A framework for successful cross-cultural business negotiations and a win-win outcome.
©Eleonore Breukel www.intercultural.nl
Negotiating is a process in which two or more people discuss common and conflicting interests to reach an agreement of mutual benefit. Using a framework can help you take appropriate actions before and during negotiations and to anticipate your counterpart’s approach. You can adapt the framework outlined in this article to the specific cultural context and negotiation style of various European countries.
Success is the result of preparation and hard work. The better prepared you are for business negotiations, the less unexpected situations you will run into. Your preparation will show your counterpart that you´re well informed and know what you want, which generates respect. Actually, we negotiate every day with our partner, kids and friends on serious and less serious matters. Make sure that also in your private life you are prepared to create a win-win situation.
Define your goal
The first step in preparing for a business negotiating is to define your goal and your absolute bottom line for the negotiations.
Research your counterpart
Do some research to try to find out what the needs and the goals of your counterpart are. What do you already know about his needs and what do you have to explore during negotiations? For example, is he looking for a specific design, measurement or quality you can deliver? Did he receive orders for which he has no capacity at the moment? Is his intention to hit and run or is he interested in repeated business? What is his idea of a win-win situation? What is your added value to his business and what is his added value to yours?
Find common ground
When you know what you have in common, you have ground to build on. For example, you´re both interested in the latest techniques in your field. Or you´ve discussed the inferior quality your competitor offers and you both agree that only the best quality and service will conquer the market. Other points of connection can be the same native language e.g. English, Spanish, Arabic, Hindi, Malay. Make sure that both have the same interpretation of the words you use. E.g.
Know your tradables
In the bargaining phase of the negotiation process you need to give and take a little. In order to do so you need to know what you can give to your counterpart which is of low value and low cost to you, while being of high benefit to your counterpart. These are your tradables. This may include changing the design of a product, speeding up production time, providing warehousing before shipping, or providing by-products at low cost.
To enter into negotiations, you need to know where decisions are made in the organization of your counterpart. Is your counterpart the decision-maker, or is it his or her boss or others who may not be present at the negotiation table? Decisions may be based on the consensus of a number of people from different departments, or decisions are exclusively made at the top. This depends on the organizational culture you are dealing with. Researching all these players involved takes time. In Eastern and Southern Europe, in the Middle East, Asia and South America where organizations are more hierarchical, decisions are often made at the top; this means that less people and time is involved. If the decision-maker is present at the negotiation table you can make persuasive appeals to fit his disposition.
Check who will be at the negotiation table
Know beforehand who will be present at the negotiation table and what their positions are. What are their specific individual aspirations in this negotiation? Do they represent the interests of their own departments or of the entire organization? In most regions in the world you may easily recognize the highest- ranking person in the room because others in the room will pay him respect. In the egalitarian Northern European countries though, differences in status will not be so explicit.
Check the protocol
This is difficult to find out and very much depends on which organizations are involved and what the negotiations are about. It may be Government, heavy industry, garments or IT services. Try to find out who will speak first.
Prepare the paperwork
Carefully prepare the paperwork or backup material you´ll need for this meeting. Make copies available on-line or on paper for other participants. Be aware of all legal aspects of the agreement.
The opening phase sets the tone for the rest of the negotiations. The atmosphere should be respectful. Create trust. Be well-dressed and -groomed. Shake hands with all negotiators when entering and leaving the room but check the local etiquette first. Usually in Arabic countries men do not shake hands with women. Don´t sit down until you´re shown a seat. Emphasize good relations with your counterpart and talk about some of the history of both organizations and the market to create trust. Take time to create a good negotiating climate.
Planning and flexibility
Decide together on an agenda and a time frame, especially if negotiations will take more than one meeting. If you´re in Northern and Western Europe as well as the USA or Australia try to finish the meeting on time or you may cause irritation. Other regions usually consider time to be more flexible especially when relations and the completion of a transaction are involved.
Present your negotiation goal, your interests and your points of view with a short argumentation. Power and persuasive argument Show that you´re well-informed about your counterpart´s market. At this stage you show determination; you´re eager to reach an acceptable and realistic agreement for both parties. Use logic to try to persuade your counterpart. Bring in substantive proof using factual evidence and verifiable statements, statistical reports and cost- benefit analyses. The communication style in Northwest Europe, the USA and Australia tends to be linear and people usually speak in a calm voice. South America, Middle Eastern, Southeastern and Southern European negotiators often use emotional appeal to persuade their counterparts: they may give evidence that coincides with emotions, values, next to hard data. In order to express themselves they speak at length and often raise their voice to make their commitment to the cause explicit. Don´t be intimidated! Your argumentation may be a blend of logic and emotion depending on the cultural context. Speak in a firm voice, use the present tense and avoid words like ‘could, should or would’. Use energizing language. For example; ‘Let´s discuss this now´, ´We´ll make this move together’ ‘We´ll sign today, we´ll ship tomorrow…’
During the profiling phase you and your counterpart present views and expectations by clarifying your respective goals and objectives. Try to obtain a clear view of the underlying vital interests and limits of your counterpart. Ask many questions.
Identify the issues
Identify opposing interests and issues. In the Southern and Eastern regions of Europe, Asian and South American regions terms and details may be diffuse and breaches unclear. Try to define issues and agree together what the issues are, so you can be sure there are no misunderstandings or misinterpretations. Clearly express the gap between you and your counterpart. If you ask for € 20,000 and your counterpart does not want to pay more than € 18,000, you have a gap of € 2,000.
Once you have a clear view of the issues and the gap between you, identify for yourself your own limits and opportunities in this negotiation. Look at your possible gains and losses and find out in which area pressure can be used.
In the exploration phase you try to look for the limits of your counterpart. A positive and creative mindset is crucial for both negotiators. Possibilities Ask questions about why certain issues are so important to your counterpart. Are there alternative solutions? Can you work together towards a solution? This is the time to talk about specifications, prices, payments, guarantees, claims, logistics, the legal aspects of the agreement et cetera. Keep bringing up new proposals to start to build an agreement. Work with tradables.
Each negotiator has the possibility to work with low-cost, high-benefit actions to close the gap. If your counterpart provides your production manager with training which would cost you more otherwise, you may want to lower your initial price. The benefit for you is high and the cost for your counterpart low. Put your tradables on the table.
Once all the issues, possibilities and tradables are clear, you can start bargaining and trading to close the gap. In this phase negotiators feel pressured. You have to anticipate how your counterpart might react to your next action. You may encounter various negotiating styles. Your counterpart may try to influence you and put you under pressure. You may have to compromise. However, never give something away without asking something in return for it. Make sure your agreement covers all the details.
6 The agreement
Once you´ve reached an agreement, make sure you make each detail specific, measurable, acceptable and realistic. Put each action in a time frame. Discuss how and when you will have to sign the legal contract. In the Northern and Western European countries detailed written agreements are important. Trust between parties is based on this formal piece of paper. In Eastern and Southern Europe, trust is heavily dependent on personal relations; as the future unfolds adjustments will have to be made to the agreement. Show your counterpart that you´re happy with the agreement. Negotiators often celebrate successful agreements by having lunch or dinner together after the negotiation. Keep in mind that negotiating is like a game people play to win. If you close your negotiations with two winners, you´re a successful business negotiator.
© Eleonore Breukel www.intercultural.nl