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Cross-Cultural Negotiations

Table of Contents​

  1. Sources of Power in Negotiations
  2. Negotiation Strategies
  3. Negotiation Tactics
  4. Stages of the Negotiation Process
  5. Communication and Information
  6. Emotions and Moods in Negotiations
  7. Cross-Cultural Negotiations: Focus on China
  8. Individualistic vs. Collectivistic Negotiation Behavior
  9. Exam Preparation Guide

Sources of Power in Negotiations​

Power is the ability to control people, situations, and negotiation outcomes. This capability depends on:

  • Willingness to use power
  • Knowledge of relevant power sources
  • Ability to utilize these power sources

Critical Distinction: Real control over power sources vs. subjective perception of control by either party.

External Sources of Power​

1. Economic Means​

  • Reduces dependency on the other party
  • Eliminates time pressure
  • Facilitates alternative options to negotiations
  • Enables achieving higher goals

2. Social/Organizational/Political Status​

  • Using status to impose solutions
  • Different status levels typically lead to competitive negotiations with multiple attempts to impose solutions
  • Similar status levels among negotiation managers push toward cooperative negotiations

3. Time Control​

  • Controlling the timing and pace of negotiations
  • Setting deadlines and schedules

4. Technology​

  • Can provide new solutions and alternatives

5. Controlling Bureaucracy​

  • When a negotiating party controls bureaucratic systems
  • When alternatives to negotiations mean getting entangled in bureaucracy for the other party

6. Reputation​

  • High reputation provides confidence and security to the other party
  • Reduces uncertainty for the other party
  • When a party is known for following through on threats, the effect is more pronounced

Internal Sources of Power​

1. Alternatives to Negotiations​

  • Parties with more alternatives show less dependency
  • Negotiations become less critical, leading to better outcomes

2. Coalition​

  • Binding multiple partners as an integrated negotiating party
  • Increases resources, allows better risk distribution, provides mutual support
  • Enables achieving higher goals and managing riskier moves
  • Risk: Internal disagreements can lead to "divide and conquer" tactics by the other party

3. Investment & Commitment​

  • "Addiction Phenomenon": The more resources (money, time, effort) invested, the more willing a party becomes to make concessions
  • Relationship Commitments: Commitments to relationships or outcomes weaken the committed party

4. Information​

  • Knowledge about prices for other buyers, production scales, sales volumes, cost prices, customer complaints
  • Critical in supplier-buyer negotiations

Personal Sources of Power​

1. Weakness​

  • Weak negotiators have nothing to lose, making it difficult to change their position
  • Weakness generates public/media sympathy that can be utilized
  • Example: Party A doesn't know that Party B's chief negotiator lacks sufficient organizational strength

2. Expertise​

  • Expert opinion can convince or block the other party's arguments
  • Strategic Warning: Bringing in world experts only makes sense if the probability of the other party bringing counter-experts is low

3. Charisma​

  • Easy identification and admiration leads to willingness to imitate and broad support
  • Example: Bringing someone famous who doesn't need to be an expert but needs to be someone the other party can rely on

Sources of Power in Socialization​

1. The Power of the Written Word​

  • The party formulating the agreement draft has substantial advantage
  • The draft dictates the continuation of negotiations

2. Precedent​

  • Past commercial negotiation terms can serve as precedent
  • "Why should we accept less than others?"

3. Justice​

  • Belief in fairness and just demands becomes a power source
  • Encourages parties to harden their positions
  • Exists between states but not between companies

Negotiation Strategies​

Battle Strategy​

Characteristics:

  • "I'm on one side, you're on the other"
  • Aggressive pushing to the red line
  • Likely when one party is significantly stronger than the other
  • Negotiations are harsh and aggressive
  • The other party is viewed as an enemy or opponent

Tactics:

  • Threats, intimidation, breaking contact
  • Effective when there's no balance of power
  • Risk: Can escalate conflict if the other party responds harshly

Cooperation Strategy​

Characteristics:

  • Optimal results when both parties implement this approach
  • Neither party attempts to push the other to red lines
  • Parties of similar size and position
  • Focus on mutual concessions in exchange for achievements in other dimensions

Tactics:

  • Mutual consultations, concessions, promises
  • Results are optimal
  • Risk: Requires some disclosure, including revealing weaknesses

Combined Strategy​

Characteristics:

  • Parties use both battle and cooperation strategies at different stages
  • Stronger party starts aggressively (battle strategy)
  • When the weaker party is pushed close to red lines, switches to cooperation
  • Allows the weaker party to achieve some gains

Critical Warning: Avoid starting with cooperation and switching to battle at advanced stages, as this likely causes antagonism and may make the other party feel "offended" and leave.

