International Meeting And Negotiation Styles

International Meeting and Negotiation Styles Special Focus: United Kingdom Mediterranean Countries Arabic Countries China Japan Russia and Eastern Europe

Hayes Forsten [email protected] IB8180 4/8/99

Executive Summary As the world’s business climate shrinks to a smaller and more connected community of business people, understanding how to conduct a meeting is imperative to success. Success means a great deal more when considering long term objectives. The goal of this analysis is to first understand several important current trends in the international business climate. Several articles will be examined to uncover the findings of those researching, struggling, and engaging in international business. Next, a focus of negotiation and meeting styles of several countries and types of cultures will be discussed. Finally, a summary of key points should give business people navigational guides for undertaking business in the international arena. Individuals who deny the need for a solid tool box of tactics in dealing with general cultural and business differences will perhaps find that their ventures outside comfortable boarders may be less than effective.

Introduction

In an attempt to set the ground work for the importance of keeping cultural differences in mind, the following situation surpasses words.

“An eagerly awaited plane lands in Brazil. A high-ranking passenger makes his descent to the tarmac and, eager to make a good impression on the new Latin American contacts, raises his fingers in an unmistakable vulgar salute to the male anatomy.”

Don’t laugh - it happened. (The late President Richard Nixon was the culprit.)1

The unfortunate “hello” President Nixon gave is just the type of mistake we should strive to avoid in doing business overseas. The following analysis will be a multicultural approach to the importance of knowing the territory prior to engaging in business. One would not venture into an unknown territory of land without a map, if one were available. Thus, throughout this analysis we will be drafting a map for business exploration. This analysis will by no means be the only road map for the future that the business person should rely on, but rather the goal will be to heighten the need for cultural research to be conducted prior to engaging in negotiation, or business travel to a foreign country.

We will begin by exploring business ethics, and where business students fit into the spectrum. Also, the importance of actually developing an employee to monitor good ethical behavior during meetings, negotiations, and day to day activities will be explained. Finally, the discussion will end with perhaps more interesting findings regarding the meeting and negotiation styles of several cultures. Hopefully, the conclusions will reinforce the need for diversity in the work place, and the fact that simply having diversity and not understanding it does not always equate to success.

Business Ethics

1 Moline, Julie. 1998. Behavior modification; tips in doing business abroad. Reed Travel Group - Meetings and Conventions , 33:38. Conducting business overseas provides companies with a great deal of opportunities. New markets and the possibility of expanding profit margins are perhaps the most obvious, but corporations can gain even more from expanding overseas. Companies can gain international presence and increase their name recognition in other corners of the globe. Although the opportunities are great, international commerce comes with some challenges. Local customs and practices may be at odds with laws in the corporate home country.2

In his article “Don’t do as the Romans do”, Brian Hollister examines the need for a company official to monitor the ethical code of conduct of the organization conducting business overseas. A company should develop a position within the company to monitor such issues on a local level. Developing this employee is perhaps a good spring board to future discussions on conducting meetings and negotiations in foreign countries. In addition, the analysis works for countries other than the U.S. Below is a brief job description of a Security Manager:

 Work with company attorneys in drafting the company’s code of conduct.  Develop an ethics statement that will cover the companies position on such issues as environmental pollution, bribery, wages, work hours, factory conditions, and child labor.  Work with an ethics committee and compliance officers to ensure that management is not inadvertently sending employees mixed messages.3

The concept of mixed messages is a topic that may need further explanation. Below is a quote regarding a hypothetical situation that leads to a new line of analysis:

“It’s costing us thousands of dollars per day while our product sits on the docks - do what needs to be done to get it out of customs.”

Quotes such as these from company officials may seem very innocent, or simply frustration verbalized. However, the ambitious employee may misinterpret the message to imply that unethical behavior may be acceptable to the company. Also, this may be interpreted as an informal demand by management to act in an unethical manner. 4

On a personal note, I worked for a company several years ago that engaged in the importation of fabrics from overseas. An import embargo was enacted due to the negligence of a competitor which affected all imports of flannel from China. As a result, our order was held in customs for over six months. In brief, the president of our company sent a memo to all employees explaining the situation, and the final note on the message was a very committed plea to remember that we should only consider the most ethical and legal avenues to rectify the situation.

