Cross-cultural negotiations are rife with challenges as diverse groups come together to reach a mutually beneficial agreement. Because of this, cultural competency is becoming a ‘must-have’ in the business world due to the intricacies involved.
This essential skill helps you navigate complicating factors like:
Modern technology has drawn the world together in ways never before dreamed. People can effectively communicate with each other worldwide using services like Zoom, Slack, and more. And now, the social benefits of engaging with other cultures and perspectives have enticed American businesses to enter international markets.
For example, giant corporations like the NBA and Marvel are currently striving to gain a strong and strategic foothold in China. But to do that successfully, they need to carefully balance competing cultural beliefs, values, and biases.
Cultural decision-making often hinges on behavior and core beliefs, meaning that cross-cultural agreements are frequently reached in vastly diverse ways.
At RED BEAR, we understand the importance of approaching cross-cultural negotiations with confidence and proper planning. Our methodology, rooted in the fundamentals of negotiation, gets results. For every dollar invested in our workshops, our client’s receive, on average, $54 back. That’s the power of effective cross-cultural negotiation training; that’s the power of RED BEAR.
Let’s explore cross-cultural negotiation and how we can use it to better position ourselves for success.
Global commerce is becoming an integral part of everyday business. Ensuring your employees have cross-cultural negotiation skills has become a necessity, not a luxury.
Factors spurring the need for cross-cultural negotiations include:
RED BEAR Negotiation conducted a survey of sales and purchasing professionals from Fortune 100 organizations and found that 72.7 percent of the respondents reported that the number of cross-cultural negotiations had increased substantially during the past three years:
“RED BEAR Negotiation conducted a survey of sales and purchasing professionals from Fortune 100 organizations and found that 72.7 percent of the respondents reported that the number of cross-cultural negotiations had increased substantially during the past three years.”
Companies must ensure that their employees master the skills of cross-cultural negotiations to make certain that communication channels remain open and efficient.
With increased endemic globalization, the cost of inferior performance has become unacceptable. The lack of negotiation skills with partners and peers impacts the company’s bottom line and makes reaching an agreement dangerous due to potential misunderstandings.
It is no secret that cross-cultural negotiation’s importance to bottom-line profitability continues to increase. Even if your business does not engage with global customers and companies, at some point, you will likely begin to interact with a worldwide market as your business expands.
As a result, cross-cultural negotiation skills are quickly becoming the norm, which means that professionals across all industries need to develop and hone a new and particular set of skills to remain competitive.
RED BEAR reports that 72.2% of businesses show an increased volume of negotiation with people from unfamiliar cultures.
“RED BEAR reports that 72.2% of businesses show an increased volume of negotiation with people from unfamiliar cultures.”
The impact of cross-cultural negotiation on the bottom line for most businesses is indisputable. The foreseeable need for cross-cultural negotiation skills will only increase as companies expand their global reach to improve profitability and competitiveness.
Of course, one of the main challenges in cross-cultural negotiations is understanding how our cultural conditioning may impact decision-making and perceptions. How so? Let’s take agreements as an example.
While most people prefer specific agreements (78%), cultural differences mean this might not be true in all cases.
For example, the above statement might be true for English speakers, but it would be a different story if you were dealing with individuals from Japan or Germany. In that case, almost a majority (45.5%) would prefer general agreements to specific ones. Of course, this is only one area of cross-cultural negotiation where challenges can emerge. Let’s explore some of the other common pitfalls negotiators face.
What conditioned cultural presumptions do you bring into a negotiation?
Understanding your own presumptions and cultural differences can give you a competitive edge when dealing with international clients.
Remember, our goal isn’t just to close the deal; it’s to develop a long-term relationship.
Try to grapple with your expectations for the nature of an agreement. For example, in the U.S., contract terms are concrete — rarely wavering once agreed upon.
