Secrets of International Negotiations

Anna A. Ovcharenko

Corporate culture importance

Since the world community entered the third millennium, global changes have taken place in its structure. As we know, mobility has become the key point in many business fields. Today ways of organizational management of the company has also changed. The modern employer can choose another company easily if he’s not satisfied with its work terms. In conditions of Ukrainian business the catalyst for changing job is the financial side, namely salary, bonuses, various social programs.

National companies that aspire to increase and hold their international market share should understand the importance of international connections. Corporate culture is the valuable intellectual property of a company that makes it unique on the market, forms a team of faithful employees and increases its adaptability to external factors. Moreover, it’s practically impossible to copy it. The latest tendencies show that cooperation, M&A, development of international projects and different international ways of collaboration are especially priority-driven on the Ukrainian market now that is widening all the time and has externallyoriented focus in spite of the political and economic crisis.

The goal of any law company interested in collaboration is to receive positive results from the readiness of a potential partner or client to cooperate. The initial stage of such collaboration includes just negotiations which affect the outcome of project implementation or providing legal services. There is no doubt that during this stage different representatives of corporate culture, including organization and national diversity, collide. That is very important to study them at international level.

Conflicts on negotiations

Keith Ferrazzi, СЕО of famous consulting company Greenlight, former marketing director of Deloitte Consulting, who raised its brand in the list of world ratings and according to the Forbes publication is “one of the most sociable people in the world”, considers that: “Lot of negotiations could be hold with great success if both parties spoke about what they wanted frankly and honestly. Even if there is some disagreement in positions then people will appreciate with greater regard a person who put all chips on the table”. Unfortunately, this practice is very rare in the modern world, where cross-cultural secrets of international negotiations take special place. Misunderstanding or ignoring another culture often bring negative results (non-signing of the most important agreements, losing investors, increase in losses, delay of different business processes, etc.) and provoke a number of conflicts because of:

a) Miscommunication. For example, the visible kindness and consent of Japanese are not confirmation of the positive outcome of negotiations. This is just a cultural feature, namely not to offend the interlocutor and to avoid the word “No” in their language;

b) Mistaken ways of contractual functions. Famous American manager Richard Gesteland emphasizes the importance of recommendations of a familiar person for a potential company-partner, or at least acquaintance at an international exhibition or conference for Chinese, Japanese, Arabs, Turks, Mexicans, Russians, Poles, Romanians and Slovaks. At the same time, initially the availability of an informative letter with appropriate suggestions and ensuing phone call according meeting arrangement for most Americans and Canadians is sufficient;

c) Wrong choice of negotiating language. Despite the fact that English is considered the world’s language of negotiation, it would be a great mistake to use it with the French. French people will appreciate correct French, usage of translator’s services during negotiations or copying, even if both parties knows English well;

d) Bad preparation. Excessive thrift often leads to appointment of inexperienced employees to important posts, to ignoring the assistance provided by specialists, consultants, to minimizing of business trips which, after all, doesn’t stimulate the development of long-term relations with partners;

e) Ignoring the time factor. Frequently optimistic expectations of the results of cooperation with foreign partners as well month-long efforts, that don’t produce an initial effect, make companies back out of intended plans. While a medium-term strategy with float is necessary especially to plan the cooperation with the Chinese, Japanese, Arabs, Turks and Mexicans. Time attitude is also important in this matter. Thus, especially punctual cultures such as the Germans, Americans, Australians, Canadians, Englishmen, Norwegian, Swedes, Dutch and Czechs are faced with the problem of misunderstanding of “devil-may-care” time attitude the Arabs, Turks, Greeks, Brazilians, Filipinos, Indians, Bangladeshis and Mexicans (e.g., 15 minute delay is normal);

f) Using ineffective methods of verbal and non-verbal communications. The increased contact level (small destination between interlocutors, tactile contact, intensive eye contact, high gesticulation) of representatives form the Arab world, countries of South America and South Europe will induce a negative reaction from natives of most countries of Western Europe, Scandinavia as well as North-East Asia. It’s very important to know body language. For example, the left hand in Arabian countries is considered to be dirty. It’s also refers to the bottom of shoes that shouldn’t be shown during the crossing of legs;

g) Non-observance of business ethics. It’s necessary to pay attention to the ethics of behavior with women in the USA and many countries of the East (for example, when a woman gets up men should also rise from the table). It’s advisable to give special attention to business cards and rituals involving its handing that are critically important, e. g. for the Chinese, Japanese and representatives of Asian countries.

Effective preparation for negotiations

It’s necessary to prepare a short portfolio about the other side to avoid above-mentioned negative situations and to reach the most favorable goals for the company and to reduce possible losses prior to the start of any cooperation. This portfolio includes:

Characteristics of company activity: analysis of business environment (political interests, economic situation, features of legal control), principal functioning rates for the last 3 years, company management, its interests and priorities, key partners and competitors.