In retrospect, I did not realize at the time how important that sentence was to the ethical health of the company. Although frustrations ran rather high over the next 6 months, I never recall hearing a plea such as the one above. We all knew the costs were mounting, and our customers were looking elsewhere for order fulfillment, but we did follow the proper channels and eventually the product was released.

2 Hollstein, Brian. 1998. Don’t Do as the Romans do. Security Management, 42:56-57. 3 Hollstein, Brian. 1998. Don’t Do as the Romans do. Security Management, 42:56-57. 4 Hollstein, Brian. 1998. Don’t Do as the Romans do. Security Management, 42:56-57.

4 One can only imagine the costs involved with a lawsuit resulting from an illegal bribe or payment overseas. The larger a company grows, and the larger the overseas operation develops, the greater the need for a compliance officer and security manager.

Since the immediate readers of this analysis will be those attending an American business school, a brief examination of the ethical teaching will be done. The tendency of American business schools is to teach a “universal” set of ethical standards and managerial perspectives that can have a serious impact on the business practices of new graduates. In addition, this perspective can have a disparate impact on those companies desiring to do business globally. A business manager should not make decisions based on a situation out of context. Each decision should become “situational” and contingent upon both cultural factors and moral norms.5

An establishment called the Caux Round Table was developed in 1993, and the findings were quite interesting. A study of MBA students found that “80% of the study participants distanced themselves from their own description of the average MBA student. ‘The students stressed that they were less selfish or materialistic or that they had more resistance to selling out their principles for a higher salary’”6

These findings were impressive and surprising. One explanation given was that students were responding to the so-called “Decade of Greed” in the 1980’s. The scandals during the 80’s were very dominant in the media, and perhaps students of today are distancing themselves from such activities. 7

International Meeting and Negotiation Styles

By exploring the importance of sound ethical behavior and the recent research of the future business people of the world, a good foundation has been established to finally analyze negotiations. Attention will now be placed on current trends in international meetings and actual cultural styles.

The Asian crisis took its toll on the tourism trade in many of the countries affected. However, one segment that may be overlooked is the meeting and convention sector of these countries. Incentives for companies to have their meetings in East Asian nations are increasing. Hotel and conference center construction blossomed in the early 1990’s, and the desire to book in advance is very evident. Business travelers to countries such as Singapore and Malaysia spend a great deal of money while on the road which boosts local economies. 8

The article entitled “Taming the Tiger” by Robert Carey put an interesting twist on the concept of international negotiation. The article focused on meeting and negotiating with different cultures on the topic of having and securing contracts for holding company meetings and conventions in several Asian countries.

The article states that “Malaysia and Thailand, to name just two, have massive hotel over construction that was based on the ability of the region’s economy to keep its pace. With the

5 Vega, Gina. 1997. Caveat emptor: Ethical chauvinism in the global economy. Journal of Business Ethics, 16n12/13:1353-1362. 6 Vega, Gina. 1997. Caveat emptor: Ethical chauvinism in the global economy. Journal of Business Ethics, 16n12/13:1353-1362. 7 Vega, Gina. 1997. Caveat emptor: Ethical chauvinism in the global economy. Journal of Business Ethics, 16n12/13:1353-1362. 8 Carey, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82. region’s economic slowdown, ‘it’s simple: the Koreans aren’t going to Malaysia anymore, the Indonesians aren’t going to Singapore, and so on. Their best markets have dried up, so the hospitality sector is looking outside the region to pick up the slack.’”9

Thus, the environment is set for international negotiations to emerge. How neat. Meeting on the topic of having meetings! At any rate, research has shown that companies all over the world are being targeted for new business by the Asian countries. Hong Kong hotels are already sending out mailings offering discounts on rooms and entertainment to lock in deals now. Also, sales directors have made promises such as those by Won Soh of Pan Pacific Hotels and Resorts that “Depending on the time of year, we would host a meeting group in 1999 and again in 2000 without a rate increase.”10

With the desire of the Asian countries in mind, the first level of negotiation styles emerge. U.S. and other international company planners should keep in mind the findings of the author that “Asians are very pragmatic - they’re deal makers. So I’m sure that most hotels would be amenable to freezing rates or accepting marginal increases each year for repeat meeting business.”11

Greater detail will be given to each countries negotiation style, however the comments of the author of “Taming the Tiger” regarding Asian negotiation style will be interesting later in the analysis. Now the focus will be turned to trends in the international meeting arena. One may ask “why is it so important moving forward for business people to be well versed in the local customs of countries they may never have to travel to for meetings”?