Negotiation Tactics​

Tough Tactics​

1. Threat​

  • Expression of willingness to damage the other party in the future
  • Specifies conditions under which damage will occur
  • Effectiveness depends on ability to damage and degree of credibility

2. Intimidation​

  • Performing disturbing/annoying actions that cause immediate pain
  • Damage is felt immediately with no doubt about credibility
  • Example: Strike occurring during negotiations
  • Usually causes harsher reaction than threats

3. Assault​

Three methods:

  • Presenting positions aggressively
  • Attacking the other party's positions
  • Attacking the other party personally

4. Ultimatum - "Take it or Leave it"​

  • Problem: No way to back down ("climbing a tall tree without a ladder")
  • May anger the other party and cause resistance
  • Perceived as illegitimate or discriminatory

5. Stopping Communication/Contact​

  • Exiting the negotiation table, silence, temporary continuation, or consultation breaks
  • Heavy tactic that creates pressure
  • Counter-tactic: Other party can apologize for unclear communication, suggest social break, or request private one-on-one conversation

1. Temporary Negotiation Stoppage​

  • Limited time stoppage with established deadlines
  • Creates pressure, allows adaptation to initially unacceptable ideas
  • Pushes other party toward deadline when conflict cost becomes too expensive

2. Setting Deadlines​

  • Natural Deadline: Contract expiration, agreement expiration
  • Artificial Deadline: Determined independently as pressure means

3. Setting Daily Schedule​

  • Determines which issues will be discussed and time allocation
  • Creates time pressure for specific issues

Limited Authority​

  • Prevents pressure on negotiation managers
  • Allows patience, consultation before important decisions
  • Slows process until final decision
  • Related to Addiction Phenomenon

Persuasion Tactics​

  • Convincing the other party about factual situation
  • Appealing to reason/logic or emotions
  • Presenting facts and documents
  • Convincing that agreeing serves their interests
  • Convincing that their demands are useless
  • Persuasion through investment: Other party considers they've invested too much to justify withdrawal

Soft Tactics​

1. Concessions​

Approach #1:

  • Start with higher demands
  • Make minimal concessions
  • Set concession limits as high as possible
  • Don't give up

Approach #2:

  • One party ready to make concessions only if the other party also makes concessions
  • Higher willingness when:
    • Knowing the other party and empathy
    • Perceiving the other party as very strong
    • When both parties exert pressure
    • When managers believe agreement results are beneficial

Cultural Note: In Far Eastern and Muslim cultures, concessions may be interpreted as "weakness." Start with high demands and make slow, small concessions.

2. Active Listening and Promises​

  • Active Listening: Satisfies the other party's need to be heard and understood
  • Creates cooperative atmosphere
  • Gives the other party feeling of being understood
  • Promises: Expression of willingness to compensate the other party for "acceptable" behavior

Stages of the Negotiation Process​

Stage #1: Preparations​

Key Elements:

  • Data collection
  • Determining initial negotiation goals, including "compromise limits"
  • Schedule of priorities
  • Determining negotiation location
  • Time schedule, cultural characteristics, understanding influencing forces, market conditions

Confidentiality: Each party should not share preparations with the other party before negotiations begin.

Stage #2: Presenting and Rationalizing Initial Goals​

Key Elements:

  • Each party presents goals with appropriate explanations
  • Rationalization strengthens positions and persuades the other party
  • Tests extent to which positions may be accepted

Important Considerations:

  • Start with "social chatter" to create comfortable atmosphere
  • Build personal chemistry and mutual trust
  • Don't reveal all background details or power sources immediately
  • Be ready to "spice up" with additional details if needed

Stage #3: Bargaining Stage​

  • Each party applies various tactics to motivate the other party
  • Evaluates value of different alternative solutions

Stage #4: Conclusion Stage​

Key Elements:

  • Combining final proposals and agreements
  • Evaluating agreement by:
    • Cost-benefit ratio
    • Whether agreement is best result for both parties
    • Agreement durability

