BUS403: Negotiations and Conflict Management

Read this section on the five phases of negotiations: investigation, determining your best alternative to a negotiated agreement (BATNA), presentation, bargaining, and closure. The text includes best practices and tips on how to avoid common mistakes made during negotiations. Some business leaders and managers have a distributive view which envisions a pie they will divide among stakeholders. This perspective reduces the opportunity for conflict and opens the door for problem resolution. Note that we will refer to this document several times during the course.

Watch this video on four elements of negotiation: goals, strategy, issues, and planning. Notice they resemble the phases listed in the previous reading. Having clear, measurable outcomes will help you determine whether you have won or lost in a negotiation. Dialogue and vocabulary are crucial elements. You cannot reach an agreement or settle a dispute if you do not "speak the same language" or if your goals run in opposite directions. Everyone involved must be able to communicate and understand the concepts and terminology used during the negotiation.

This text summarizes common characteristics of problems and the five steps in group problem-solving. The reading describes brainstorming and discussions that should occur before group decision-making, compares and contrasts decision-making techniques, and explores various influences on decision-making. The section "Getting Competent" emphasizes the need for leaders and managers to delegate tasks and responsibilities as they identify specialized skills among their teams and employees.

Read this text, which explores tools and techniques business leaders use for making decisions. It defines the advantages and disadvantages of different levels of individual and group decision-making strategies.

Read this text. As you set the goals for a negotiation, pay special attention to this description of SMART goals which should be specific, measurable, achievable, realistic, and time-bound. Using quantitative (numeric) terms helps you measure and benchmark progress. SMART goals keep employees focused, motivated, and inspired. A failure to set SMART goals increases the risk that your work will be derailed or lost to noisy distractions.

Watch this video on how to create a negotiation strategy. The presenter outlines four strategies based on how you answered these questions: How important is the outcome to you, your team, or your business? How important is your long-term relationship with the other person?

1. Competition – you need a good deal now; maintaining a good relationship is not important;
   
   
2. Accommodation – you give the other side what it wants; you must maintain a good relationship;
   
   
3. Avoidance – you withdraw from the negotiation; maintaining a good relationship is unimportant;
   
   
4. Collaboration – you want to work together to both get what you want; you need to maintain a good relationship.

Whether you face a fixed or expanding pie, limiting negotiation errors guarantees a clearer path to victory that is sustainable and long-lasting. Read this text to avoid some common negotiation errors.

Watch this video on distributive negotiation to learn when this strategy is appropriate and when a collaborative (or integrative) strategy may "expand the pie" for both parties. Negotiators often use distributive bargaining (or win-lose bargaining) when negotiating over price.

With this type of bargaining, words like deadlock, final offer, firm, hostile, and ultimatum are commonplace. The concepts of the target price, buyer's resistance point, seller's public (asking) price, seller's resistance point, and bargaining range are inherent to distributive negotiation. The presenter uses the example of a basketball game to make the point that distributive bargaining means winning and losing.

Watch this video lecture on positional bargaining. The presenter cites Fisher and Ury, who argue that positional bargaining does not produce sustainable agreements and is an inefficient means of reaching win-win solutions. Pay attention to the "orange" example that explains the benefits of moving beyond the position to the issues of the conflict. In a case involving the parties' position on price, the price is the mutually accepted price (position), and negotiations are directed toward that goal.

The presenter highlights the limits of position bargaining, which results in a loss for one party. Notice that negotiators who know the other party's desires or needs have an advantage.

Game theory, or decision-making under competition, has its origins and applications in economics, operations research, and psychology. Game theory revolves around social interaction – what occurs depends on what others may be willing or unwilling to do. This section explains the basics of game theory, which studies optimal decision-making in a competitive circumstance where the decisions of one individual affect the situational outcome for every stakeholder. Game theory includes four major categories: classical game theory, combinatorial game theory, dynamic game theory, and other topics in game theory. Exposure to game theory benefits leaders who use critical thinking and logic to plan and manage growing industries and businesses.

