Business Negotiation Process in a Multicultural Context

Published: 2017-08-22 11:20:56
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Sewanee University of the South
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Abstract

Culture is an innate characteristic of every human being. It is from our culture that we identify and judge ourselves, our environment and circumstance and the people and events happening around us. The spread of globalization has made world business a boiling pot of the various cultures that. It is against this backdrop that we seek to investigate how this multiculturalism impacts on business negotiations, how to mitigate the effects. Communicating in a multicultural environment has many challenges, the different world views that the various cultures project upon the world proving a constant hindrance that bars successful business in spite of the closed divide in socio-cultural and geographic spheres. This study will explore the various ways in which diverse cultures have adapted to the heterogeneity that shapes the world business arena in modern times, the various challenges that that has brought along. The study will also attempt to project how the future business negotiations will evolve in multicultural contexts in the future

1.0 Introduction

 Culture is a complex whole that incorporates the knowledge, beliefs, arts, morals laws, customs and any other traits and abilities acquired by people as members of the society. Language and the many elements of nonverbal communication transmit the elements of culture so subtly that one is even not aware of the fact that their actions are -in many cases- in response to cultural norms.

Business negotiation is the communication that takes place in business before a transaction is done to settle on the terms of the transaction, during the transaction to facilitate the transaction and after the transaction is finalized to secure future business opportunities. In the modern world, advancement In International business, the task environment is larger and more complex. It has to deal with increased number of customers, suppliers, competitors, allies and regulators. Most important to consider is the fact that they all have varying rules, personal values and beliefs. The international business comprises of the socio-cultural, political/legal, and economic and technological factors. These general environments contain the four major forces in international business negotiations.

Once born into an individual culture and having been socialised there it is practically impossible that one learns all or another culture and completely ignores his own. It is also very practical that business negotiations have to take place in an international setting given the significant economic developments in the world. Business negotiations in a multicultural and global context as expected come with a pack of setbacks in the form of the various communication barriers that are ever present whenever there is a meeting between two different and unrelated cultures.

In the multicultural sphere, negotiators must effectively plan the organization, direction and control of the different communication functions in the various cultures under their purview. Whether working in a familiar or a new culture, multicultural negotiators must learn to deal with forces that influence business negotiations in other cultures.

The first part of this paper is the introduction. Here, an overview of the paper will be provided. The main concepts that will be explored in the paper will be previewed. The second part of the paper will be the literature review. The literature review section will entail a summary of all extant work that is pertinent to the study. The main ideas that have been postulated in such works will be examined and summarized. The research will also explore the gaps that have been left for study in such works. The second part after the introduction will lay out the theoretical framework of the paper. Here, the theories that will guide the research will be explored and explained.

The strength and weaknesses of such theories and their applicability towards this study will be explored. The theoretical framework part will be critical as it is the theories that will be explained here within that will be used in the analysis, interpretation and the understanding of all the data and materials that will be employed in this research. The third part of this paper will explore the primary concern of this paper, how business negotiation is against multicultural context and how cultural disparities can impact business negotiations. The penultimate, maybe last part of this paper will lay out the conclusions of the paper and attempt to offer recommendations that could guide negotiators in navigating through multicultural business negotiations in the future.

2.0 Literature Review

Presently, all aspects of a scientific social and mental life are subjected to rapid and accelerated growth owing to globalisation. Cross-national and cultural communications increases rapidly and in the recent past emphasis has been placed by researchers on the importance of awareness of the varying cultural norms as globalisation has brought about a rising trend that necessitates communication with people from different cultural backgrounds (Ablonczy-Mihalyka, 2009).

To study this problem, its critical to realise that communications rules and norms between communicators with different background and cultures have changed and that different cultures have varying values perceptions and philosophies. Negotiators working in a multicultural setting are impacted on by more than one culture, and this impact has a significant effect (Ablonczy-Mihalyka, 2009).

