BUSINESS NEGOTIATIONS 15
Businessnegotiations take place between individuals who act as representativefor their respective firms. With globalisation and expansion of firmsto the international markets, there has been increased need toconsider the socio-cultural differences in order to improve thequality of the outcomes. Every society observes distinct values andnorms that guide the communication process and other forms ofinteractions. Negotiation is not the only aspect that is consideredduring the process.Negotiations may arise at times when there are conflicts ordisagreements among parties where each has distinct interests.Negotiation are important communication, conflict resolution andstakeholder management. Issuessuch as power distance, cross border, and tactics are instrumental inensuring that the interests of all parties are considered. Thepaper will examine the business negotiations in a multi-culturalsetting. The essay will use the Hofstede cultural dimensions togenerate critical findings for the study. In particular, the essaywill examine the business negotiations between China National Tire &Rubber Company and Pirelli.
Theresearch method is through review of literature from books andscholarly articles. Among the issues to examine includecross-cultural communication, business negotiations, and diversity.It is assumed that the diverse cultures in Europe present challengesand opportunities to business negotiations with the Chinese businesspeople or firms. Negotiators from China and Italy are met withsocio-cultural differences that indicate differences in the powerdistance. Of essence is the scrutiny of the hierarchy andegalitarianismlevels.From this frame of reference and what is narrowly known about theproblem, the research therefore seeks to gather evidence relating toboth proactive and reactive strategies for addressing theseprevailing challenges and problems.Diversity in the society should be taken positively as it will allowexchange of different cultures and ideas hence improve existence.People need to learn from one another’s experiences, culture andbackground. Harmonious practices ought to aim at the integration ofpeople’s beliefs irrespective of cultural values or nationality.
Businessoperators engage in negotiations that are meant to offer benefits interms of business of expansion, growth and market entry, amongothers. Negotiations seek to identify the appropriate mechanism thatincrease the gains while at the same time minimise the conflicts.International business relationships are largely influenced by thenature of negotiations. Negotiators from different nations are likelyto encounter socio-cultural differences owing to the variations incultural values. Diversity among the negotiators results indifferences in the mechanism during the negotiation process henceaffecting the outcomes. In fact, following the researched negotiationtips does not guarantee agreement or success. As such, exceptionalnegotiation strategies that consider the cultural variations arenecessary.
Inexamining the business negotiation between China National Tire &Rubber Company and Pirelli, the paper will look into the culturalvariations between Italian and Chinese negotiators that are likely toinfluence the outcomes. Ideally, the Chinese culture is known to haveunique cultural values that are expressed in their modes ofcommunication, negotiation styles and culture. The two nations havedistinct cultural values that influence business negotiations. Thedifferences will be discussed alongside the Hoftede’s theory oncultural dimension. Being among the most developed regions, China andEurope attracts many business interests due to increasedopportunities. In business negotiations, Hofstede agrees thatobjectives and communication process change depending on thenegotiators nationality. He asserts that understanding the culturaldimension should help in enhancing the success of the negotiations.Differences between the westerners and Asian negotiators have playedout in many business negotiations. Identifying a common identityamongst negotiators enhances the success of business negotiationswhere the differences are regarded as instruments to improve thequality of the process.
Withthe increasing globalisation, the European market has remainedattractive to foreign firms and investors. Inorder to succeed in business relationships with the Chinese, theEuropean business people have to navigate several cultural variationsowing to the differences in cultural beliefs and values.Failure to make deals in the European market by the Chinese islargely contributed to lack of understanding on the culturaldimensions that characterize the business operators from eitherregion. Significantdifferences were identified during the negotiations between ChinaNational Tire & Rubber Company and Pirelli in the quest to form abusiness partnership. The differences between the two partiesportrayed the need to understand the cultural values between thebusiness negotiators.