Watch this video on the Prisoner's Dilemma, a classic example of game theory. The participants base their strategy on what they think the other party will do. The Prisoner's Dilemma illustrates how individual choices can lead to the worst situation possible. The situation devolves as each side tries to outplay the other. This situation offers a lesson for mergers and acquisitions of smaller or larger companies.

Watch this short video on the concept of a zero-sum game where only one side wins the entire prize, business, or territory. In business, this looks like a full acquisition, hostile or otherwise. This concept is important in industries with high customer turnover and business growth.

Watch this video on the integrative or win-win approach. It assumes the parties can change the situation to create a solution where everyone gets what they want. Perhaps they will cooperate and approach a third party to fund their endeavor. Neither side is compromising (they are not giving up what they really want). The sides minimize their differences and focus on what they have in common. They understand each other's needs.

Collaboration helps everyone walks away with a favorable outcome. Remember to celebrate your victory with everyone who was part of the negotiation. It will help build your relationship and prepare for your next negotiation.

Read this article, where the author offers practical examples of using a distributive and integrative approach. He lists requirements for effective negotiations and circumstances or moments that involve distributive bargaining. Can you think of examples where this occurs in your life?

The text includes three steps in the negotiation process: pre-negotiation, negotiation, and post-negotiation. During pre-negotiation, you should assess your confidence level, determine what is important to your prospect, and identify your goal (the minimum you will accept during negotiation).

The concept of emotional intelligence gained popularity during the 1990s. Robert Cooper and Ayman Sawaf define emotional intelligence as the ability to sense, understand, and apply the power and acumens of emotions to promote human energy, information, connection, and influence. According to Daniel Goleman, your emotional intelligence quotient (EQ) is more important than IQ in predicting leadership success. Emotional intelligence is critical to managers. The more complex the project profile, the more important the project manager's EQ is to project success.

Many view personal success as zero-sum goals (win-lose), while altruism and family-related goals are positive-sum (win-win). Neuroeconomics experiments based on cooperation and trust confirm that people who trust others tend to have a positive-sum attitude to life. People who believe life is a positive-sum game tend to be happier than those who see a zero-sum game.

We can apply many of these negotiation concepts to conflict negotiation, which we will study in Unit 4 – a key predictor of poor leadership is the lack of emotional intelligence, self-awareness, and self-control. Emotional intelligence skills can improve business outcomes by helping managers make decisions more quickly with value-based results and solutions. This helps businesses run more smoothly and keeps leadership and management connected to front-line staff, customers, and vendors.

Read this section, where many concepts discussed in this course come to life. For example, a successful close is based on preparing to meet the opportunities. Preparation requires planning, which involves strategy. Selling is like building a house: everything comes together if the foundation is poured correctly. The steps to closing a complex sale (more than $100,000) – discover, diagnose, design, and deliver – resemble the negotiating phases we discussed. Every document, phone call, email, and meeting is part of the sale until the closing papers are signed. Be sure to answer the questions at the end of the section.

This text describes Robert Cialdini's six principles of persuasion. Robert Cialdini (1945– ), an American social psychologist, specializes in non-manipulative ways to negotiate or persuade. In this excerpt, Cialdini says there is no correct way to persuade or negotiate, but the principles are core areas to start.

Read this article on creating sustainable agreements with suppliers built on cooperation and collaboration. The philosophy of "maximizing profit at any cost" is no longer appropriate for a world of finite resources, increasing consumer power, and supplier importance.

Read this article on collective bargaining, a topic we will explore again in Unit 3. In the United States, the National Labor Relations Act of 1953 covers most collective agreements in the private sector. What are some illegal actions according to this Act? How would you describe arbitration? Pay close attention to the discussion on collective agreement. For unionized businesses, employees, business leaders, lawyers, and other stakeholders use the collective agreement as a baseline for their negotiation.

As you read this text, pay close attention to the section on investment bankers since it discusses the economic changes the business will experience and what it will report to shareholders and customers.