The term culture, whenever it appears in any communication context, especially in the context of business negotiations often throws up problems that hinder the success of such communication. Culture and cultural differences breed mistrust between negotiators (Palgrave Macmillan, 2003). The fact that different cultural socializations inherently imply different communication templates and this in it provides a tricky barrier for the negotiators who have to navigate through negotiations with counterparts from other cultures. According to Louhiala-Salminen et al. (2005, 404) in multicultural situations, the various cultures of the interactants interact with and influence encounters which in turn influence the nature of discourse. In the above-mentioned work, Louhiala-Salminen et al. point out that it may be difficult to differentiate between the impacts of national, corporate or organizational cultures on the course of business communications. In international and multicultural communications, corporate and organisation cultures are often the root of the multicultural challenges faced by negotiators.

3.0 Theoretical Framework

In the concept of business negotiations covering a multicultural field of operations, there are important theories that best explain the workings and operations of the sector. They provide a workable platform for studying the operations. There is therefore, have a standardised base from which we can understand how the problem of multiculturalism affects the course and discourse of negotiations. Previously postulated theories and hypotheses have attempted to define and explain the relationship between multiculturalism and business negotiations and have also attempted to offer recommendations and solutions to the problems that hinder such endeavours to optimize the efficiency of business negotiations in a multicultural environment/context.

The theories that have been postulated in the field of international business attempt to explain the complex situations and problems that arise within the sphere of business communications in a context of multiculturalism. One of these theories is the game theory. The theory states that business negotiations are like a game in which there can only be one winner. As such, whatever one party wins or gains is what the other party loses. In a negotiation, the outcome is not only dependent on the strategies employed by the negotiator (which can be one of many) but also upon the strategy used by the opponent. The theory builds upon the min-max theory in which the primary objective of the opponent is to increase the gains that accrue to the negotiators side in the discourse while at the same time reducing the amount of ground that will be ceded to the opponent s side. However, the min-max strategy causes problems as it assumes that the opponents have perfect information of the business negotiations and the other sides position. However, such an assumption is based on illusions of business taking place in an ideal world, a perfect world that is not the case in real business transactions and the accompanying negotiations. Also, it is more limiting because of the inherent challenges that come along with negotiations in a multicultural context. Reducing variables when negotiating in a multicultural context is almost always advisable for negotiators. This strategy simplifies the course of communication and limits the agenda of the negotiations to include only what the negotiators intend to achieve while limiting the challenges that accompany negotiations across cultures.

Bargaining in an international business forum is challenging as negotiators socialized in different cultures have differing expectations on the outcome of the negotiations. Negotiators will be inclined to jump into conclusion and concede to conventions based on their world view. The reason for this is that negotiators will want to succumb to their notions of fairness and follow the precedent that has been imprinted on them by culture.(Sattel, 2009) This makes multicultural business negotiations a maelstrom of varying cultural templates that make it a challenging field to navigate.

Promises and threats made in the course of multicultural negotiations are bound to be judged with suspicion and mistrust that characterises integrations in a context that has two or more cultures. Negotiators often enter negotiations with expectations that the result will make things better for them and their teams. The opponents similarly harbour expectations of positive results for their team. Navigating business negotiations in a multicultural environment, therefore, involve a mixture of cooperation and competitions and binding commitments have to be made.

4.0  Main Content

In the process of business negotiations that take place across the international borders, the negotiations are bound to be affected by the significant environmental factors surrounding these business proceedings. On a broad view, these environments are inclusive of the social-cultural dimension, the political/legal frames for operations and the economic status of the negotiators (parties) and the technological standards of the two negotiating partners. This paper will explore in details how these environmental factors form a barrier that hinders business negotiations in a multicultural field.

4.1 Social-Cultural Environments

Socialisation is a way that an individual is introduced to fit in a culture/the peoples way of life. This environment renders people with different expectations and points of view of the same phenomena. It is from this environment that an individual forms a worldview and the template with which he interprets the world around him. International business deals are not only carried out across borders, but they also take place across cultures, and this places an onus upon the negotiators to understand the different socio-cultural environments. Negotiators from varying cultures may view the intent of negotiations differently. For some negotiators, the purpose of negotiations is to achieve a signed commitment while for some negotiators may view the goal of such negotiations as a means to create a lasting relationship with a new ally or partner. For some cultures, the relationship that is created is more important than the signed contract while the written agreement is more important to others. The socio-cultural environment also breeds differences in the attitudes of negotiators from different cultures. These differences shape the way in which the negotiators approach the negotiating table. For some, deal making is supposed to result in a win-win situation for both parties while for others; the deal should result in a win for them regardless of the other parties gains or losses. People socialized in different cultures have different approaches and notions about deal making, for some cultures, it is a collaborative problem-solving process while for others, and the negotiating table is a confrontational field of war.

