3 Key Areas to Consider Prior to a Major Cross Cultural Negotiation

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3 Key Areas to Consider Prior to any major cross cultural negotiation: Hierarchy, Individualism v. Collectivism and Importance of Context. Consideration of these areas will not guarantee agreement …

3 Key Areas to Consider Prior to any major cross cultural negotiation: Hierarchy, Individualism v. Collectivism and Importance of Context. Consideration of these areas will not guarantee agreement but can help minimize the chance of impasse in a situation where an agreement is possible as well as reduce time and cost of the negotiation.

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  • 1. Cross Cultural Negotiation 3 Key Areas to Consider Prior to any major cross cultural negotiation Bill Kohnen Global Purchasing Fundamentals 2014
  • 2. 3 Key Areas to Consider Cross Cultural Negotiation Importance of Hierarchy Individualism vs. Collectivism Importance of Context Bill Kohnen Global Purchasing Fundamentals 2014
  • 3. Bos Manager VP Director VP President Hierarchy Context Collective vs. Individual Bill Kohnen Global Purchasing Fundamentals 2014
  • 4. Impact of Hierarchy • To What degree do the people you are negotiating with need to get approval from. • To what degree does hierarchy or lack of it create goals and expectations to be meet that are not directly related to negotiation • What will be your relationship if any to others in the organization? Is that a risk to you? Examples Important Malaysia, Japan, Large Global Corporations May never directly meet people will real authority Moderately Important Germany, Singapore Generally authority given to reach agreement within a set range Less Important United States Technology Start Ups Bill Kohnen Global Purchasing Fundamentals 2014
  • 5. Individualism vs. Collectivism • Important when trying to identify the decision maker(s) • Impact on and decision criteria • Impact on timing • How to close the deal • Once deal is made may impact way it is executed Examples Collectivism Brazil, Philippines Middle Ground Israel, India Individualism Australians, Texans Bill Kohnen Global Purchasing Fundamentals 2014
  • 6. Importance Of Context • Method of stating goals • How fast and direct can you be to get to stating your specific goals • Extent discussion will focus on past, present or future • Whether negotiation give and take will be direct or indirect • Of the 3 areas the one most often derails discussions that otherwise could have reached agreement Examples Context Important Arab Cultures Japan Moderately Important France Not Important Germany, US, Street Vendors anywhere in the world Bill Kohnen Global Purchasing Fundamentals 2014
  • 7. Impact on Negotiation Examples Hierarchy Individualism Context Negotiation Outlook High Low High Patience, Prepare for Long Discussion Multiple Meetings Solution and Benefit for Group Low High Low Expect getting to point quickly Pressure to agree fast Expectation you can make a deal Bill Kohnen Global Purchasing Fundamentals 2014
  • 8. Impact on Negotiation - Example Hierarchy Individualism Context Negotiation Outlook High High High Expect other side to be confident and straightforward and want to talk However final agreement will need to be approved by people not in negotiations Example: Big Western Multinational, Military Organization Bill Kohnen Global Purchasing Fundamentals 2014
  • 9. Summary • Thoughtful consideration of background views of other sides is an important part of planning for cross cultural negotiations • Recognizing different approaches does not mean you should alter your style • Ultimately the negotiation, like any other, can only reach an agreement based on whether there is overlap between each sides maximum and minimum expectations • However the possibility of an agreement is less likely to be derailed and may conclude relatively fast and for less cost with an understanding of the other sides background views Bill Kohnen Global Purchasing Fundamentals 2014