In October 2018, Sears, Roebuck and Co. officially filed for Chapter 11 bankruptcy. Review this case study – a slide presentation – to learn about selling points Sears experienced, such as real estate, operations, top brands, leadership, liquidity, and catalysts. In 2022, profits helped Sears emerge from bankruptcy. Sears was once the world's largest retailer, with nearly 3,500 Sears and Kmart stores. In February 2023, 17 full-line Sears stores, Sears Grand, Sears Appliance & Mattress, and Sears HomeLife stores remain. In 2020, Covid-19 breathed new life into its real estate when many sites became vaccine centers.

This chapter discusses several types of agents and principles and the agent/principal relationship. Pay close attention to the discussion on the duties of agents and principals. For example, the agent has a fiduciary duty to the principal.

Read this chapter on the agent's fiduciary and general duty to the principal and the principal's duty to the agent (contract and tort). This section explores what the demise of a relationship between a third party, principal, and agent means in the legal sphere. Pay attention to the chart (Figure 39.1) on types of authority and the discussion on implied authority.

Review these course notes, which summarize the advantages and disadvantages of coalitions and the challenges of multi-party negotiations. For example, complexities are informational, procedural, and social during multi-party negotiations. Pay attention to the definition and characteristics of a coalition and the decisions, processes, and procedures of multi-party negotiations. The notes emphasize that the social aspect of groups and parties can help or hinder the outcome.

Read this text on the six power tactics (legitimate, referent, expert, reward, coercive, and informational) that leaders have to persuade or push others to action. Power is upward and downward. Some high-level positions are symbolic and have little to no power. Likewise, people in seemingly lower-level positions may have more power than those with more duties and higher pay. Power tactics – behavioral, rational, and structural – are attributes businesses use to solidify power internally and externally.

Read this text, which defines three different types of conflict: intrapersonal (within oneself), interpersonal (among individuals), and intergroup conflict (among groups of people).

Conflict can foster innovation by forcing us to ask what is possible and prompt us to generate ideas to resolve a dispute. Read these three short blog posts where the author outlines the benefits of conflict in the workplace, such as recognizing that the status quo is not working and fostering creativity. The third entry offers some suggestions for managing conflict.

Read this text, which explains why certain leadership styles are more effective at managing conflict. For example, a study by Zhang et al. found that transformational leaders who used conflict management methods could influence their teams more effectively to enhance coordination and performance.

Read this article, which outlines four main reasons why dysfunctional workplace conflicts arise. It offers ways to manage conflict that arises from misinterpretation, competition, different values and expectations, and unrealistic goals and expectations. In the next section, we review these ideas and other causes of dysfunctional workplace conflict.

Read this text, which explores different types of organizational structures. The first section explores four key organizational descriptors:

1. Centralization describes the role management and organizational leaders play in the decision-making process and the central infrastructure of the company or organization;
   
   
2. Formalization describes whether the company has and follows formal policies and procedures (preferably in writing) to help employees respond to questions and situations consistently;
   
   
3. Hierarchy describes the arrangement employees follow regarding decision-making authority, central roles, and responsibilities; and
   
   
4. Departmentalization describes the functional boundaries or divisional structures departments within the company follow to delineate their operations and production.

Read this chapter, which discusses the central themes of the economic concepts of scarcity, choice, and opportunity cost.

The concept of opportunity cost describes how companies and organizations allocate their scarce resources when they follow one option and not another. In other words, economists calculate an opportunity cost, a numerical amount (a cost or loss) that documents the company's decision.

For example, when a company chooses to sell a division that would have earned $5 million annually, the opportunity cost for the sale is $5 million per year. Think of it as a lost opportunity. Note that the company's choices can cause disagreement and conflict among employees who object to the decisions made.

Read this text, which presents four distinct phases psychologist Bruce Tuckman created in 1965 to classify the group developmental process. The author explains how Tuckman's concept of task interdependence is a key element of the norming phase.