Types of Negotiations​

One-Time Negotiation​

  • No previous history/relationships between parties
  • No expectations that results will affect future relationships

Long-Term Ongoing Negotiations​

  • Both parties have complex sets of interests
  • Multiple ways to reach agreement
  • Fear of harming long-term relationships pushes toward concessions

Communication and Information​

The Difference Between Interests and Goals​

  • Negotiations focus on goals
  • Interests are motivation and driving force
  • Parties rarely fully achieve initial goals but can realize their interests
  • Solution achieved when interests are satisfied, not necessarily when goals are reached

The Nature of Conflict​

  • Conflict of interests arising from competition for limited resources
  • Conflict exists when parties perceive situation as conflict of interests
  • Subjective observation in parties' minds is important, not necessarily objective situation

Information Gathering and Processing​

Main Goals:​

  • Recognizing opportunities and foreseen risks
  • Identifying parties' strengths and weaknesses
  • Minimizing uncertainty
  • Result: Maximizing ability to make correct decisions

Data Categories:​

  1. Objective data
  2. Data on the other side
  3. Data on our side

Sources of Data:​

  • Questioning: Self-questioning, questioning other party, other negotiators, experts
  • Written Information: Official publications, stock exchange reports, annual/quarterly reports, audit reports, articles, interviews
  • Previous Negotiations: Information about possible lawsuits, negotiation methods, agreement types
  • Tests and Checks: Identifying other party's advantages and disadvantages
  • Intelligence Information

Difficulties in Data Collection:​

  • Contradictory Information: Ignored when contradicting adopted concepts
  • Complexity: Harder to remember = more likely to be rejected
  • Too Much Information: "Can't see the forest for the trees"
  • Prior Information: Can harm negotiation efforts and suppress demand levels

Emotions and Moods in Negotiations​

Advantages and Disadvantages​

Positive Mood:​

  • Mobilizes party to remember positive situations
  • Provides "credit points" to the other party
  • Increases willingness to be persuaded
  • More cooperation and mutual satisfaction

Negative Mood:​

  • Records "negative points" against the other party
  • More defensive approach
  • Deeper, more systematic data processing
  • Less trust and attention to other party's interests

Influence Mechanisms​

1. "Contamination" Assumption​

  • Emotions of one party generate similar emotions in the other party

2. "Signals" Assumption​

  • Through demonstrating feelings, negotiators understand the other party's intentions

3. "Incentive" Assumption​

  • Emotions serve as incentives to continue relationships or terminate negotiations

Practical Applications​

Positive Emotions:​

  • On Negotiators: More ready to be persuaded, process data less systematically, more cooperative
  • On Relationships: Positive signals interpreted as satisfaction, reducing worry about stalemate

Negative Emotions:​

  • On Negotiators: Less optimistic, more defensive, reject more proposals, process data more systematically
  • On Relationships: Dominant effect is rejecting proposals that could bring mutual economic benefit

Tactical Manipulation:​

  • Manipulative use of positive emotions is more acceptable than negative emotions
  • Pragmatic Level: Emotions signal need to change behavior patterns
  • Symbolic Level: Expression of negative feelings may symbolize absence of power balance

Cross-Cultural Negotiations: Focus on China​

Key Preparation Elements​

1. Translator​

  • Recommendation: Bring your own translator
  • Risk: Chinese hosts may provide translator who filters and reviews what's said
  • Use simple English, no slang or loose translations
  • Short sentences and professional translator

2. Material Preparation​

  • Prepare written printed materials for Chinese side before meeting
  • Chinese communicate well through writing/reading
  • Recommendation: Translate materials to Chinese with high-quality translation
  • Print in black and white only to avoid hidden meanings/undertones

Decision-Making Process​

Consolidating Decisions​

  • Most Chinese (except those raised in the West) rely on personal experience and subjective feelings
  • Important: Invest in building personal connections and relationships

Group Decisions​

  • Decisions made by highest-ranking leader but require consensus of negotiation team members
  • Group decision-making is common in China
  • Even quiet team members have contributing voice

Cultural Protocols​

Business Cards​

  • Position clearly written in both English and Chinese
  • Critical: Don't put Chinese business card in back pocket without reviewing it

