Proyectos De Negocios

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International Negotiation: How Do I Get Ready?

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Example: An International Negotiation Failure
A marketing manager for a large U.S. technology company was visiting one of Germany’s biggest corporations.  He wanted to sell them on using his new product in their system.  Since the product and application werequite new, there was no established pricing in the market yet, and the vendor was hoping to get a premium for their technological leadership.

The presentation went well, and the decision maker on the German side seemed quite interested.  He asked for the price.  ‘We think that this product will be well received by the market.  We’ll be able to sell it to you at 12 dollars.’, the Americanresponded.  For a long moment, the German said nothing.  ‘Well, if pushed hard, we will actually be able to go as low as 10 dollars with this product.’  The German still didn’t say a word.  Twenty-five painful seconds later, the American couldn’t take it any longer:  ‘Long-term, we are confident that we will be able to push the price down to 7 dollars’.  The German now looked puzzled but pleased.This is not a fictitious story – it happened a few years ago.  The American company eventually won the business, but at a price around 2-3 dollars lower than what would have been achievable.  Volumes being sizeable, the negative profit impact amounted to more than $1 million!  The funny thing is that the marketing manager, proficient in his field but lacking international experience, probablythought he got tricked into lowering his price by a smart negotiator, while the German may still be wondering how he got such a great deal without ever asking for it.  (If you’re curious to find out what happened, skip forward to 'Silence' in the 'Negotiation Techniques' part of this paper.)
If your goal is to grow your international business, no situation presents greater risks to strategy executionand bottom line than a cross-cultural negotiation.  Two factors often amplify this:
• The negotiation partner is not well known, and strategies and objectives are unclear.
• Interacting with the other culture is a first for one or both of the parties involved, and they are not well-prepared for it.
The challenge to understand the other party also exists in domestic negotiations, but as wewill discuss in the following, understanding strategies and objectives across cultures is much more difficult.  A lack of culture-specific preparation is a deadly sin in any international business negotiation.  There are many skilled and resourceful negotiators in the United States.  But without prior cross-cultural experience or preparation, most of them will assume that both sides share animplicit agreement over what represents legitimate negotiation tactics, and that both sides believe in or at least respect the value of a win-win approach.  Furthermore, they trust their ability to correctly interpret clues about where the other side stands in the decision making process.
None of these may be the case in international negotiations.  Consequently, an American negotiator may cry foulwhen a South Korean, for example, continues to make demands after a contract has already been signed.  A Russian or Chinese negotiator may regard a concession by their American counterpart a sign of weakness, happily take it without reciprocating, and be even more motivated than before to extort further ‘free’ concessions.  An Arab might give small clues that they are willing to close the deal whichtheir American negotiation partner may miss completely, continuing to make new offers.  All of these are ‘normal’ misunderstandings across cultures which can wreak havoc with your negotiation strategies and goals.
 
Cultural Differences That Affect Negotiations
Several aspects require careful study when preparing for an international negotiation.  In this article, we will only be able to...