In Japan, however, this just isn’t the case. Instead of concrete adherence to pre-agreed-upon terms, they view contracts as malleable, based on the relationship and other possible factors. Without this cultural understanding, one might see a turn away from contract terms as a slight or something more sinister.
Our cultural presumptions often shape the negotiation process, so consider how your values and the value of the other party’s culture may impact discussions.
It should be no surprise that stereotypes are harmful.
While it’s true that as the world becomes more connected, we start to perceive different groups of people as more similar, understanding how harmful stereotypes interplay with negotiation can help bolster relationships with international clients.
It’s common for stereotypes to come to the surface when we feel uncomfortable or are in unfamiliar situations.
We’re quick to question motives when the counterparty acts outside of what we consider cultural norms. But, as with all elements of cross-cultural communication, it’s essential to analyze this initial feeling to understand the root cause of the issue.
Labeling actions as strange or wrong is a recipe for distrust. Instead, try to frame perceived differences as simply cultural differences. There is no right or wrong.
One common realization when dealing with cross-cultural business situations is that people communicate differently.
This is in both what is said, how it's said, and body language. Simple language barriers can also lead to a false sense of understanding. To communicate effectively, try to request clarification and leverage the Test and Summarize negotiation behavior.
Moreover, before negotiation even begins, attempt to understand possible differences in communication styles.
There are high context styles (indirect, relationship-focused) and low context (direct, task-focused). As you might imagine, if you’re on the wrong page with a poor communication style, it can easily lead to misunderstandings or unintentional offenses.
Virtual communication is now a regular part of everyday life. While spurred by changes during the COVID-19 pandemic, there is no denying that virtual communication is here to stay.
However, with the prevalence of discussions via video calls, email, and chats comes new problems. First are the non-verbal cues that are hard to identify in virtual negotiation. Body language and tone aid in the way we understand each other. Misunderstandings can quickly arise when you remove these cues, especially within a cross-cultural context.
Skilled cross-cultural negotiators understand that distrust occurs in such situations and will try hard to create trust-building activities and work them into their negotiation communications.
Nowadays, businesses are being overwhelmed with a vast amount of information on cross-cultural negotiations. You’ll find information on the subject in articles, websites, and books. You can explore the culture, business etiquette, and customs of the various countries where you plan on conducting business.
It’s hard to effectively access the information when you are in the heat of negotiations. Successful cross-cultural communication is most effective when you study and learn about your business associations' cultural preferences so you can anticipate any likely issues that might arise. Do your homework in advance — do not wait until the last minute.
A negotiator’s challenges when dealing with international clients shouldn’t become an insurmountable hurdle. With the right tools and knowledge, every team member should be able to enter these types of discussions confidently.
To help you better understand how to react to each of the challenges we outlined above, let’s uncover some actionable tips that get results.
Planning is non-negotiable. Time and time again, our training staff sees even the most skilled negotiators fall flat when they fail to plan appropriately.
This is especially true for cross-cultural negotiations.
Planning can help your side better understand the other party’s cultural background in these situations. Consider their beliefs, values, norms, and behaviors, using this research to craft a strategy unique to that client.
Planning will also help your team anticipate potential challenges rooted in cultural differences. Think carefully about what situations would create misunderstandings, and plan accordingly. Develop a strategy based on these cultural gaps, adapting communication styles, offers, or concessions plans to the unique cultural context.
Experiential learning is something we champion here at RED BEAR, and self-awareness can be the key to navigating cross-cultural negotiations.
Simulated cross-cultural negotiations help prepare your team and surface personal tendencies or existing cultural biases. That’s why, with RED BEAR training, your team goes through extensive real-world practice through carefully constructed negotiation scenarios.
This will help develop a productive mindset with strategies to tackle all types of interactions.
Ultimately, the goal is to hone insight, attitude, and skill to move beyond surface-level cultural facts and toward cultural appreciation, openness, and flexibility.
So, how can your team leverage the above information to navigate cultural business discussions? Here are three steps that can help define your negotiation strategy.