• Forming: When team members create relationships with each other and agree to the initial goals and individual work assignments of the project;
• Storming: When team members discuss their ideas and opposing views on how to best complete their assignment;
• Norming: When team members reshape the hierarchy, define their roles and interdependencies, compromise as needed, and reevaluate their approach to solving the task; and
• Performing: When team members come together to complete the assignment or solve the task.

Read this chapter, which describes factors that can help employees work together as a team. Companies foster teamwork by encouraging staff members to depend on and trust each other, realize they work better together than individually, support and promote each other, and find ways to foster a sense of enjoyment in working together as a team. Some organizations encourage leadership structures that rotate periodically, so each team member can lead and share responsibility among the group.

Watch this video, which examines how effective collaboration, a holistic approach, interdisciplinary thinking (collaboration among disciplines), and divergent thinking (exploring many possible solutions) are critical elements for innovative problem-solving in our complex environment. Good communication and understanding are vital for success and help a company avoid conflict.

Watch these three short videos, which offer common workplace situations that demonstrate the importance of communication and active listening for resolving workplace conflict.

Read this text, which explores the evolution of theories surrounding personality types and discusses tools businesses use to categorize and predict how individuals will act in certain situations. Kenneth Alperin compares and contrasts three personality tests: Four Temperaments, DISC, and the Myers-Briggs Type Indicator. He cites a case study of Myers-Briggs assessments that concluded two personality types were prevalent among engineering students. Alperin finds that a mix of personality types can bring out the best in others and enhance the group dynamic.

Review this article for definitions and examples of stereotypes.

Read this text, which distinguishes between blatant stereotyping and more subtle biases, prejudices, and discrimination.

Read this text, which discusses gender-based stereotypes, gender roles, gender identity, sexual orientation, and sexism. The authors argue, "there are significantly fewer real gender differences than one would expect relative to a large number of stereotypes about gender differences".

Workplace sexual harassment has been in the news. Complaints and lawsuits have included high-profile cases where managers, co-workers, clients, and potential employers have perpetrated or condoned sexual harassment and similar violations of professional and ethical standards.

Victims usually remain silent rather than report this workplace conflict because they believe their managers will ignore their accounts. Many employers dismiss the seriousness of these charges and lack the courage to discipline or terminate a perpetrator who may be an otherwise valued employee. Victims are afraid their assailant or manager will retaliate against them and jeopardize their career, such as by moving them to a less desirable work assignment or calling for their termination.

This type of workplace conflict is particularly damaging because it creates a hostile environment where employees must work despite feeling hurt, angry, frustrated, distrustful, and resentful toward their employer.

Read this comprehensive definition of sexual harassment in the workplace.

Listen to this discussion between Lewis Maleh and Karen Graves on age, discrimination, work goals, different perspectives on work, experience, and work-life balance.

Read this guidebook Australia's Queensland Health wrote to prevent their health professionals from making bad assumptions or decisions regarding their patients and co-workers.

The caregivers advise, "Before you begin to have insight into diverse communities, individuals and groups, you need to understand and know your own culture and identity, whether this is your personal ethnic, spiritual or cultural heritage or your professional or organisational [sic] affiliations. Evidence has shown that our attitudes, whether we are conscious of them or not, have a direct and significant impact on the people around us."

This manual states, "It is impossible to know all the rules that might exist across different cultural groups. However, it is possible to approach your work with the understanding that different and complex cultural conventions exist and to seek out these conventions to improve understanding, adapt to whatever cultural codes you encounter, and avoid incorrectly attributing negative characteristics to a particular group or person."

Read this chapter, which identifies how employers can enhance diversity and inclusiveness in their workplaces to help them avoid making biased and stereotypical decisions.

Read this article to learn about conflicts in the workplace, their causes, outcomes (both favorable and unfavorable), and various methods of conflict management.

Read this text, which presents four ways to resolve workplace conflict. The author emphasizes how to use confrontations as opportunities to open lines of communication to understand relevant issues at hand and overcome disputes by working together for a mutually-satisfactory outcome.

Read this article to learn how the five conflict resolution approaches described above relate to the scales of individual characteristics of assertiveness and cooperativeness.

