The course will provide an overview of the private dimensions of negotiating and drafting international business agreements, and specifically on the contractual aspects. Students will gain hands on experience in structuring, drafting and analyzing various international business agreements and documents including global....http://ibi-global.com/business-skills-courses/business-skills/business-skills-international-business-negotiation.html

1. INTERNATIONAL BUSINESS NEGOTIATION

2. CONTENT
I. Why international business?
II. Comparative environment frameworks
III. The impact of culture in negotiation process
IV. Strategies and tactics in international business negotiations
V. Negotiating in different part of the world:
a. Negotiating with American
b. Negotiating with Japanese
c. Negotiating with Chinese
VI. The important of business English in international business negotiation

3. I. WHY INTERNATIONAL BUSINESS
Business is becoming more global because:
1. Increase in and expansion of technology
2. Liberalization of cross-border trade and recourse movement
3. Development of services that support international business
4. Growing consumer pressures
5. Increases global competition
6. Changing political situations
7. Expanded cross-national cooperation

4. I. WHY INTERNATIONAL BUSINESS
International business: Operations and influences
OPERATING
ENVIRENMENT
PHYSICAL AND SOCIETAL
FACTORS
•Political policies and legal
practices
•Cultural factors
•Economic forces
•Geographical influences
COMPETITIVE FACTORS
•Major advantage in price,
marketing, innovation,or
other factors
•Number and comparative
capabilities of competitors
•Competitive differences by
country
OPERATIONS
OBJECTIVES
•Sales expansion
•Resource acquisition
•Risk minimization
STRATEGY
MEANS
Modes
•Importing and exporting
•Tourism and transportation
•Licensing and franchising
•Turnkey operations
•Management contracts
•Direct and portfolio investment
Functions
•Marketing
•Global manufacturing
and supply chain
management
•Accounting
•Finance
•HR
Overlaying alternatives
•Choice of countries
•Organization and
control mechanism

5. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
What does it mean?
United States: Its OK
Germany: Your lunatic
Greece: An obscene symbol for a body orifice
France: Zero or worthless
Japan: Money, special change

6. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
1. The cultural environments facing business
Culture is a set of shared and enduring meanings, values, and
beliefs that characterize national, ethnic, and other groups and
orient their behavior." (Faure and Sjostedt 1993, p.3)

7. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
a. Cultural formation and dynamics
Culture is transmitted in various of ways – from parent to child, teacher to
pupils, social leader to follower, and one peer to another. The parent to child
is especially in the transmission of religious and political affiliations.
Developmental psychologists believe that by age 10, most children have
their basic value systems firmly in place, after which they do not make
change easily. These basic values include such concept as evil versus good,
dirty versus clean, ugly versus beautiful, unnatural, abnormal versus normal,
paradoxical versus logical , and irrational versus rational

8. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
b. Language as a cultural stabilizer

9. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
Portion of World Output in language
42%
12%
9%
9%
6%
5%
5%
12%
English
Japanese
French
German
Spanish
Chinese (various)
Italian
Almost 6000 language

10. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
c. Religion as a cultural stabilizer
Source: World Christian Database

11. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
d. Social stratification system
Performance Orientation: Some nations, such as the United States,
base a person‟s legibility for jobs and promotions primarily on
competence
Gender-based Groups: There are strong country-specific differences
in attitudes toward males and female. In China and India, there has
been an extreme degree of male preference
Age-Based Groups: Many culture assume that age and wisdom are
correlated. These culture usually a seniority-based system of
advancement. But in the United States, retirement at 60 or 65 was
mandatory in most companies until the 1980s, revealing that youth has
the professional advantage.

12. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
Family-Based Groups: In societies in which there is low trust out-side
the family, such as in China and southern Italy
Occupation: In every society, people perceive certain occupations as
having greater economic and social prestige than others.
Americans have a higher preference for being-self employed and worry
lass about the risk of failure than the Europeans

13. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
2. The economic environment
Key economic forces include:
• The general economic framework of a country
• Economic stability
• The existence and influence of capital markets
• Factor environments
• Market size
• Availability of an economic infrastructure

14. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
GNI per capita

15. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
Degree of human development: Longevity, knowledge, standard of living
Source: www.nationmaster.com
Ranking Country Description
1 Norway 0.942
2 Sweden 0.941
3 Canada 0.94
4 Belgium 0.939
5 Australia 0.939
6 United States 0.939
7 Iceland 0.936
8 Netherlands 0.935
9 Japan 0.933
10 Finaland 0.93
TOP 10 COUNTRY OF
HUMAN DEVELOPMENT INDEX SCORES

16. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
Index of economic freedom:
Blue: Free; Green: mostly free; Orange: Mostly unfree; Red: Unfree
Source: The 2002 index of Economic Freedom
HongKong and Singapore
are the only 2 totally free

17. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
GDP Growth per capita (Source: The world bank Atlas 2001)

18. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
3. The economic environment
Legal environment (www.droitcivil.uottawa.ca)

19. II. COMPARATIVE ENVIRONMENT FRAMEWORKS
Legal environment
COUNTRY LEGAL ORIGIN
CLOSING
A BUSINESS
NO. OF
PROCEDURES
TIME (DAYS) COST (USD)
NO. OF
PROCEDURES
TIME (DAYS) COST (USD)
TIME TO
INSOLVENCY
(NO. OF DAYS)
COST
(% OF ESTATE, USD)
Australia Common (English) 2 2 402 11 320 1,623 365 18
Canada Common (English) 2 3 127 17 425 6,065 292 4
Chad Civil (French) 19 73 870 50 604 121 3,650 38
China Civil (German) 11 46 135 20 180 268 946 18
Germany Civil (German) 9 45 1,341 22 154 1,483 437 8
Guatemala Civil (French) 13 39 1,167 19 1,460 171 1,460 18
France Civil (French) 10 53 663 21 210 896 876 18
India Common (English) 10 88 239 22 365 444 4,123 8
Japan Civil (German) 11 31 3,518 16 60 2,223 216 4
Korea Civil (German) 12 33 1,776 23 75 402 534 4
Ukraine Socialist 14 40 210 20 224 80 1,084 18
United Kingdom Common (English) 6 18 264 12 101 120 365 8
United States Common (English) 5 4 210 17 365 120 1,095 4
Source: Complied from "Doing business in 2004: Understanding Regulation, "The international Bank for Reconstruction and development/The World Bank
STARTING A BUSINESS ENFORCING CONTRACT

20. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
ARE CONTRACTS IMPORTANT?

21. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
Americans consider a signed contract as a definitive set of rights and duties
that strictly binds the two sides and determines their interaction thereafter.
Japanese, Chinese, and other cultural groups in Asia, it is said, often consider
that the goal of a negotiation is not a signed contract, but the creation of a
relationship between the two sides. (e.g. Pye 1982).

22. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
54% viewing contract as a negotiating goal and 46% pursuing relationship.
males had a slight preference for contract (57.3%) and females for
relationship (52.5%)
With respect to national cultures, only 26% of the Spanish respondents
claimed that their primary goal in a negotiation was a relationship compared
to 66% of the Indians.
CONTRACT: SPN FR BRZ JPN USA GER UK NIG ARG CHN MEX IND
(%): 74 70 67 54 54 54 47 47 46 45 42 33
CONTRACT OR RELATIONSHIP?

23. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
WIN/LOSE OR WIN/WIN

24. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
Win/win negotiators see deal making as a collaborative and problem-solving
process; win/lose negotiators see it as confrontational:
1. Distributive bargaining (i.e. win/lose)
2. Integrative bargaining or problem-solving (i.e. win/win)
In the former situation, the parties see their goals as incompatible, while in the
latter they consider themselves to have compatible goals (e.g., Hoppman
1995; Lewicki et al. 1993)
WIN/WIN: JPN CHN ARG FR IND USA UK MEX GER NIG BRZ SP
(%) 100 82 81 80 78 71 59 50 55 47 44 37
Whereas 100% of the Japanese viewed negotiation as a win/win process, only
36.8% of the Spanish were so inclined

25. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
ARE FORMAL STYLE IS IMPORTANT IN NEGOTIATION?

26. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
FORMAL: NIG SPN CHN MEX UK ARG GER JPN IND BRZ FR USA
(%): 53 47 46 42 35 35 27 27 22 22 20 17
Among all respondents, two thirds claimed an informal style, while only one third
a formal style. Gender seemed to have no significance, for the distribution among
males and females was almost exactly the same as that among the respondents
as a whole--66% of women and 69% of men believed they had informal
negotiating styles.

27. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
A negotiator with a formal style insists on addressing counterparts by their titles,
avoids personal anecdotes, and refrains from questions touching on the private or
family life of members of the other negotiating team
An informal style negotiator tries to start the discussion on a first-name basis,
quickly seeks to develop a personal, friendly relationship with the other team, and
may take off his jacket and roll up his sleeves when deal making begins in
earnest. Each culture has its own formalities, and they have special meaning
within that culture
Germans have a more formal style than Americans. (Hall and Hall 1990, p.48)

28. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
DIRECT OR INDIRECT COMMUNICATION?

29. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
INDIRECT: JPN FR CHN UK BRZ IND GER USA ARG SPN MEX NIG
(%): 27 20 18 12 11 11 9 5 4 0 0 0
Males and females responded to this question identically: 90% claimed an direct
style of communication

30. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
SENSITIVE TO TIME: HIGH OR LOW?

31. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
Time in negotiations often refer to two elements:
1. promptness is meeting deadlines
2. the amount of time devoted to a negotiation.
Germans, it has been observed, are highly time-sensitive with regard to
promptness but less so with respect to their willingness to devote large
amounts of time to a negotiation. (Hall and Hall 1990 p. 37) Thus they are
punctual (high time sensitivity) but slow to negotiate and make decisions (low
time sensitivity)
LOW: IND FR GER MEX SPN ARG US JPN CHINA NIG UK BRZ
(%): 44 40 36 33 21 15 15 9 9 7 6 0

32. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
EMOTIONALISM: HIGH OR LOW?

33. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
Latin Americans show their emotions at the negotiating table, while Japanese
and many other Asians hide their feelings. Obviously, individual personality
plays a role here. Among all respondents, 65% claimed to tend toward high
emotionalism while 35% indicated a tendency to low emotionalism, and
roughly the same distribution was to be found among male and female
respondents.
HIGH: BRZ ARG MEX SPN CHN USA NIG FR IND JPN UK GER
(%): 89 85 83 79 73 74 60 60 55 55 47 37

34. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
AGREEMENT BUILDING

35. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
Form of agreement: Generally, Americans prefer very detailed contracts that
attempt to anticipate all possible circumstances and eventualities, no matter
how unlikely. Why? Because the "deal" is the contract itself. Other cultures,
such as the Chinese, prefer a contract in the form of general principles rather
than detailed rules. Why? Because, it is claimed, the essence of the deal is
the relationship between the parties
Among all respondents in the survey, 78% preferred specific agreements
while only 22% preferred general agreements. Male and female participants
responded in roughly the same proportions
GENERAL: JPN GER IND FR CHN ARG BRZ USA NIG MEX SPN UK
(%): 46 45 44 30 27 27 22 22 20 17 16 11

36. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
Agreement building: Does it start from agreement on general principles and
proceed to specific items, or does it begin with agreement on specifics, such
as price, delivery date, and product quality, the sum total of which becomes
the contract?
TOP DOWN: IND ARG FR UK CHN GER USA NIG SPN JPN BRZ MEX
(%): 67 62 60 59 55 55 54 53 53 36 33 33

37. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
ONE
LEADER: BRZ CHN MEX UK USA SPN ARG GER JPN IND NIG FR
(%): 100 91 91 65 63 58 58 55 55 44 40 40
One leader or group consensus: Culture is one important factor that
affects the way groups are organized and the way organizations function.
Some cultures emphasize the individual while others stress the group. One
extreme is the negotiating team with a supreme leader who has complete
authority to decide all matters. Many American teams tend to follow this
approach, which has been labeled the "John Wayne style of negotiations."
(Graham and Herberger 1983, p. 160) Other cultures stress team
negotiation and consensus decision- making.

38. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
RISK TAKING: HIGH OR LOW?

39. III. THE IMPACT OF CULTURE IN NEGOTIATION PROCESS
HIGH: FR IND UK CHN USA NIG ARG GER BRZ MEX SPN JPN
(%): 90 89 88 82 78 73 73 72 56 50 47 18

40. IV. STRATEGIES AND TATICS IN BUSINESS NEGOTIATION
A. Strategies
Most of the negotiation literature focuses on two strategies:
1. Interest-based (or integrative, or cooperative) bargaining
2. Positional (or distributive or competitive) bargaining
There are three approaches:
1. Hard is essentially extremely competitive bargaining
2. Soft extremely integrative bargaining (so integrative that one gives up
one's own interests in the hopes of meeting the other person's interests)
3. Principled negotiation is supposed to be somewhere in between, but
closer to soft, certainly, than hard

41. IV. STRATEGIES AND TATICS IN BUSINESS NEGOTIATION
Tactic 1: The Wince: The wince can be explained as any overt negative reaction to
someone‟s offer.
Tactic 2: Silence: In the negotiation process, silence can be your strongest tool. If you
don‟t like what your counterpart has said, or if you‟ve made an offer and you‟re waiting
for a response, just sit back and wait.
Tactic 3: The Good Guy/Bad Guy Routine: This sleazy tactic is often used in movies,
where two detectives are interrogating a person who‟s just been arrested.
Tactics

42. IV. STRATEGIES AND TATICS IN BUSINESS NEGOTIATION
Tactic 4: Limited Authority: This tactic is a variation on the good guy/bad guy routine,
but instead of two people working over you, the one person you‟re dealing with tells
you that he or she must approve any deals with an unseen higher authority.
Tactic 5: The Red Herring: This technique comes from fox hunting competitions, where
one team drags a dead fish across the fox‟s path to distract the other team‟s dogs. At
the bargaining table, a red herring means one side brings up a minor point to distract
the other side from the main issue.
Tactic 6: The Trial Balloon: Trial balloons are questions designed to assess your
negotiating counterpart‟s position without giving any clues about your plans. For
example, you may ask your counterpart, “Would you consider trying our services on a
temporary basis?” or “Have you considered our other service plans?”

43. IV. STRATEGIES AND TATICS IN BUSINESS NEGOTIATION
Tactic 7: Low-Balling: Low-balling is the opposite of the trial balloon. Instead of tempting
you to make the first offer, your counterpart will open the process with a fantastic offer.
Then after you agree, they start hitting you with additional necessities
Tactic 8: The Bait-and-Switch: Similar to low-balling, the bait-and-switch tactic should be
avoided. Your counterpart may try to attract your interests with one great offer, but then
hook you with another mediocre one.
Tactic 9: Outrageous Behavior: Outrageous behavior can be categorized as any form of
socially unacceptable conduct intended to force the other side to make a move, such as
throwing a fit of anger or bursting into tears. As most people feel uncomfortable in these
situations, they may reduce their negotiating terms just to avoid them

