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Negotiating an International Deal? Better Know Your Cultural Cues

August 28, 2017

How much do you really know about your influencing and cross-cultural communication abilities? If the answer is “Not enough,” or “I’m not sure,” then professors Denis Leclerc and Thomas Kull can help.

Leclerc, a Thunderbird professor of cross-cultural communications and negotiations, and Kull, a W.P. Carey associate professor of supply chain management, have designed a four-day course to help mid- to senior-level managers improve their influence and negotiation in global and cross-cultural settings.

The Oct. 2-5 course, Strategic Global Influence and Negotiation, uses hands-on practices to equip attendees with the skills to successfully and comfortably influence and negotiate with diverse customers, suppliers, business partners, stakeholders and employees.

In the first of two Thunderbird Knowledge Network Q&As, Drs. Leclerc and Kull share observations about these essential skills for globally focused business leaders:

Q: Many managers are already experienced negotiators. Does a global setting require a different skill set?

Leclerc: Global negotiations have a lot more context that requires people’s attention. Cultural differences add a variable into the dynamic of negotiations. Your communication style has to be to the point, clear, and have an understanding of the nuances of cross-cultural negotiation. In the beginning, most managers do not foresee these added layers of complexity. And so that layer of complexity then becomes exponential.

Kull: Typically, when you start reaching across borders, negotiations involve multiple parties. There’s a broker, there’s authorization required for certain transactions, there’s commercial or even currency hedging. Whether it’s a business transaction or an NGO type of negotiation, there will be multiple parties more often in a global setting. What’s left out of almost all negotiation training is how to deal in a multi-party environment. So that’s a unique aspect we bring to our course. It’s a valuable skill for domestic negotiations, but it’s an essential skill in a global setting.

“What’s left out of almost all negotiation training is how to deal in a multi-party environment.” Click to tweet

 

Strategic Global Influence & Negotiation
October 2-5, 2017 | Thunderbird Campus

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Q: With globalization impacting businesses everywhere, are these skills now mandatory for business leaders?

Leclerc: You’ve got to have educated negotiators at the table. What happens is people might be aware of some of the pitfalls, but at the same time they really do a poor job in the preparation and the post-negotiations. People believe that the negotiation is what happens at the table, but that’s only one part of the cycle. It’s also what happens after the negotiation. And some organizations train their employees very well because negotiations are a core function of their business. But most organizations still see negotiations as “Oh, it’s sales.” Or it’s handled ad hoc because “everyone does it, so we don’t really need training.”

Organizations right now are into leadership and abilities and other concepts, but they don’t realize that training people in negotiation allows them to touch multiple layers, with internal negotiations and external negotiations. I think organizations today are doing a better job, but there’s still a big gap between what people are capable of doing and what they are actually doing. One of the questions I always ask is, “Do you know how much you have left on the table?” And people don’t know, and there is no training for that. So that’s where we are trying to help. We want them to have a better understanding of the complexity of negotiation and the concept of sharing a common language in the negotiation.

Kull: There’s a technical side of this that’s also changing the landscape, and that’s the transparency that has arisen in supply chains and people’s concerns about how things are made. In 2013, a garment factory building collapsed in Bangladesh and killed over 1,000 people. It also destroyed many brand images. This was not only a human tragedy but a failure of negotiation, because if you look back at the deals and arrangements that were made, many of the companies purchasing from these suppliers did not specify at all and were not even considering the possibility these garment manufacturers were subcontracting to other manufacturers with those operating conditions.

It’s a vulnerability that is due, in part, to some ignorance about what is possible. Companies may also be dealing with different values in different countries. But they make promises and set up delivery dates without factoring all of this in. How does that affect the deal you’re making? Effective negotiations require training, preparation and understanding.

“People believe the negotiation is what happens at the table, but that’s only one part of the cycle.” Click to tweet

Q: Can you share other examples from the business world of problems caused by a lack of cross-cultural negotiating or communications skills?

Leclerc: I’m thinking back on a great example of failure in a negotiation of a merger, which was Dahmler-Chrysler. The two entities never agreed on the intangibles of the negotiation -- what would they get out of the partnership? So it worked for a little while but then totally imploded because what was supposed to be negotiated was not understood. The American side was negotiating on the manufacturing speed. And the Germans were negotiating on quality of the product. But none of it was clearly stated. If you watch the very first video of the two CEOs standing together on stage, you can see clearly on their faces that they are signing a contract one side is not happy with.

Kull: In the late 1990s, I had a firsthand experience working with an American steel company that was negotiating a complex deal with a Japanese company. Everyone thought an agreement had been reached for the Japanese supplier to use steel from the U.S. steel company. I was there, and I truly thought I saw agreement … we heard a lot of “yes” and other affirmative indications. But about three months into it, we realized that this agreement was never made. No one ever signed anything, we weren’t getting any new orders, and they were still using their existing steel supplier.

So there was some immaturity among the players who had never dealt with this combination of factors, and that included the cultural norm of saving face by not really saying “no” in front of everyone. We didn’t understand that at all.

Thunderbird's Strategic Global Influence and Negotiations course is designed to give global managers the insight and skills needed to successfully navigate negotiations in cross-cultural settings. With a combination of discussion-based training, real-world cases and immersive hands-on experiences, the program provides the know-how to enter international negotiations with the critical understanding of how cultural nuance affects the negotiation process.

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