BUS403 Study Guide

Unit 5: International and Cross-Cultural Negotiation

5a. Define culture

  • What are culture and cultural awareness?

Culture refers to a group, community, or society's beliefs, values, mindsets, or practices. Our culture forms the basis for how we think and function. It encompasses how we communicate, dress, eat, interact, play, think, and work. Our culture shapes everything we do (including those who rebel against it). In the global workplace, we must remember that people from other countries are shaped by their cultures.

Cultural awareness refers to our ability to understand another culture's values and perspectives so we can interact with them effectively, even if we do not agree with or personally accept their practices. It is important to understand that no culture is right, wrong, better, or worse.

To review, see:


5b. Compare how cultural beliefs can influence negotiations

  • How does understanding cultural norms influence negotiations?
  • What are some challenges commonly faced in intercultural negotiation, and what are some strategies to overcome them?
  • What is cultural intelligence?

People from different cultures may interpret the facts and purposes of negotiation differently. It helps to learn about the geography, history, and general practices of the culture to overcome these barriers. As in any negotiation, you should learn what each negotiating team hopes to gain to create a winning solution for both sides.

According to Earley, Ang, and Van Dyne, cultural intelligence (CQ) refers to our ability to adapt as we interact with people from different cultures regarding behavior, motivation, and metacognitive aspects. People with higher CQs can blend more easily into any environment to conduct business more effectively. Anders Brendstrup explains the importance of knowing and accepting the various idiosyncrasies of different cultures.

To review, see:


5c. Describe how nonverbal communications impact business negotiations

  • Why is non-verbal communication important to business?

Nonverbal communication can carry greater truths than the spoken word. It is important to understand the teachings, perceptions, and societal norms of work colleagues from different cultures to avoid miscommunications using gestures that the other person might find insulting.

To review, see:


5d. Discuss the challenges multinational corporations face in managing their employees

  • What are some challenges that multinational corporations encounter when managing their employees?
  • What are some approaches to addressing incompatible customs and cultural norms?
  • Why is "saving face" important in Chinese culture?

Training and managing employees in a culturally diverse multinational corporation can be challenging. Managers should recognize and respect different beliefs, cultural norms, and customs. For example, American employees often eat lunch at their desks to complete work tasks during the 30–60 minutes they have to eat lunch. However, in many countries, lunch is the main meal of the day; employees go home to eat lunch with their families and return to work from 5:00 until 8:00 p.m. These workers also spend much time getting to know each other personally since business is often based on trust and personal connections.

Many more traditional cultures have the concept of saving face, which refers to the deference and respect workers show their supervisors and elder co-workers. It can be rude, if not fatal, to ask too many questions or second-guess their opinions, especially in public. Bringing gifts to your superiors is expected and may boost your standing in many countries. However, many Western cultures frown upon this practice because it invites corruption.

To review, see:


5e. List the seven dimensions of Trompenaars' model of national cultural differences

  • What is Trompenaars' Model of National Culture, and how do its seven dimensions apply to cross-cultural and international negotiations?

Fons Trompenaars (1953–), a Dutch management consultant, created a model to compare general national cultural differences using seven dimensions. These descriptions can help participants anticipate and respond to cultural beliefs and practices during international negotiations. Even if you do not agree with these stereotypes, they may be helpful to consider.

  1. Universalism vs. particularism
  2. Individualism vs. communitarianism
  3. Neutral vs. emotional
  4. Specific vs. diffuse
  5. Achievement vs. ascription
  6. Sequential vs. synchronic
  7. Internal vs. external control

To review, see Trompenaars' Model of National Culture Differences and Interview with Fons Trompenaars.


5f. List Geert Hofstede's six dimensions of culture

  • What is Geert Hofstede's Dimensions of Culture Theory, and how do its six cultural dimensions apply to cross-cultural and international negotiations?

Geert Hofstede (1928–), a Dutch social psychologist, created a cultural dimensions framework that examines cross-cultural communication to compare national cultures across six dimensions. Hofstede describes how culture affects individual values and human behavior.

  1. Power distance
  2. Uncertainty avoidance
  3. Individualism vs. collectivism
  4. Masculinity vs. femininity
  5. Long-term orientation
  6. Indulgence vs. restraint

To review, see Types of Organizational Culture and Intercultural Communication.


5g. Explain how understanding culture and national identity affect cross-cultural or international negotiations

  • Why should business leaders try to understand the economic, political, and social culture of a country or region where they wish to do business?

Negotiators should examine cultural differences at all levels. However, they should always remember that making gross generalizations and false stereotypes can be counter-productive. It helps to know the individuals they are dealing with, not just their culture, country, or company.

We can categorize cultural differences during international business negotiations into four areas: 1. language, 2. nonverbal behaviors, 3. values, and 4. thinking and decision-making processes. Business leaders who work in foreign countries are wise to build relationships with local government representatives to minimize and avoid legal and political pitfalls before they occur. For example, many Americans believe the laws in China are quite vague, and it is easy to cross legal or political lines while transacting business within their borders.

To review, see: 


5h. Describe political and legal issues that impact international negotiations

  • Why can problems with authorities be an opportunity for businesses in foreign countries?

In countries where regulations and practices change frequently, it can be difficult for an off-shore business to remain "up to speed." Creating connections with government and political authorities provides an opportunity to build invaluable relationships that can help the business avoid roadblocks.

The media can exacerbate inaccurate cultural stereotypes. Businesses should adopt an approach that corresponds to the area where they work since populations in different countries (and even regions within countries) can have different cultural and political outlooks. Communication is essential to understanding and building trust. Employing teams in these countries to interact directly with native representatives can avoid misunderstandings and make all the difference. Anthony Cordesman states in his video, "An ethnocentric America can turn friends into enemies. They cannot turn enemies into friends".

To review, see:


5i. Describe the role the World Trade Organization plays in international business negotiations

  • What is the main purpose of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)?

In 1948, the United Nations created the General Agreement on Tariffs and Trade (GATT) to promote international trade by reducing and eliminating trade barriers, such as tariffs and quotas. During the Uruguay Round negotiations from 1986 to 1993, the member countries replaced GATT with the World Trade Organization (WTO), which first met on Jan. 1, 1995.

The WTO's main purpose is to serve as a forum for member countries to negotiate and adjudicate trade agreements and participate in dispute resolution for trade in goods, services, and intellectual property.

Part of WTO's nondiscrimination mandate is the designation of most-favored-nation status (MFN). Most-favored-nation status requires WTO members to apply the same terms and trade conditions to all other WTO members. In other words, if a country grants another country (even a non-WTO member) a special favor, every other WTO member must receive the same treatment.

To review, see The World Trade Organization (WTO).


Unit 5 Vocabulary

  • achievement
  • ascription
  • collectivism
  • communitarianism
  • culture
  • cultural awareness
  • cultural norm
  • cultural intelligence (CQ)
  • diffuse
  • emotional
  • external control
  • femininity
  • Fons Trompenaars
  • Geert Hofstede
  • General Agreement on Tariffs and Trade (GATT)
  • individualism
  • indulgence
  • internal control
  • long-term orientation
  • masculinity
  • neutral
  • nonverbal communication
  • particularism
  • power distance
  • restraint
  • saving face
  • sequential
  • specific
  • synchronic
  • uncertainty avoidance
  • universalism
  • values
  • World Trade Organization (WTO)