Personal interests in collaboration: development of draft strategy, its positive and negative sides; key goals; shares of participation; calculation of cooperation benefits and losses.

Person in the company responsible for making the final decision: position, main identification data, employment record, personal traits, nationality, professional development, ways of acquaintance and influence on him.

Representatives of the company with whom negotiations on cooperation will be held: position, main identification data, employment record, personal traits, nationality, professional development, corporate culture features of the group (team).

Features of corporate culture of potential partner (example of partial analysis is made in box 1):

a) national features of corporate culture:

— specialities of establishing contact (by Internet, electronic letters, phone calls, recommendations of familiar person for the partner or VIP, official letter by dispatch, acquaintance at exhibition, conference, previous meeting in informal setting, use of translator’s services, etc.);

— description of communications (level of expression, features of verbal and non-verbal contact, specificity of context in dealings);

— attitude to time (level of punctuality, respect to opponent’s time, time-management);

— value of status (level of status respect, ethics of communication between representatives who have different status);

— importance of observing negotiation schedule (precision of adopted timetable following, negotiation rituals, features of tenders, handing of business cards and gifts);

b) external analysis of corporate culture of potential partner (extolled values, strategy of activity (focus on market demand and adaptability or company’s needs, internal processes and stability), policy of personnel management, features of vertical-horizontal communications, internal climate, corporate symbols). It’s a good idea to confirm it with reliable information obtained in the company because often anything which a company pronounces is insufficient.

Modeling of negotiating behavior (importance of team or work group building, overvaluation of primary price, features of presentation preparation, development of negotiating strategy (cardinal strategy — aggressiveness-passiveness; standard strategy — compromise between subtle and hardline approach; stra-tegy of principal negotiations — search for mutually-beneficial results, in case of divergence of interests to make a decision involuntarily).

Preparation of successful international presentation:

— choosing the presentation language (choice of key language, use of translator’s services and right expressions, polite compellations);

— style development (aggressiveness (Americans, Canadians), restraint (English, Finns), artistry (Italians), reasoning and formalism (Germans, Japanese), focus on facts (Americans, Dutch);

— observance of time-limit (delimit and expose to sound time frame, conciseness of speech, careful preparation of introduction);

— noting of presentation goal and problem (outline the current position, suggest possible strategies and their positive and negative sides, emphasize barriers and the way of suppressing or overcoming them: who? where? when? how?);

— use of effective ways of presentation (accent on facts, handouts, electronic presentation, slides; usage of examples; following the basic idea of performance; reducing details and insignificant problems).

8. Study of contract signing features and solution of other law questions.

Features of Ukrainian corporate culture

Foreign as well as national businessmen should pay attention to some features of Ukrainian corporate culture. This knowledge will help to increase the effectiveness of mutually beneficial cooperation.

Acquaintance via a familiar person for the company or via the firm with which it coope-

rates and has strong business connections during a personal meeting, at a conference or at a specially organized exhibition. Personal acquaintance and connections are the first priority. It’s essential to make acquaintances in government or some ministries, taking into account corruption, bureaucratic barriers and intentional delay of business to receive money or to lobby the interests of another company as well the high risk of corporate raiding.

Variative expressiveness, which means initial restraint in manners; using direct and open speech with a low level of context; direct eye contact.

Although culture is distinct with moderate punctuality, it’s necessary to come to negotiations on time, even with small margin to have time for preparation.

There is focus on difference in status, which requires a special attitude and manners with representatives who are higher in temrsterm of rank and older.

In the event of negotiations it’s necessary to be ready for unforeseen situations. For this purpose several additional variants of handout material should be prepared in advance, primarily showing the main advantages of parties; all possible questions that can arise during negotiations and the ways of solving them must also be worked out. During bargaining on shares of participations in a project and profit-making it’s essential to begin with an initially overinflated price so as to reduce it later.

Role of cultural component in business

As we know, any market relations allow the presence of a seller and buyer. Frequently just the seller concerns the buyer or advantageous business partner whose interests should be prio-

rity. In this case the organization especially needs to study corporate and cultural regularities of negotiations with the exact client to make an appropriate impression and stand out from other competitors.

To define the role of the features of one’s own corporate culture and one’s partner is perhaps not so notable as profit-making or achievement of definite rates because of the complexity of their quantitative calculation. But the practice of considering their priority can result in a rise in profits, an increase in the level of synergy (when 2+2 equal not only 5 but even more), retaining employees who are valuable for the company, productive and long cooperation with clients. This experience can be traced in such companies like General Electric (quality program Six Sigma and corporate culture of Jack Welch), Toyota (Toyota production system), Ford Motor Credit (corporate policy of the company that provides appropriate financial consideration, work consisting of teams and further training), joint venture of General Motors Corporation and Toyota Motor Corporation NUMMI (new principles of competition and cooperation based on self-management), etc.