Corporate meeting planners have encountered a frequent situation recently. Currently, the following statement is usually voiced by upper level executives, but the pretext and mindset is the is the important feature to this analysis.

“What, again in Singapore?”12

Personally, I find it hard to believe that I would ever make a comment like “What, again in Singapore?” since I have never been there, however, business planners world wide are finding that companies do not want to repeat trips for meetings. Some planners are even reluctant to plan meetings in the same locations within a three to four year window.13 Thus, the ground is set once again for international negotiations.

Globalization continues to march forward inevitably and doing business with people from different cultures has become as common in many cases as filling out expense reports. However, doing business with people from other cultures is not as straight forward. Business styles and organizational structure can vary greatly from country to country, even among those who share boarders and languages. Just as humor doesn’t translate well (as evident in the opening situation) neither do a great deal of attitudes, assumptions and behaviors. Many of these characteristics may even seem normal or innocent in one’s home country.14

9 Carey, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82. 10 Carey, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82. 11 Carey, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82. 12 Carey, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82 13 Carey, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82 14 Moline, Julie. 1998. Behavior modification; tips in doing business abroad. Reed Travel Group - Meetings and Conventions , 33:38. Global Negotiations

Negotiation can be defined as “a process whereby two or more parties - be they individuals, groups, or large social units - interact in developing potential agreements to provide guidance, and regulation of their future behaviors.”15

Two major areas of context must be defined prior to examining the countries and cultures. Whenever two parties negotiate, the whole process occurs under two umbrella contexts, environmental and immediate. The environmental context refers to forces in the environment that are beyond the control of either party involved in the negotiations. Second, the immediate context includes such aspects as the relative power of the negotiators and the nature of their interdependence - factors over which the negotiators have influence and some measure of control. Below is a bulleted list of each:16

Immediate Context - factors under the direct influence or control of the parties  Interdependence/Bargaining Power: dependence on each other to attain respective goals  Immediate Stakeholders: goals of managers, employees, board of directors, and constituents affect strategies, offers and counteroffers.  Desired Outcomes: Two types - tangible(profit-sharing, technology transfer) and intangible - (goodwill, desire for win-win outcome). Generally more compromise on tangible outcomes when long term relationship is desired.  Relationship between parties: harmonious previous relationships encourage favorable future negotiations.  Conflict between parties: Level of agreement on key issues influences level of support for each other.

Environmental Context - forces beyond the control of either party  Political Pluralism: Conflicting foreign policies of different nations  Legal Pluralism: transaction must comply with the applicable laws of the nations involved.  External Stakeholders: interests of parties not directly involved in the negotiation.  Instability and Change: need to accurately assess economic and political risk in the target country.  Foreign Government Control: governmental interference on technology transfers, critical industries, and production capacity.  Currency Fluctuations: include contingency clauses or currency hedging contracts to hedge against wide swings in exchange rates.  Ideological Differences: attitudes toward political freedom, property ownership, gender equality, and foreign investment.  Cultural Differences: focus of the attached matrix.

The above model should help in defining the context of each negotiations. Also, this should serve as a check list prior to entering into international negotiations. The text Negotiation provides the following advice:

“The model should be applied from the outside in. Negotiators should start with the environmental context and study its impact on the immediate context and on the negotiation

15 Lewicki, Roy, Minton, John, Saunders, David. 1999 Negotiation. Boston, MA. Irwin McGraw-Hill. 16 Lewicki, Roy, Minton, John, Saunders, David. 1999 Negotiation. Boston, MA. Irwin McGraw-Hill. process and outcome. Then the direct impact of the immediate context on negotiations should be studied.

The model should be treated dynamically. Any changes in the environment and immediate contexts will bring subsequent changes in the negotiation process and outcome. As the negotiation moves from one stage to the next, negotiators must reevaluate their initial needs, motivations, positions and strategies under changing contextual circumstances.”17

To paraphrase, when one conducts negotiations in the international arena, the first questions to answer would certainly have to do with those issues that lie outside the control of either party. Once issues were address in the environmental area, one would look to the actual people, and issues described in the immediate context. After researching negotiation globally, the above represent the best set of questions one could cover prior to sitting around the table.

Next, the focus will be on the actual styles of negotiation and organizational structure of the following countries and cultures:

The United Kingdom Mediterranean Countries Arabic Countries China Japan Russia and Eastern Europe

Attached is the matrix for each country and culture.

