Negotiation is a dialogue intended to resolve disputes. Participants aim to agree on a course of action, bargain for individual or collective advantage, and craft outcomes that satisfy various interests.
Let's look at an example of how how an inability to understand the impact of the political landscape can change the negotiation process.
Raytheon, an American defense contractor, was negotiating a NATO weapons system with a consortium of European companies. They had researched the companies they believed were best able to handle the work at-hand, and contacted these companies to begin negotiations. These negotiations came to an abrupt halt when the governments of several of these companies informed Raytheon to cease the negotiations. Raytheon was informed that the decision about the companies they could negotiate with was not up to the company, but to the respective governments. Following these direction, Raytheon was able to successfully complete its negotiation to sell its weapons package.
Years later, Raytheon was implementing a similar system in Japan. Armed with the lessons they learned in Europe, the sales team immediately began talking with the Japanese government, not the individual companies. Nothing happened. The reason became clear when a senior executive had a private conversation with the Japanese deputy minister of defense. Unlike European governments, the Japanese government did not want to choose one company over another. The officials did not want to anger any of the companies or alienate its associated political clout.
This example demonstrates why businesses should study and understand different cultures before entering into negotiations. National political culture is one of the many factors that influence behavior at the negotiation table. Raytheon made a key error by assuming it could replicate successful negotiations in Europe, in Japan. When negotiating new deals with foreign governments and/or companies, businesses should have a set pre-negotiation strategy, take time to learn the local customs and culture of the country, and try to understand the expectations of the other party.
Cultural differences cause four kinds of problems in international business negotiations.
Negotiators should examine cultural differences at all levels. However, they also need to remember that making gross generalizations and false stereotypes can be counter-productive. It helps to get to know the individuals they will be dealing with, not just their culture, country, or company.