Negotiation strategies in a multicultural business environment

Negotiation strategies in a multicultural business environment

Business negotiations play an increasingly important role in the context of internationalization and the dynamization of the business environment.

The basis for conducting successful business negotiations is the choice of an appropriate strategy, consistent with the personal and cultural characteristics of the negotiators.

When choosing a strategy, negotiators must take into account not only the specifics of the negotiation process and the type of negotiations (integration, distribution), but also know the models, mechanisms, and methods for their practical implementation.

This article focuses on those strategies, techniques, and tactics (an integral part of the negotiation process) that lead to the success of negotiations in a multicultural business environment.

The practical conduct of the negotiations is illustrated by specially selected mini-cases, examples, and empirical research to illustrate the difficulties that arise in the process of business negotiations in the clash between representatives of different cultures.

“Managers spend a lot of time negotiating. These negotiations are an integral part of the manager’s job…” Reference:

Business negotiations are a common business practice

Negotiations as a key element of everyday business practice and at the same time already a scientific discipline arouse the significant interest of researchers and practitioners in the era of the global economy.

The term “negotiation” comes from the Latin word “negotiari”, which means “run a business”. Although of ancient origin, this term has become widespread in our daily lives: numerous articles, broadcasts, and newsletters provide information on the conduct of one or another type of negotiation, starting with negotiations at the individual level (for example between an employer and its potential employees), go through the company level (between individual companies – to establish strategic partnerships, create joint ventures, mergers, and acquisitions, as well as with their stakeholders) and reach negotiations at the national level – between individual countries and organizations of a supranational nature.

Negotiations are part of every company’s daily life

Negotiations are an integral part of the daily life of any company, be it starting, operating, or developing. Their importance, but also difficulty, increases in the case of business in an international multicultural environment.

Negotiating in a multicultural business environment is a mandatory skill for managers (entrepreneurs and managers) of companies facing the internationalization of their business.

Emerging problems in negotiating in a multicultural business context can limit the opportunities for company internationalization. Because, along with intercultural differences, it is necessary to take into account the impact that globalization and the new economy have on the negotiators around the round table.

Therefore, the ability to negotiate (in particular negotiating in a multicultural business environment) is one of the hallmarks of a successful entrepreneur and manager in the context of internationalization and globalization of business. The dynamics of the business environment and the growing competition at the global level determine the need for continuous adaptation of negotiation strategies, which are becoming more flexible and context-oriented.

The purpose of this article is to identify and analyze strategies for successful negotiations with difficult partners in an international (multicultural) business environment and related models, mechanisms, and methods for their practical implementation.

Several mini-cases illustrating the theoretical formulations (models, influencing factors) are considered, and the main directions of the influence of cultural affiliation on the negotiation strategies are analyzed, for example:

  • Comparison between Dutch and German culture;
  • Comparison between German, French, Mexican, American, Japanese, and Bulgarian culture.

Conclusions are made on how the choice of negotiation strategy affects the outcome of the negotiation process when representatives of different cultures participate in it.

Models, strategies, and tactics in the negotiation process

Negotiation strategies are a key element in the negotiation process, which in turn is an integral part of the overall model for negotiating between different business organizations.

Consideration of this model is necessary for two reasons:

  • To illustrate the place of negotiation strategies as part of the negotiation process;
  • To outline the factors that influence the negotiation process, incl. and on the choice of the negotiation strategy.

The result of the negotiations depends primarily on the interaction between the negotiators, and in particular between their strategies, tactics, behavior, reactions, but it is also influenced by other factors. The analysis of negotiation strategies is an important part of the study of the negotiation process as a whole.

However, for a full analysis, it is necessary, along with the strategies, to outline the other elements of the negotiations included in the general framework of the negotiation process.

To better illustrate the negotiation process and its main components, we will first look at the life cycle of the negotiation process.

Negotiation lifecycle phases

The three main phases of the negotiation life cycle are planning, implementation and evaluation. During the first phase (planning) the problems and needs are analyzed, the goals and interests of the negotiating parties are identified; the opponent is introduced, a choice of strategy, technique, and tactics is made.

This is followed by the implementation (implementation – how to do it in real conditions) and evaluation of the negotiations (whether and to what extent they are successful, is there a “field” for future negotiations between the parties, adaptation of the strategies, and tactics used, etc.). Hence, depending on the received feedback (estimates), the necessary adjustments are made for individual phases.

