Adler Graham Essay Example For Students

Adler Graham Essay In history, negotiation skills were considered as a native talent or instinctive, but nowadays they are regarded as a technique that can be learned (Ghauri 1986). Negotiation process especially requires written and/or verbal communication skills between parties (McCall Warrington 1984, 13). Business negotiation process can be divided into three groups of variables that are presented in the Figure 1: the background factors, the process and the atmosphere (Ghauri 1996, 5). Figure 1: The process of business negotiations (Modified from the figure of Ghauri 1996, 81) Background factors influence the process of negotiation and the atmosphere. They include objectives that are the final stages parties desire to achieve and environment which means political, social and structural factors relevant to both parties. Also the market positions (e. g. monopolistic power) parties posses influence the background factors. As well as the third parties, and the negotiators themselves. Third parties are the ones who are affected by the negotiation or can influence it at some level, for example governments, agents, consultants and subcontractors. Negotiators influence the background factors with their experiences, negotiating skills and personality. (Ghauri 1996, 5-6. ) Atmosphere is a fundamental part of negotiation process. It is characterised as the perceived milieu around the interaction process, how the parties see each others behaviour and the properties of the process. In different processes there are different characteristics of atmosphere that dominate. Atmosphere can be conflicting or co-operative depending whether the parties have common or conflicting interests. The power versus dependence in the relationship means the property of the relationship, i. e. how power is divided between the parties. Also the expectations parties have influence the atmosphere. The expectations can be long-term (values and possibilities of future business) or short-term (prospects for the present deal). (Ghauri 1996, 6-7. ) The process phase of negotiation is divided into three stages which all are influenced by strategic and cultural dimensions. The first stage in order is the pre-negotiation stage. In this step parties make the first contact, gather information on matters relevant to the process, define their own interests and prepare the negotiation scheme. The second stage is the face-to-face negotiation. Parties access to this phase if they feel that the negotiation is the best alternative to find a solution to a joint problem. They evaluate alternatives present, select the ones compatibles with their own expectation and agree on all terms. The last stage is the post-negotiation, which includes writing, signing and implementing the contract. (Ghauri 1996, 10-11. ) 3 BUSINESS NEGOTIATIONS IN INTERNATIONAL SETTINGS 3. 1 International business negotiations With the globalization of business, the question of negotiating in international settings has received a lot of attention. When negotiating internationally, there are various distances between parties that influence the cost of the process. The clearest one of the distances is physical distance, but also there are economic, educational and cultural distances present. (Usunier 1996, 93. ) Parties in international negotiations come from different countries and have different cultural backgrounds. They may have different patterns of thinking, feeling and acting. (Hofstede Usunier 1996, 119. ) Due to the differences on parties cultures, the development of the negotiation process, and how parties understand the relationship are crucial (Ghauri 1996, 4). There are three different levels of culture that influence the behaviour of negotiators:Â   national level (cultural differences between countries) organizational level (cultural differences between different types of organisations depending on their home country and industry)Â  personal level (cultural differences between individuals due to different countries, organizations and especially due to their professional and regional backgrounds, sex and age) (Ghauri 1996, 4; Hofstede Usunier 1996, 119-120). McDonalds Top Five Critical Success Factors EssayThe model presented in the Figure 1 applies also in international business settings. Environmental differences, especially in view of the culture and business traditions prevailing in different countries, are important things to take into account. It might be difficult to understand and adjust to each others culture or traditions, but it is very important to be aware of these differences. Post-negotiation stage also presents a crucial problem in the international negotiation process: which law should be chosen to regulate the contract and arbitration? This requires an entity like the International Chamber of Commerce to act as an arbitrator in all international deals. (Ghauri 1986, 73-82. ) As stated in this chapter, the cultural knowledge has a huge importance in international business negotiations and relationships. In the following subchapter we are going to talk more about those cultural characteristics that influence business negotiations between parties from different countries. 3. 2 Cultural characteristics that influence business negotiations As already stated, various cultures make up the character of an individual. All the cultures (national, regional, industrial, organisational and personal) have subcultures and even subsubcultures (Kapoor et al. 1991, 21, 25, 83). The fundamental differences between cultures have an impact on firms business success throughout the global marketplace (Gesteland 1999, 19). However, one should start preparing for international negotiations by learning ones own cultural values and how much they differ from those of the other party (Hofstede Usunier 1996, 126). What are the components of a culture that should be taken into account in international business situations?