Read this resource to learn how to use Thomas-Killmann's approaches to conflict resolution to obtain a positive outcome. Pay special attention to the role emotional intelligence plays in guiding our thinking and behavior.

Read this text, which describes the continuum of types of conflict resolution or alternative dispute resolution. We call the process "alternative" because it occurs outside the courtroom.

Read this article to explore how different communities respond to conflict.

Read this resource for some general guidance on solving conflicts in the workplace.

Negotiations can be contentious, fraught with infighting, and create hurt feelings when one party does not believe the other is addressing their concerns in a fair manner. However, the two parties can resolve their differences and restore peaceful operation when they find common ground or understanding.

For example, workers may organize to form a coalition (or union) to negotiate for better working conditions or receive extra pay. In this case, the union steps in to negotiate on behalf of the workers. They may even threaten to strike or refuse to work until the employer agrees to meet their terms. These unions may push employers to create a healthier work environment, such as by supplying special safety or protective gear or paying workers overtime pay in exchange for working extra hours. These steps can create a healthier, more productive workforce that benefits everyone.

Read this resource to review how American workers have created unions to fight for a better work environment since the 1860s. Workers' unions tend to get involved in political activities as they strive to promote better working conditions on behalf of their members with local, statewide, and national legislation. The negotiations union leaders undergo with companies on behalf of their members are called collective bargaining.

Collective bargaining describes the negotiation process workers' unions undertake with employers to regulate salaries, working conditions, benefits, and other aspects of workers' compensation and rights. Read this text for more information and context on collective bargaining in the United States.

Read the article below to learn the Equal Employment Opportunity Commission (EEOC)'s view of the many advantages of mediation. Note the positive review of this informal dispute resolution given by two employers.

Read this article to learn more about the advantages and disadvantages of arbitration as an alternate dispute resolution. The outcome of this problem-solving may depend on the arbitrator's interpretation of the contract terms. In contrast, in mediation, the third party is neutral, and the participants may not reach a mutually agreed-upon resolution.

Note that employers increasingly include mandatory arbitration clauses as part of their employment contracts to limit the ability of employees to bring legal action against their employer in a court of law. These clauses are controversial, as you will see below.
While they can prevent companies from receiving publicly damaging, so-called frivolous lawsuits from disgruntled employees, others argue that employees, who sign these agreements to get hired, sign away their rights as citizens to obtain due process remedies to unfair work practices in a court of law. By signing these contracts, employees relinquish their ability to sue their employer to protest discrimination, sexual harassment, being terminated without cause, and other grievances.

Read this blog post which presents some controversial aspects of mandatory arbitration agreements from the arguments presented before the United States Supreme Court in October 2017.

Read this text, which describes two aspects of litigation that are important to consider: legal standing and class action lawsuits.

Watch this video, which explains the different types of risk businesses face, such as legal and reputational risk, and how they manage risk and conflicts that may affect their business. The speaker discusses three steps to managing legal risk: identifying the legal risk, evaluating the chances of something going wrong, and determining the response. Four strategies include risk avoidance, risk reduction, risk shifting, and risk acceptance.

Read this text, which describes how most trials proceed.

Read this blog, where the author explains that negotiators should define and express their self-interests, enlarged interests, enlightened interests, and aligned interests, so each side in the dispute can arrive at a common point of understanding. This way, they can identify a common path forward that is mutually beneficial. Negotiators can create amenable solutions when they understand what each party wants to achieve.

In the workplace, the shared goal may be to work together in ways that benefit the company for "the good of the order." Using our problem-solving skills to create new solutions that benefit everyone are components of creativity and innovation that can help our company thrive.

Read this text, which provides some best practices for effective teamwork.

As you read this text, pay attention to the phases of conflicts, which explains that taking preventative steps during the potential conflict and gestation phases can help you avoid conflict escalation and barriers that could become insurmountable.

The author discusses barriers to conflict resolution in "Hindrances to the Smooth Implementation of the Process of Integration." Differences of opinion may remain, but interest in the common good should prevail and help participants surmount real or perceived roadblocks.

