief of explanation of open and closed questions in the questionnaire.

Research methodology

Based on the research questions and the materials available, particular

methods can be applied to study the impact of culture. Quantitative methods,

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such as the research carried out by Hofstede (2010) to get the data to design the

model for cultural dimensions, may involve an large amount of data gathered

from a lot of different sources for a long time. Therefore, “quantitative research

cannot deal with the social and cultural construction of its own “variables””

(Silverman, 2008). On the other side, according to Eriksson and Kovalainen,

2008, qualitative measures can access the practice of social structure as

generated and interpreted by cultural meanings. From the nature of the issue and

with the purpose of deeper studying about the impact of cultural factors in a

negotiation setting, a qualitative research method has been chosen for this

thesis, as it proves to be the most appropriate to respond to the problem.

Limitations and challenges

The thesis is restricted to the comparison of the two cultural settings and

their influence on the business negotiation. The participants are limited to the

staff in Vietnamese local companies. An enormous benefit here is that the

information collected is compatible with the research in question and its purpose.

However, the most challenging step is that it will take much time and effort to

gather the data as well as it may get into many difficulties to approach the

reliable sources. But when the sources are accessed, the act of collecting the

information will become easier.

Data collection

The data collection will include primary as well as secondary data. The

primary data is collected by a survey aiming to the sale managers at Vietnamese

local companies that often have commercial activities with Japan. The

questionnaire is designed in English to avoid any misunderstandings in the result

of the survey.

The secondary data will consist of remarkable sources. The significant one

is from academic articles and books, in which there are an abundance of

theories, concepts and information for Vietnamese and Japanese culture and

negotiation styles. Besides, the research also uses data from online databases

and articles as well as trustworthy websites to analyze the influence between two

countries.

4. Data analysis and discussion

5. Conclusion and recommendation

5.1. Conclusion

5.2. Recommendation

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APPENDIX

REFERENCES