Individuals are different. Every person is unique in their way. It is also an additional factor that their individuality is affected and influenced by the socio-cultural environment in which their worldview is shaped. Their approach to business negotiations is also different depending on their socialization. This is critical in determining the requisite levels of decorum, the expected etiquette, their style of interpersonal interactions, their mannerisms that will all manifest in the context of negotiations. The use of titles, gestures and bodily contact, for example, the shaking of hands, the manner of dress, speech and the observation of personal space and interact with the other person. This forms the negotiators personal style that is a product of their socializations. It is thus the responsibility of cross-cultural negotiators to study and familiarize themselves with the cultures of their counterparts to ensure smooth negotiations devoid of cross-cultural mishaps.(Palgrave Macmillan, 2003)

4.2 Political/Legal Environment

 Political systems in the world can be classified along a continuum with democratic governments in one end of the range to totalitarian regimes that characterize the other extreme. Business negotiators have to be familiar with the prevailing political and legal environments with which they intend to negotiate to overcome that barriers that are may arise due to differences in political and legal systems in the home cultures of the negotiators. In democratic regimes, the people often have a voice and can decide what happens in the economy through popular choice. In such countries and cultures, the legislative assemblies are composed of democratically elected representatives. In such a regime, therefore, it is possible to influence major decisions through lobbying and the same attitude boils down to business interactions. However, in totalitarian regimes, power is often concentrated in the hands of a few, and it is harder to influence decisions using the methods that work best in free and democratic regimes. The political and legal differences across cultures also determine the stability and sustainability of agreements and commitments entered upon by members of such cultures and are thus a critical factor to consider when approaching business negotiations in a multicultural context.(Palgrave Macmillan, 2003)

4.3 Economic Environment

The economic conditions prevailing in the cultural backgrounds of multicultural negotiators play a big role in shaping their varying stances at the negotiating table and in their understanding of their negotiating counterparts. The economic environments of the negotiators are what determine what each negotiator views as a win or again for the team. The economic context of the negotiators also determines what sort of regulation that the negotiator is accustomed to (Hooker, 2008). In some countries and cultures, the market is tightly controlled by the government while in other cultures; the market is controlled by the invisible forces that are better known as laissez-faire.

4.4 Technological Environment

In the twenty-first century, the levels of technological advancement across different cultures are different. Some cultures are highly developed and are up to date regarding technology while some cultures make do with technology that would be at best classified as rudimentary and crude by others. These differences in technology provide differences in the modes in which negotiations can be carried out, the speed at which such negotiations will yield results and will also shape the expectation that the negotiators will have while approaching the negotiating table.

5. Conclusion

The study has attempted to examine the problem of business negotiations in a multicultural context and the challenges that are inherent in such an endeavour. The paper has defined the limits that multiculturalism places upon business negotiations and the impact that such limits have on the success of the negotiations. The paper has explored the various determinants of culture such as the social, political, legal and economic environments and the significance of these determinants in approaching business negotiations in a multicultural context. The study has also attempted a summary of the extant work that is relevant to the topic and problem and has used the knowledge gained in such works as a foundation upon which this paper was built. Though a challenging and tricky endeavour, this paper has shown that with the right application of the right principles, multicultural business negotiations can be negotiated with ease and could give positive results to each of the negotiating sides.

References

Ablonczy-Mihalyka, L. (2009). Business communication between people with different cultural backgrounds. Conference of the International Journal of Arts and Sciences.

Hooker, J. (2008, DECEMBER ). Cultural Differences In Business Communications.

Jon L.Pierce & Randall B. Dunham. (2006). Managing. 

Palgrave Macmillan. (2003). The Global Negotiator: Making, Managing, and Mending Deals Around The World In The Twenty-First Century. 

Sattel, G. (2009, November 29). A Guide to Game Theory Negotiations. Digital Tonto.

W.Salacuse, J. (2005, March/April). The Top Ten Ways That Culture Can Affect International Negotiations. Ivey Business Journal.

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