Read this chapter to review the project life cycle to ensure stakeholders are satisfied with the progress and manner of project completion. Are the project members fulfilling their responsibilities and accounting for resources properly? When the project is finished, team members should conduct a post-project evaluation to reflect on lessons learned, recognize positive ideas, and discuss ways to avoid mistakes during future projects.

Read this interview, which explains that community groups need a formal way to deal with conflict resolution. Incorporating components of respect and compassion is critical to good conflict resolution. This is especially important in today's media environment, where news that a conflict resolution attempt has turned chaotic and disrespectful can be highly damaging. Negative press will severely impact profit and community outreach.

Watch this video to learn five reasons why managers should talk openly with employees they consider to be poor performers.

Read this article for advice on how to converse with an employee who is not contributing to the company or organization as well as expected.

Many companies have a policy of progressive discipline to respond to employee misconduct. Managers usually begin the process by discussing expectations and asking for feedback from their underperforming employees. If this conversation does not improve, you may need to document the negative results and collect the legal documentation you need to discipline or terminate an employee. Read this resource, which details this process of escalation.

Read this chapter for an overview of how cultural understanding applies to business negotiations. For example, in high-context cultures, body language can be more important than spoken words. In low-context cultures, people tend to use explicit and direct verbal language.

The introduction describes the challenge of conducting business globally without understanding local business practices and culture. Dunkin' Brands received a first-hand lesson when it returned to Russia in 2010 to open 20 new stores after an 11-year absence. It proved difficult to balance the need to allow local operators to offer customized flavors and food products without diminishing the overall brand of their multinational company. Dunkin' created several items to appeal to Russian flavor preferences.

Note that successful business people should always practice cultural etiquette and standards of decency when they meet someone from a foreign country. They also realize they will fall flat if they succumb to gross stereotypes or fail to recognize the differences of the individuals they work with.

Read about the role ethics and national culture plays in negotiations. For example, in China, companies and workers do not like to say "no." To accommodate this norm, the author suggests asking open-ended questions, such as, "how will you do this for us" and "will it be done"?

This article highlights how businesses alter menus or messages to become profitable away from home. Pay close attention to the discussion about the changes Dunkin Donuts and Baskin Robbins went through in Russia, China, Japan, and most of Asia.

This video examines how to build meaningful cross-cultural interactions and relationships among team members in China.

Read this summary of the different models Trompenaar identified. For example, which of Trompenaars's five orientations describes a culture where people achieve status according to their ability to perform their functions well?

Watch this interview, where Trompenaars compares social media users by age, country, and other demographics. These comparisons align with how demographic data is gathered and shared. In this interview, Trompenaars compares the social media needs of older and younger users and the individual versus the community.

Read this article on four cultural models or frameworks Edgar Schein, Charles Handy, and Geert Hofstede identified. Schein examined three types of organizational culture, and Handy developed a framework of four types of culture in today's society.

Geert Hofstede identified six dimensions of culture when he studied IBM offices in 50 different countries. These include power distance, uncertainty avoidance, individualism vs. collectivism, masculinity vs. femininity, long-term orientation, and restraint. Which of Hofstede's Cultural Dimensions describes an organization's comfort level with risk-taking?

Read this text, which expands on Hofstede's six dimensions. Scores in each dimension range from zero to 100 and describe people in New Zealand relative to the characteristics of each dimension. Pay attention to Hofstede's definition of culture, in which the mind distinguishes one group from another. Business leaders must understand how to market a product or service so it appeals to all groups.

Watch this video, which cites the challenges of working with employees from multiple countries. Management must understand how employees wish to be managed and how to work with others. Notice the themes Brendstrup cites. He describes how the company acquired smaller companies to serve several international regions simultaneously (China, Europe, and Thailand/Philippines). He mentions the complexity of managing employees in other countries and realized the need to offer training on cultural differences to all their employees.