Thenegotiators have distinct cultural differences that played out in thecourse of the discussions. Culturalnorms and values by the negotiators play a crucial role in thenegotiation process. Cultural collision is prevalent due todifferences in cultures, ethnic and religious groups, values,lifestyles, languages and levels of prosperity. Cross-culturaldifferences between the parties made it significantly difficult tocomprehend the values and attitudes of the negotiators. This resultedin misunderstanding between the negotiators. Challenges arise innegotiations due to the cultural differences between individuals fromvarious nations. Italiansopted for a more individualistic approach in making decisions withminimal consultation with their partners. This is largely contributedby the fact that they come from low power distance culture that callsfor respect for individual opinion and decentralization of thedecisions. Collectivistic perspective was seen among the Chineseparties as they come from a high power culture distance (Graf,Koeszegi, & Pesendorfer, 2012).The cultural dimension power distance between the negotiators hasgreat influence on the outcomes and the nature of negotiationschemes. It was identified that power distance has great influence onthe business negotiations. In egalitarianism cultures, all partiesare treated equally hence, it is unlikely for the parties to agree asopposed to hierarchical societies where structures are the drivingfactor. Etiquette and behaviors are different among various cultures.Both Italian and Chinese negotiators have great respect for either ofthe parties involved in the negotiations. The Chinese culture wasmore inclined to hierarchicalperspective while the Italians preferred the egalitarian perspective.Pirelli’snegotiatorsused an individual or organizational-centred approach while theChinese use situational-based approach(Gammelgaard, Kumar, & Worm, 2013).
Anothercritical component in negotiation is communication between theparties. The findings show that the quality of negotiation waslargely affected by the communication differences between thenegotiators (Andrea,Sabine & Eva‐Maria,2012).On communication, challenges emerged owing to the differences inlanguage. The negotiators had to use interpreters who at times gavethe wrong impression. With interpretation, it was difficult toexpress another person’s body language and expressions which formimportant segment in communication.The communication process between the two was also different in thatthe use of facial and verbal expressions was different.
Therepresentatives from China National Tire & Rubber Company optedfor polite strategies compared to the Pirelli negotiators who werelargely noisy in the discussions. The politeness strategy by theChinese is influenced by the addressee’s social attributes of rank,gender and age. Italianswent for a quick strategy in discussing the partnership between thetwo firms while the Chinese spent significant time going through thedetails. The level of respect and courtesy by the Chinese was highercompared to the Italians. Appearance by the Italians was consideredas an important component in their negotiations.
Culturaldifferences as seen in the above findings affect the outcome of anynegotiation due to the differences in the attributes of thenegotiators. Grimm(2010) asserts that the cultural differences affect the negotiationsbetween seller and buyer due to differences in interests between thetwo parties. Italians negotiating on behalf of Pirelli were largelyconcerned about a partnership that would more beneficial while theChinese looked for a long-term relationship. The discrepancybetween the Chinese customs and the rest of the cultures in Europeshowed that the people practicing the culture are often faced withculture shocks when faced with other cultures. This is not healthyduring negotiation and is likely to lead to biased outcomes.Understanding the culturaldifferences enables parties in a negotiation to look beyond theimmediate circumstances and realize the impact of their actions.Thus, the potential to achieve a more holistic understanding isachievable.
Theapproach used during the negotiation process influences the outcomessince every approach has diverse attributes and features. Some of themain approaches include distributive, lose-lose, compromise andintegrative approaches. Depending on the approach, any party orparties involved in the negotiation can either win, lose or bothparties win or lose.Negotiation in the current global environment is multi-cultural innature. They argue key features in cross-cultural negotiationsinclude power, disputes, emotions, inter-group relationships andsocial dillemmas, among others.Thediversity model reflects the globalization in the world today andchanging communication trends. Diversityhas both benefits and disadvantages, which should be effectivelymanaged in order to achieve positive outcomes.
Onescholar, Claude Alavoine, argues that negotiation involves theamalgamation competition and cooperation among the parties. Ideally,these key features match with diverse techniques of the relationshipand orientation in strategy and schemes used by the negotiators.Alavoine further argues that trust and cooperation are controlled byuncertainty of the circumstances, goals and orientation that emergeat the relationship. Ideally, negotiators resort to coercion andthreats when there emerge confrontation of power during thenegotiation. This is meant to ensure the achievement of a tolerablebalance of power. Power differences as is the case in differentsocieties is key contributor to egocentrism. This has great potentialto contribute to disagreements in negotiations. Differences inculture tend to antagonise some individuals, especially those whoappear weak. The persuasion skills, personalities and attitudes arecritical in the outcomes of a negotiation. Chinese negotiators hadgreat respect for the individuals involved in the discussion. Theirnegotiation skills as identified from their culture were moreconcerned with identifying a long-term and workable businessrelationship. Their concern was reflected in the lengthy negotiationprocess.