Personal biases are often hard to uncover — and almost everyone has them.
Try to start by recognizing your own cultural “baggage.” That is to say, what we bring to the table regarding assumptions. For example, direct communication is the only way to operate.
You should identify unproductive default behaviors. Some people overlook positioning your case advantageously, assuming the counterparty already understands value.
Or, they might set aspirations too low to avoid appearing "offensive" in their counterpart's culture.
Consciously adjust to preempt these types of behaviors. Be sure to manage information skillfully based on cultural norms for transparency and be prepared to satisfy the other side’s needs over wants.
Once you have identified your cultural biases, research likely cultural influences on your counterpart's approach. Remember, it’s not just you who carries biases.
Map out potential areas of tension, considering attitudes toward expressing power, status differences, risk tolerance, and decision-making strategies. Brainstorm what strategies bridge these divides and create a sense of shared value.
For example, one might frame a proposal to resonate with a particular culture. That’s the power of effective positioning.
Adjusting your strategy as new information arises is also essential. Tweak your process to meet the identified areas of cultural divide. Set high aspirations, but calibrate those toward cultural norms around directness.
You should concede according to plan while building trust and reciprocity in your counterpart's frame.
Use indirect or direct probing, based on high vs. low context tendencies, to uncover the other side's needs over wants. Ultimately, your goal should be to craft an agreement that can satisfy both parties' culturally grounded interests.
By understanding your blind spots, identifying cultural gaps, and adjusting your strategy accordingly, you can approach negotiation effectively in cross-cultural contexts.
Successful cross-cultural negotiators strategically calibrate a negotiation's competitive, collaborative, and creative dimensions to keep tensions healthy and work toward win-win outcomes.
When the competitive and creative dimensions are in balance, it can unlock the power of creative problem-solving to break stubborn impasses.
Here is how that might work:
When negotiators can accomplish this balance, they can use the creative dimensions to:
Here’s an example: an American negotiator frustrated by her German counterpart's analytical style could treat it as a chance to craft nuanced terms that satisfy both sides' interests. Their complementary strengths could yield a more robust deal than either would have developed alone.
By managing inherent cross-cultural tensions wisely, you can keep negotiations on track and uncover innovative agreements.
RED BEAR uses a global cultural awareness tool, so individuals can better understand their tendencies and preferences when interacting with others. The process also allows for comparisons of cultures and individuals.
The tool effectively measures individuals and cultures on a scale with five dimensions. The feedback helps negotiators better anticipate the needs and behaviors they may encounter when cross-culturally negotiating:
When a Nestle acquisition team arrived in Shanghai to collaborate with a Chinese delicacy manufacturer, their initial friendly, forthcoming approach fell flat. Negotiations stalled.
Recognizing the need to adapt, the team leader consulted a Chinese business expert, who highlighted the importance of guanxi — building a mutually beneficial relationship.
The Nestle team pivoted, setting aside deal points temporarily to focus on cultivating personal rapport.
When they returned to the table, the dynamic had transformed. With the foundation of guanxi established, their Chinese counterparts were far more receptive. This culturally savvy shift cleared the way for a productive partnership.
The Nestle team's experience illustrates critical principles in action:
Through cultural attunement and flexibility, the Nestle team bridged significant differences and achieved a win-win outcome — underscoring the power of a culturally informed negotiation strategy.
It is no surprise that cross-cultural negotiation requires a more nuanced approach. But, when negotiators learn to tackle their own biases and strive to understand the cultural differences at play, they can craft strategies that close the deal and create opportunities for long-term success and collaboration.
At RED BEAR, we focus on a negotiation methodology rooted in effective communication.
Our goal is to transform individuals into world-class negotiators, whether that’s in cross-cultural, sales, or procurement environments. That’s why our training is utilized by over 45% of the Fortune 500.
Ready to get your team ready for cross-cultural negotiations? Learn about your workshop options today.