Positions and Seniority​

  • Formal positions and responsibility definitions are very important
  • Coordinate and agree on positions and/or seniority levels
  • Throughout multi-participant meetings, only the most senior people will speak

Time Management​

  • Extending Time: Chinese tend to extend negotiations beyond schedules for strategic advantage
  • Patience: Chinese are champions at spreading time and insisting on unimportant details
  • Frequent Visits: May require many trips to China with significant expenses

Signed Contracts​

  • Important: Mutual contract signing doesn't mean negotiations are finished
  • Chinese view contract signing as beginning of relationship
  • After personal connection established: Chinese will honor and fulfill agreements completely
  • Personal chemistry and mutual trust often more important than the contract itself

Communication Guidelines​

Conducting Conversations​

  • Knowledge of Chinese Culture: Understanding language, culture, and history builds trust
  • Negative Answers: Being direct doesn't mean being polite
  • Better to say "I'll think about it" or "we'll see" instead of "NO!"
  • Losing Face: Chinese will modify facts or answers to avoid offending the other party

Preferred Small Talk Topics:​

  • Nature in China
  • Climate and geography in China
  • World tours, especially in China
  • Positive experiences during your stay in China
  • Chinese art

Topics to Avoid:​

  • Political issues: Taiwan, Tibet, freedom of speech and information

Strategic Considerations​

Key Principles:​

  • Talk around issues instead of solving them directly
  • Never show anger, always be polite
  • Use soft, gentle way of speaking
  • Use the other party's strength (like martial arts) instead of exploiting weakness
  • Provide "Exit Doors" for the Chinese party
  • Know when and where to exit the negotiation process

Progress Management:​

  • Effectively conduct progress in time
  • Chinese side interested in your schedule and limitations
  • Share when you must leave and if company management pressures you

Individualistic vs. Collectivistic Negotiation Behavior​

Three Key Dimensions​

1. Power Differences​

Low Power Distance (Western):

  • Independence, equality, and cooperation valued
  • More internal unity within negotiating group
  • One person dictates actions, others follow and obey

High Power Distance (China):

  • Significant dependence on will of superiors in hierarchy
  • Emphasis on coercion and power use
  • More pronounced internal unity within negotiating group

2. Uncertainty Situations​

High Uncertainty Avoidance (China):

  • Fear of surprises that may lead to concessions perceived as defeat
  • Key Feature: Seeking sympathetic member in foreign group to build personal relationships
  • Use feelings of goodwill, obligation, guilt, or dependency
  • Friendship = obligation to help friend
  • Through personal relationship control, gain more information and predict reactions

3. Individualism vs. Collectivism​

Collectivistic Society Characteristics:

  • High loyalty to group or society expected
  • Loyalty more important than efficiency or achievements
  • Personal goals sacrificed for group goals
  • Individual defined by group belonging, not personality
  • Honor expresses individual status in group's eyes
  • Honor has enormous significance in negotiation process

Negotiation Behavior Differences​

Goal Setting and Concessions​

Collectivistic Negotiators:

  • Don't rush to voice negotiation goals to other party
  • First seek to know other party and understand positions
  • Declare high, disproportionate goals and behave rigidly
  • Retreat from initial goals occurs slowly, heavily, and painfully
  • When other party doesn't accept high position, ask for counteroffer (usually higher)
  • Negotiations continue from higher price as new starting point

Relationship and Agreement Treatment​

Collectivistic Characteristics:

  • Important: Relationships that will develop after agreement signing
  • Focus not only on conflict resolution but developing derivative relationships
  • Written agreements signed at public ceremonies may embarrass collectivistic negotiators
  • Prefer informal agreements or agreements with interpretable principles
  • Agreement is beginning of relationship
  • Prefer "adaptable" agreements subject to future changes

Communication Behavior​

Collectivistic Style:

  • How message is communicated more important than oral message itself
  • Prefer to bypass questions, avoid precision, circumvent problems
  • Avoid direct confrontation with other party
  • Don't bargain on issues related to personal or group honor
  • High social status individuals typically don't bargain, even at high cost
  • Reason: Bargaining doesn't correspond to their high honor

Concept of Time​

Collectivistic Society:

  • Time accuracy, schedules, and efficiency don't matter
  • Most important: Social system and relationships between parties
  • When long-term relationships important, immediate short-term achievement less important than establishing mutual trust
  • Reasons for extending negotiations:
    • Need to show "good/conscientious" and rigid position representation
    • Need to receive and assimilate information as perfectly as possible
    • Fear of fast process leading to shameful mistakes
    • Desire to establish personal relationships
    • Absence of time pressure feeling
    • Tactical process dragging (intentional, expressing dissatisfaction)

Exam Preparation Guide​

Interactive Practice Tools​

🎯 Quizlet Flashcards & Practice​

Practice with interactive flashcards and matching games:

📚 Open Quizlet Flashcards

Interactive Matching Game:

Use these tools to test your knowledge of key concepts, power sources, strategies, and cultural differences.