Several interesting inferences and observations can be drawn from the cultural matrix. Discussions of this nature will be examined during the presentation period.

One characteristic or quality a good international negotiator must posses is patience. Usually, negotiations will take a great deal of time because of the complexities. To reduce the time, negotiators must be well versed in the differences between cultures. Also, patience is vital because it sends a signal of the negotiator’s commitment to the project, and it helps build a long- term relationship with the other party. Finally, patience ensures that possible contingencies resulting from changing contexts, as discussed previously, are planned and taken into consideration.18

17 Lewicki, Roy, Minton, John, Saunders, David. 1999 Negotiation. Boston, MA. Irwin McGraw-Hill. 18 Lewicki, Roy, Minton, John, Saunders, David. 1999 Negotiation. Boston, MA. Irwin McGraw-Hill Summary and Conclusion

In tying the nature of international negotiation, business style, and overall organization together, one must pay close attention to several key factors. First, organizations must address the issue of ethics within its current format, and most definitely on the international front. Ethics vary from country to country throughout the world. Understanding the differences is the first step in formalizing ethical standards for your organization, and protecting the organization’s interest globally.

The international business climate is shrinking everyday. Knowing how to respond if placed across the table from an individual with whom you must negotiate will not always be simple, but it will most likely occur in future. As mentioned above, patience is vital during negotiations. Hopefully, the words of Raymond C. Floyd will also come to mind while a business person’s patience is growing thin “Differences among people of diverse cultural backgrounds can either draw them together or hold them apart”.19

Using the matrix of cultures and context analysis as page one of the map to successful negotiations, perhaps business people will be able to bring ideas and goals together. The overall goal in negotiating and conducting meetings successfully overseas, regardless of what background a person has, should ultimately be to understand the other individuals background, needs, individual style, and macro agenda. This level of understanding will no doubt lead to a clear understanding of the responsibilities and obligations of each party’s future behaviors. Problems will arise inevitably, however the prepared, informed, and patient international business person will most likely be the successful business person.

References

Cary, Robert. 1998. Taming the Tiger. Successful Meetings, v47n6:71-82.

Hanaoka, Masao, Mroczkowski, Tomasz. 1997. Effective right-sizing strategies in Japan and America: Is there a convergence of employment practices? Academy of Management Executive. V11n2: 57-67

Hollstein, Brian. 1998 Don’t do as the Romans do. Security Management, 42:56-57.

19 Sheridan, John 1994. Dividends from Diversity. Industry Week, v243n17:23-26. Howard, Carole, M. 1998 Going global: How to expand your horizons while avoiding the “ugly American” syndrome. Executive Speeches, v12n3:29-34.

Lewicki, Roy, Minton, John, Saunders, David. 1999 Negotiation. Boston, MA. Irwin McGraw- Hill.

Moline, Julie. 1998. Behavior modification; tips in doing business abroad. Reed Travel Group - Meetings and Conventions, 33:38-45.

Sheridan, John H. 1994. Dividends from Diversity. Industry Week. V243n17: 23-26.

Vega, Gina. 1997. Caveat emptor: Ethical chauvinism in the global economy. Journal of Business Ethics, 16n12/13: 1353-1362. United Kingdom Mediterranean / Arab China Japan Soviet Union/Eastern Central and South America Business Climate and Very kind, friendly Very important Very hospitable. Be Great Importance Great Importance. Need to Bureaucratic. Trust and Personal Relations and humorous respectful of religious build strong interconnections in choice of partner are and cultural customs establishing long term essential relationships

Time Constraints Open Relaxed Relaxed Keep time open Keep time open Slow moving. Time wasted due to bureaucracy

Structure Easy going. Ensure to Socialize first, work Business transactions Professional. Make use of Professional. Make use of Little structure use proper titles later are considered a social formal calling cards formal calling cards (Lord, Dr.) event

Preparation More under-prepared Focus more on the Personal impressions Meticulous Meticulous Lack preparation and person than the are supplemented by understanding of position fact business problems Flexibility Flexible Open to changes May change agreement Need to focus on equality, Open. May change agreement Need to be very patient after committing to it mutual benefit or after committing to it reciprocity

Communication No concern Avoid telephone for Very reluctant to say no Very difficult. Establish Very reluctant to say no Need to explain certain important issues and informal communications economic and try to achieve face- due to political pressures commercial mechanisms to-face