Of course, in each specific case of negotiations, there are many (more or less) specific points, but in the general case, common steps specific to each negotiation process can be deduced.

The practical conduct of the negotiations

In the practical conduct of negotiations, the responsibility of the “host” is very great – he chooses the place of the negotiations and takes care of every detail while his partners are in “his territory”.

The negotiations can take place in a neutral place – in a business center, in the premises of an international fair, in a luxury hotel, in the VIP lounge of an airport.

However, in all cases, the host who has ordered the halls and pays the rent is responsible for the overall organization. Leaders with experience in business negotiation executives usually do not immediately take up the work on the merits. The first few minutes are devoted to the “small talk” to “break the ice” and create a pleasant atmosphere.

Then the host makes the transition by presenting the necessary documents for the negotiations. audio-visual aids, most often PowerPoint presentations on the big screen Experience has shown that prior testing of the technique is mandatory because otherwise, the interferences are very unpleasant.

Negotiation strategies are formulated based on available information and analysis. Most often, negotiators use management terminology and approaches, distinguishing between the concepts of “strategy” – “technique” – “tactics”.

The difference between strategy, technique, and tactics in negotiations

Sometimes the difference between strategy, technique, and tactics in negotiations is difficult to draw – for example, if a country uses dissuasion throughout the negotiations, this can also be defined as a strategic move, although more often dissuasion is considered a tactic. There are a limited number of strategies (5-6), a dozen techniques, and more than two hundred tactics in the negotiations.

Negotiation strategies focus on the goals to be achieved and the decisive steps to do so; the techniques correspond to the maneuvers (the way the negotiator will treat the subject and with the help of which he will deal with the topics of the negotiations), and the tactics – to the timely and accurate moves (ie they are specific actions by which the negotiator usually carefully assesses and circumvents the obstacles that arise from the adopted strategy).

Choosing a strategy for conducting business negotiations

The choice of business negotiation strategy (especially with difficult partners) depends on the type of negotiations (integration or distribution; bilateral or multilateral). In the literature on business negotiations, the first two varieties are also found under the names “win-win” (integration) and “win-lose” (distribution).

Integration negotiations are conducted to reach an agreement on many issues: in them, the parties simultaneously create value by reconciling their interests and fight for a more profitable division. For example, two negotiators want to buy a company, but one is mainly interested in human capital, while the other’s interests are focused on the patent portfolio.

Distribution negotiations

Distribution negotiations are conducted to reach an agreement on one issue; the main goal is who will ask for more value: the more one takes, the less the other gets; one party to the negotiations tries to minimize what it gives (to give as little as possible), the other party seeks to maximize what it receives (to get as much as possible)

Real business negotiations

Often real business negotiations are a mix of both (we can rarely meet any of them in their purest form). Moreover, integration negotiations can be “reduced” to distribution negotiations, when only one issue is negotiated and all other issues are temporarily resolved (and vice versa).

That is why the strategy is subject to change in the negotiation process (many negotiations involve both competition and cooperation strategies, but the focus is only on one of them). The need to achieve a balance between competition and cooperation strategies leads to the so-called negotiator’s dilemma.

The negotiator’s dilemma

The negotiator’s dilemma is a situation in which the parties with different goals and intentions find themselves in the negotiation process. Negotiators must decide which game to choose: aggressive attempts to gain value – the subject of negotiations (where there is a danger of significant losses) or cooperation with the other party.

The decision depends on the type of negotiator: whether he focuses mainly on the outcome or the relationship with others. Depending on these two criteria, 4 profiles of negotiators are distinguished, to which one balanced profile is usually added.

Relationship-focused negotiations

If a “relationship-focused” negotiator confronts a “militant” negotiator, the loss of the former is almost certain. The militant negotiator sees information as a tool of pressure and will easily switch to misinformation or bluffing.

The negotiating “strategist” will “take a step back to take two steps forward” and will assess the exchange of information according to its need. In team negotiations, the “not particularly interested” team leader may give way to a negotiator with a “diplomat” or “strategist” profile if the negotiator on the other side has a “strategist” profile to achieve the most favorable position. negotiations.

The negotiator in the “defensive position” will handle the information meticulously and comprehensively, delving into the details. The profiles presented can be variable over time. The reason for the change can be both the specifics of the given situation and a negotiator. Knowing the profiles helps to better understand the interlocutor’s behavior and seek a successful approach to it.