Exam Format​

  • 20 questions
  • 1.5 hours
  • Only 3 possible answers per question

Question Distribution​

  • 17-18 questions: Not difficult
  • 2-3 questions: More sharp, requiring deeper knowledge

Key Study Areas​

1. Sources of Power​

  • External vs. Internal vs. Personal sources
  • Power sources involved with socialization
  • Focus: Understanding different categories and their applications

2. Negotiation Tactics vs. Strategies​

  • Critical: Correlation between tactics and strategies
  • Remember: If hard strategy → no soft tactics
  • Key Distinction: Battle vs. Cooperation vs. Combined strategies

3. Communication and Messaging​

  • Verbal vs. Non-verbal messaging
  • Critical: Non-verbal is stronger than verbal when there's conflict
  • Subtext understanding: Decoding hidden messages behind feedback
  • Cultural differences in interpretation

4. Emotions and Moods​

  • Impact of positive vs. negative emotions
  • Influence mechanisms (contamination, signals, incentive)
  • Tactical manipulation of emotions
  • Key Distinction:
    • Using time tactic: Pause negotiations and indicate return time
    • Tough tactic: Pause without setting return time

6. Cross-Cultural Behavior​

  • Individualistic vs. Collectivistic negotiation behavior differences
  • Focus on China: Specific cultural protocols and communication styles
  • Four key dimensions of cultural differences

7. Data Collection and Analysis​

  • Critical: Understanding true vs. fake data in current era
  • Process: Before and during negotiations
  • Ability to analyze and take actions based on data

Exam Tips​

Reading Questions Carefully​

  • Pay attention to: ONLY, ENTIRELY, RARELY
  • Be simple in approach
  • Reading the answer is the key

Common Question Patterns​

  • Sources of power identification
  • Strategy-tactic correlations
  • Communication interpretation
  • Cultural behavior differences
  • Emotional impact analysis

Strategic Approach​

  • Focus on understanding rather than memorization
  • Connect concepts across different sections
  • Practice identifying key differences between approaches
  • Be prepared for scenario-based questions requiring application of concepts

Additional Study Resources​

🎮 Interactive Learning Tools​

Quizlet Study Set​

Complete flashcards and practice tests for Cross-Cultural Negotiations:

🚀 Start Quizlet Practice

Features:

  • 📝 Flashcards: Review key terms and concepts
  • 🎯 Learn Mode: Adaptive learning algorithm
  • ⚡ Test Mode: Practice with different question types
  • 🏃 Match Game: Speed-based concept matching
  • 📊 Progress Tracking: Monitor your improvement

Additional Visual Elements​

Illustration Placeholders​

[ILLUSTRATION PLACEHOLDER 1: Power Sources Framework] Visual diagram showing the relationship between external, internal, and personal power sources, with examples of how they interact in real negotiations.

[ILLUSTRATION PLACEHOLDER 2: Negotiation Process Flow] Step-by-step visual representation of the four negotiation stages, showing key activities and decision points at each stage.

[ILLUSTRATION PLACEHOLDER 3: Cultural Communication Styles] Comparison chart showing verbal vs. non-verbal communication patterns in Western vs. Eastern negotiation contexts.

[ILLUSTRATION PLACEHOLDER 4: Emotional Impact Matrix] Visual matrix showing how positive and negative emotions affect negotiators themselves vs. their relationships with other parties.

[ILLUSTRATION PLACEHOLDER 5: China Negotiation Protocol Timeline] Timeline showing the typical progression of Chinese negotiations, from initial contact through contract signing and implementation.

This comprehensive guide covers all major aspects of cross-cultural negotiations, with particular emphasis on the China-focused content and cultural behavioral differences that are likely to appear on your examination.