Representativesfrom China National Tire & Rubber Company wanted a structuredapproach that was evidence in every stage of the discussion. Theapproach is founded on the distribution of the empowering featuresamong the parties involved in a negotiation. Italian negotiatorsappeared to have ‘known alternatives’ where they made choicesthat will optimize their gains. The strategic approach seeks to getthe most suitable outcome that is pleasant to all parties hencesometimes regarded as symmetrically prescriptive. The strategicperspective in negotiation forms the basis for other theories such asgame and critical risk theories. In their approach, the Chineseappeared to react to the concession conduct of the Italiancounterparts. For the Chinese, a ‘win-win tendency’ was somethingthat they dearly pushed. The approach was meant to identify ways toensure there are mutual gains for both the China National Tire &Rubber Company and Pirelli. The move sought to promote cooperationand inclusive strategies to aid in the attainment of ‘win-winoutcomes’. All the parties’ interests and options are ‘placedon the table’ to help identify harmony among the parties. Allparties were required to identify and create shared principlesaccording to the integrative approach. The scrutiny of behaviourperspective during negotiation process will help in formulation oflong-term goals by adopting multi-disciplinary approaches to the workethics and business processes. Sequentially, the negotiating teamwill be in a position to exploit their strengths in fulfilling theset objectives (Witte, 2012).
Cross-culturalChallenges in Negotiations
Negotiationtheory is based on key elements that include decision-making,behaviour, agreement and analysis. Various approaches on negotiationinfluence and shape the decision made. Negotiations are evident inthe daily communication in areas such as business, politics andgeneral socialisation processes. Globalizationand multi-cultural settings requires the business operators todevelop the cultural capability. Thishas been contributed due to adherence to cultural tolerance andadoption of appropriate values. The approaches are based onefficiency and authority of the firm to handle diverse challenges.Integratedapproaches need to ensure that business processes are balanced withexisting cultural initiatives in an organisation. Negotiationsare driven by the art of communication among the parties.Cross-cultures tend to characterize differences in values, attitudesand mode of communication. The cross-cultural influences affect thepattern of behaviour among the negotiators. In instances wherenegotiators come from different cultures, there is a possibility ofmisunderstanding. Behaviourhas a tendency to unite the parties towards a common goal andcontributes to integrative agreements (Gelfand,2010).Cross-cultural dimensions results in diverse approaches and outcomesthat reflects a tendency by the negotiators in adopting a clearbehaviour pattern. This is due to the exchange of different kinds ofideas from people with varying experiences. Further, theindividualistic or collective approaches in negotiation affect thespeed of the process and outcomes due to the differences in interestsand attributes. Individual negotiation is likely to be culminatedwith threats and unmet interests as opposed to collective approach.Personal character shapes the members in the organization towards ageneral manner of perceiving, thinking and feeling. In fact,characters of an individual influence the formation of a negotiationtone that the way people and groups interact with colleagues. In thecollective approach, the process is likely to take longer since everyparty is allowed to present their demands(Liu, 2013).
Changesarising from globalisation affect the control of the negotiationprocess because of trying to cope with people from different culturesand language. Some aspects of the internal dimension, for instancerace, affect the mode of communication in a negotiation and thecontent of information relayed both negatively and positively.In a cross-cultural setting, the negotiators are likely to benon-conversant with the various cultures and mode of communication(Hofstede & Michael, 2012). It is critical to observe that socialrelationshipsdo not just offer the context or a platform for transformativecommunication, but it is within the debate and dialogue interactionof the relationship that transformation comes about. The perceptionabout collective communication is related to commitments required tostruggle together in a shared inquiry and dialogue in support oftransformation.
Hofstede& Michael (2012) agree that the globalisation of businesses bringforth the national and regional differences. Managing an entity thathas diverse parties from diverse cultures is not easy. The diversecharacter, language, religion and background among individuals are amajor headache and challenge in communication. It is throughunderstanding the differences that individuals meet their objectives(Hofstede & Michael, 2012). Identifying the individualdifferences was important for effective administration of an agenda.In negotiations, the negotiating parties within a cross-culturalsetting need to develop prerequisite attributes that will help inmeeting their objectives. Qualities such as interpersonal skills,organisational skills, and communication skills are required.Moreover, the negotiators need to have goodhuman skills as it contributes to a high degree of self-awareness andcapacity to understand the feelings of other negotiators. The skillshighlighted enable the negotiators to cope with the variouspersonalities involved in the negotiation.