44. V. NEGOTIATING IN DIFFERENT PART OF THE WORLD
1. With Americans
a. A relationship is good, a deal is better: Trust arises from the way you do
business together, not from your relationship
b. Each party has the authority to reach an agreement: Americans will further
assume that you have full authority the conclude the
agreement. When it comes to team negotiation. Americans very often expect that
each member of their team to speak for his particulate function, requirement, and
objectives. Americans bring their lawyers in negotiation
c. What do we talk about? When? Specific, quick and at a time
d. Negotiating style: Informal, friendly, direct
e. Getting agreement, “Would you put that in writing”: Put in writing is the
evidence of trustworthiness

45. V. NEGOTIATING IN DIFFERENT PART OF THE WORLD
2. With Chinese
The Chinese mentality – “the market place is like a battle field” – allow as to link
Chinese stratagems with Chinese style of business.
a. Pre- negotiation
Lobbying before the Chinese government authorities is the most
important activity facing foreign firms that want to sell large industrial
projects in Chinese
Presentation: ‘You have to learn how to make presentations...you have to
present your technology and company many times to different groups...and
sometimes them same group comes back, but of course, they do not
remember anything from the earlier presentation…they ask the same
questions ... I think they do this to check you’.
Informal discussion and trust building: ‘They [Western firms] want to come and
sign the contract quickly and do not know that [if] we do not understand
each other …there is no business relationship. First, we have to know and trust
each other, then we sign contract.”

46. V. NEGOTIATING IN DIFFERENT PART OF THE WORLD
b. Formal negotiation
‘Once one of the Chinese negotiators insisted that our project in
Thailand had some problems and that our technology did not
work well. I did not say anything, but when I came back to the
hotel, I called the head office and asked our office in Bangkok to
check ... there was no problem. Next day, in a private meeting, over
the dinner, I told the Chinese Manager that his statement
about Thailand was not correct and that I did not say anything in
yesterday’s meeting not to embarrass him... I gave him
the telephone number of our Thai counterpart and asked him to
check for himself. After that he became very friendly and
even helped us to get that order’.
Persuasion. The Chinese use a variety of negotiating tactics to
Persuade the other party to do business their way: flattery, identifying
the opponent‟s problems, shaming, deception and pitting competing
foreign companies against one another.

47. V. NEGOTIATING IN DIFFERENT PART OF THE WORLD
‘A tactic which I believe that the Chinese employ is that … they set the
deadline on a certain week and arrange a banquet long before the contract
is actually ready. They told us that things must be ready on Saturday when
the mayor would come to the banquet. In this way the Chinese applied
pressure on us to reach an agreement. This was common… You became
a little disappointed the first time you came cross such a situation.
But, after a while, when you recognized the same thing happening again in
other places, you knew that it was a tactic’.
Concessions and agreement. The formal negotiation ends with
an agreement by the negotiating parties through their concessions or
compromise. In this stage, the Chinese showed a strong inclination to settle
all suspending issues holistically in a „package deal‟.

48. V. NEGOTIATING IN DIFFERENT PART OF THE WORLD
c. Post negotiation
Implementation and new rounds of negotiations. Our empirical findings
reveal that problems in negotiating with China also exist after the formal
negotiations, i.e., during the phase of implementation of the agreement.

49. V. NEGOTIATING IN DIFFERENT PART OF THE WORLD
3. With Japanese
Deal from the top. "Always bring people of rank to major negotiations-never
product managers," says Jackson.
Leave the lawyers home. Involving lawyers in a business deal sends a very
negative message to Japanese negotiators, Jackson says. "The Japanese expect
that you come to an agreement and then get the paperwork done afterward."
Avoid confrontation. "Aggressive American sales types really have a problem
negotiating with the Japanese,”
Be patient. "You'll always have more meetings than you expect," Jackson says.
Decisions are made by consensus, he notes, "so you may find yourself covering
the same ground over and over again with new people."
Build relationships. Often, Japanese negotiators use protracted discussions as a
way of deciding whether to establish a long-term

50. BE SUCCESSFUL!