Globalization has led to an exposure of a very large market. The large market in return offers a great variety of goods and this makes the businesses competitive; thus making the suppliers and the demanding parties learn intercultural negotiations and build relationships that will enable the smooth flow of goods and services across different cultures (Fisher & Saphiere, n.d.).
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Advantages of intercultural analysis include delivery with minimal preparations and minimizes surprises that may spring up due to the cultural differences.
The success of any international business depends on how well the negotiations are done. They need to be well prepared and well understood to both parties in order to achieve good international businesses (Numprasertchai, 2006). Cultural diversity is one of the most unavoidable situations in the process of international trade.
Cultural activities do influence international businesses in different ways through out the process. The different cultural values calls for different negotiation approaches for example negotiating with a communist is not the same as negotiating with a capitalist though most of the times there are no pure capitalists
Values: across different cultures people have different values for example while the Americans are characterized by strong individualism the Chinese are characterized by strong collectivism. This is more due to the fact that the two countries have different economy systems with the Chinese being characterized to communism while Americans are known for capitalism
Cultural differences on conflict management: since the Chinese are more collective they prefer to use indirect ways avoiding direct confrontations and prefer using those in administration to solve the crisis while the Americans prefers confronting others with arguments and facts if available. While Chinese prefer long-term relationships Americans prefer short term and after the results are achieved the contracts expire.
The Chinese managers are characterized by risk avoidance. They prefer safer and less risky businesses while the Americans consider risks as ordinary thing that will have to be experienced naturally (Zigang & Zhang, 2004).
Joint ventures open opportunities for increasing the market with other non established economies, economies of scale, geographical constrains and break down of barriers to entry into the market and generate higher revenues in shorter period of times (Allen, n.d; Vaughan, n.d).
The Negotiation Process
The negotiation process constitutes of three stages: pre, actual and post negotiations. The pre-negotiation stages entails involves groundwork and scheduling. The actual negotiation is the vital among the three that consists of interaction, building trust and formidable relations which focus on the main aims of negotiating. It is usually face to face interaction while post negotiations relates to agreements or concessions evaluation and follow up.
Managers should embrace cultural diversity. Any deviation from their culture or from their way of doing things is seen as an error or a distortion to the truth (Kottoli, 2006).
Starting a Joint Venture
When two individuals come together to carry on an economic activity and share the risks involved which may be for an unpredictable or a known duration then the individuals are said to be in a joint venture (Vaughan, n.d).
Before starting a joint venture several things run through the minds of the company managers and among them the following are vital to consider:
Map the players and the process
In any deal it is always advisable to know who is involved in the decision making process. In most of the companies it is a well known fact that beyond the managers there are some other individuals behind the scene who may influence the deal. When making a deal with Chinese it is always an important fact to note that local party officials play great roles in negotiations even when the company is private (Sebenius, 2002).
In the same case when dealing with European countries you may have to pass through several commissions established by the EU. The joint ventures are then scrutinized to fulfill the Union’s requirements.
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Who decides what?
The management of the company is divided into various dockets with each docket having its’ responsibilities for example, when dealing with a German company its corporate governance provides structures in which some other players in the industry can block the will of even the majority shareholders. Thus, though the shareholders may agree on a joint venture some senior statesmen like the labour unionists can bar the merging.
Who owns certain decisions?
Structures within a company blind many corporate suitors all over the world an example is given about the Honda car makers invested heavily with the British maker Rover.
The two companies had a good relationship but when the government sold Rover to British Aerospace, (BAe) rover continued losing money the BAe ended the relationship and sold Rover to BMW through a secretive deal that Honda was not aware. The Japan carmaker had invested much in the company they had not taken to the fact that decisions rights over Rover were vested on BAe (Sabenius, 2002).
Informal Influences that can Make or Break A Deal
For any deal to be a success it is always advisable to understand the guys responsible for signing the agreement but more to that many countries have networks of other rich and powerful people who influence the decisions in a company though they may not have a formal relationship with the company. In Japan when making a merger you may consider the industrial groups that are linked by a web of ties, shareholdings among others. In Italy it may be the powerful rich families, in Russia the Mafia and so on.
Adapt to your Approach
When negotiating you seek to influence the outcome of an organization. This process is always different among cultures and may call for diverse negotiation strategies and tactics. When making a negotiation depending on whom you are dealing with you may choose consensus, coalition or the Top down approach where you make the deal with the boss him or herself.
A good example was when the Italian Industrial products sought to acquire a large proportion of a French business trying to make friendly overtures with the management it did not bear fruits thus the Italian chief went quietly to the top and made the deal with the boss.
Consensus seeks to reach an agreement between the two parties for example what happened between the consortium of USA companies proposed to build a dam in China they had to hold a consensus with the Chinese in order to reach to an agreement (Sabenius, 2002). Coalitions are created so as to accelerate customers’ ability to access goods within a wider pool.
Ending a Joint Venture
International joint ventures can end unexpectedly for various reasons among them if the purposes for the establishment are reached or if any unexpected contingency arises (internally or externally) and the contingency impedes the continuation of the venture (Beamish, 2009). Thus, it is always advisable to take into consideration any unexpected factor that may arise and affect the continuation of the joint venture and try and find ways of managing the arising contingency.
We can conclude that intercultural projects cannot be determined in advance since it depends less on the parties you are negotiating with than the way you plan the project and on how to implement. As a project manager your main role is to overcome all cultural obstacles that may come your way as you try to negotiate any business. One has to be cultural sensitive and create an environment which can encourage the business negotiations to continue (Chevrier & Claes, 1996).
It is also important to conclude that in the verge of expansion and creation of joint ventures there is more to what meets the eye; the challenges involved and the procedures to be followed for a joint venture to be successful as noted above. Know your partner well and avoid surprises.
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Beamish, P. (2009). Joint Ventures and Alliances. Web.
Chevrier, S. & Claes, L. (1996). Intercultural Project Management: Melting Pot Dream Or Tower Of Babel Nightmare. Business life seminar. Web.
Fischer, M & Hofner, D. (Not dated). Navigating the Rough Seas of Intercultural Negotiation. Web.
Kottolli, A., (2006). Challenges of working across cultures. Web.
Numprasertchai. H. P. (2006). Dimensions of Success in International Business Negotiations: A Comparative Study of Thai and International Business Negotiators. Web.
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Spangler, B. (2003). Positional Bargaining. Web.
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