Businessnegotiations between China National Tire & Rubber Company andPirelli have generated significant differences owing to the culturaldifferences. As such, challenges highlighted above will require thenegotiators to adopt strategic approaches that will minimise thenegative effects. Conflicts that emerge during the cross-culturalengagements can be reduced through elaborate understanding of thecultural dimensions. This is the first step to improve the human andworking relationships among various parties. The consideration of theethical issues and problems arising from socio-cultural differencesbenefits the members in their engagements. In business negotiations,all the parties have diverse interests that need to be fulfilled.Balancing the interests will require the parties to identify a commonworking ground. The foundation is created through appropriateunderstanding of the prevailing differences. Owing to theircross-cultural differences, the representatives from the two firmsneed to generate an elaborate mechanism that will address theprevailing challenges. Understanding the cultural differences plays acritical part in addressing challenges and opportunities that mayarise during the negotiation process. Chinese social interactions areinformed by the environment, which includes cultural practices andbeliefs (Dong& Liu, 2010).The linkage between the societies demands that individuals upholdgood and ethical values. It is possible to cause a transformation ina society in order to mitigate conflicts. The perception aboutcooperation is related to commitments required to struggle togetherin a shared inquiry in support of social transformation. With suchmotives, it is possible to encourage varieties of exchanges betweensocial groups and individuals by compressing their interactions toconform to the contemporary needs and values.
Policy-makersshould consider establishing policies that will enhance co-existenceas well as promote exchanges with people from other cultures.This ispossible in the process of collaboratively changing and naming theircollective reality that people are capable of transforming theirself-images and their organization in more positive directions.Further differentiation of various negotiation models whenconsidering the environment and the objectives can make it clearerfor one to understand. Since different environmental factors promptdissimilar classes of feelings, it is possible to differentiatefeelings into contradiction and confirmation feelings. Goodrelationship between people from cross-cultures provides crucialelements that enhance the creation of an accommodative environment(Barron, 2011).
Awarenessabout the socio-cultural differences between the two the two partiesare instrumental to enhance mutual understanding. This enables thetwo parties to use the appropriate channels to resolve the emergingconflicts. Creation of enviable relationship will improve the qualityof the negotiation and outcomes where the parties will benefit fromthe agreed terms. The negotiators need to agree on cultural standardsfor use during the negotiation process. The standards should beagreed before-hand in order to hasten the process as well as allowthe parties to avoid conflicting situations.
Whileevidence suggests that integration and development of culturalstandards is imperative to enhance communication during negotiation,there exist limitations in the essay particularly in gathering theprimary information. The communicationpractices should aim at the integration of administrative andpractices of existing values. Supportiveand integrative approaches are essential to address the prevailingchallenges. Participativeapproaches through teamwork help in creating a platform through whichnegotiations take place successfully. As such, the parties negotiateand discuss matters interchangeably hence learn from one another. Such participative practices increase the capacity of problem-solvingand self-esteem. Theapproaches need to be geared towards addressing the conflictingcultural features between the two cultures.
Thestrategies to overcome the challenges need t be implemented withgreat consideration of diverse cultural values. Both China NationalTire & Rubber Company and Pirelli negotiators should engage witheach other for significant to ensure that the partnership succeeds.The implementation of the highlighted recommendations starts with theindividuals and organisations engaged in the negotiation process. Itis appropriate for the negotiators to have a prior understandingabout the cultural diversity in the country where they intend toengage in business negotiations. China National Tire & RubberCompany and Pirelli need to understand Italian and Chinese culturesrespectively. The information about other people’s culture isreadily available in the internet and books. The budget provision forthe training will depend on the nature and scope of training. Theprovision of the basic training materials and resources such asinternet access, books and magazines is necessary. Further,appropriate training about the tips on international businessnegotiations would go a long way in enhancing of the realisation ofpositive outcomes. Training can be done through workshops among otherplatforms. The executive from the two firms should be the firstpeople to undergo the training. The government has a role to play inencouraging cross-border interactions between citizens from differentnations. This will enable the citizens to have first-hand experiencesabout other cultures.
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