Read this text, which describes a negotiation between a Chinese energy company (Sinopec) and a Brazilian energy company (Petrobras). The stage is set for a difficult experience for both parties due to several factors. The leaders on both sides had limited experience with international negotiation, and teams hesitated to start the conversation because they did not understand each other's backgrounds.

The participants researched each country's customs, history, politics, and the issues of relationships and speaking a common language. As discussed in Unit 1, each side had to learn what the other side hoped to accomplish to negotiate a win-win solution. Through homework assignments and simulation exercises, the negotiators gained the knowledge and skills to proceed. They also encouraged follow-up correspondence to ask for clarity during their discussions.

Watch this video, which explores the concept of respect or not losing "face" or "mianzi" in front of your team in China. This idea is not unique to China – most other cultures have a similar concept, but it may play out differently. Failure to understand this behavior in a business relationship can cause tension or a complete breakdown in the worst cases.

Watch this video, which discusses how Chinese workers are not used to receiving praise from their supervisors.

How can the United States improve its relationship with the Arab World? Anthony Cordesman says Americans should recognize the region includes separate countries with different cultural and political values. A country-by-country approach is critical.

Watch this video, which discusses creating country teams with values that mirror the population they serve to establish respect, acceptance, and business longevity.

Watch this panel discussion, "Women, Civil Society, and Leadership in a New Arab World." The first speaker says the Arab Spring protests from 2010 to 2011 were a catalyst that helped change minds and ideas about women business leaders and managers. For example, the director of a Tunisian business syndicate is now a woman.

However, a panelist complained that many exceptional and competent women who possess capital and leadership characteristics were being left out. For example, some Arab countries prohibit businesswomen from signing contracts or traveling alone to another country for work. Many families and traditions stand in the way of women's progress.

Mexico offers another example of an enormous country with a complex history, economic and social contrasts, and thousands of cultural and regional differences. As in the Arab world, Lee Iwan writes that businesses should treat each region separately, recognizing good conversation topics, language, mealtimes, politics, relationships, and taxation systems. Businesses must be aware that, as border partners, Mexico and the United States have many relevant treaties and regional trade agreements that could affect their operations.

Watch this brief video, which documents the author's experience on the West and East coast of the United States. It traces the commercial, cultural, and political interests that created a national Hispanic identity in the 1970s and boosted the political clout of Mexicans, Puerto Ricans, Cubans, Salvadorans, Guatemalans, and other Latin Americans. However, it notes that many businesses "homogenize" important differences within the Latino and Hispanic communities and ignore their diversity at their peril.

Read this summary of the General Agreement on Tariffs and Trade (GATT), which evolved into the World Trade Organization (WTO) in 1995 and currently has 164 members. The WTO is a forum for governments to negotiate trade agreements and settle trade disputes. It operates an international system of trade rules. They are contracts that bind governments to keep their trade policies within agreed limits. Its goal is to "help producers of goods and services, exporters, and importers conduct their business while allowing governments to meet social and environmental objectives". (WTO)

Read this chapter, which provides an overview of policy issues, controversies, and the history of international trade. Businesses that wish to conduct trade internationally or establish offices in foreign countries need to understand these complex issues. The reading discusses international economics, tariffs, anti-subsidy laws, free trade agreements (FTAs), the 1947 General Agreement on Tariffs and Trade (GATT), and the World Trade Organization (WTO).

Read this summary of the effort Raytheon, a U.S. defense contractor, made to negotiate a NATO (the North Atlantic Treaty Organization) weapons system with a consortium of European companies. Raytheon learned that the individual European governments would make the purchasing decision, not the companies they planned to partner with. Cultural differences can cause four problems in international negotiations: language, nonverbal behaviors, values thinking (cultural and personal), and decision-making processes.

Watch this video on the importance of proactively building a relationship with your local government representatives when growing a business in a foreign country so help is available in case any problems or legal issues arise. This will also raise your awareness of any ethics, rules, standards, or regulations you need to follow.

Watch this follow-up to the previous video. The speaker explains that minor problems and confrontations with government authorities can be an opportunity for businesses to improve and build relationships of trust that will help overcome future negative encounters or roadblocks.