How to Successfully Execute Business Negotiations in Iran - Case Study Example

How to successfully execute business negotiations in Iran Subject: Executing business operations in Iran 1. Overall Analysis of Communication Style Although Iran is considered a part of the Middle East, however, it should not be confused with the other Arabian countries as they have different language of communication, cultures and histories. Iran’s official language is Persian, also known as Farsi. People in general have to be mindful of their behavior in the public. They need to be aware of their dresses and make sure that it is conservative and non-revealing (Global edge, 2013). Holding hands of opposite gender is strictly prohibited unless they are children or older family members of the family. As a means of communication, shaking hands is the first gesture of recognition when meeting someone. As far as the opposite gender is concerned, a male has to wait to see if the female is extending her hands. If she does not, then a simple nod with a smile is considered as a polite gesture. Doing business in Iran requires the individual to be mindful of the culture and communication that prevails in the country. They are expected to dress conservatively yet smartly. Female alongside wearing a conservative dress, will have to cover their hair with a scarf (Circles of excellence, 2010). 2. Cultural Dimensions 2.1. High Context vs. Low Context Apparently, Iran can be associated with following a ‘high context’ culture of communication. The aspect that puts them into this category is their usage of flowery language and linguistic ability. According to Bar (2004, p. 27), “Iranians accord great import to the context of communication.” This holds true not only in case of communication with each other, but also in case of communicating with foreigners. However, the foreigners arguably may not be sensitive to majority of the contextual implications that are being shared via the communication. In certain aspects, the culture in Iran can be associated with low contextual dimension. They are pragmatic and considerate of force ratios. However, it does not surpass rational considerations. The considerations regarding confidence building, hardly ever bend over to the practical goal. 2.2 Cultural Gender Roles There are different expectations and roles for men and women in Iran. The society as well as the culture requires men and women to portray or rather demonstrate their characteristic in a way that is expected from them. Women have to portray preservation, modesty and dedication towards their home and family, whereas men demonstrate the reputation of their family through work. This kind of behavior is associated with the kind of upbringing that they have had. It is a norm in the Iranian society to maximize gender role differences and discrimination. It has been witnessed that there is no strong desire among the authorities to change this perception. This has been the tradition of the country for a long time (Dastmalchian, Javidan and Alam, 2001). 2.3 Religion and Business Majority of Iranians describe themselves as religious, thereby stating that their beliefs play a crucial role in their way of living as well as conducting business. Religion has some sorts of influence in the way business is done in the country. Religion does not only involve worship and ritual, but they also outline moral principles stating how true believers should be living their lives. The impact of religion on business induces honesty, loyalty as well as justice. This highlights how religion and business is associated to each other in a country like, Iran (Miller and Ewest, 2013). 2.4. Taboo Mannerisms: What Not To Do To make appointments a month before the actual date of meeting and confirming the same a week before. Thus, avoiding any confusion. To not be late in attending those meetings. To have all business cards and materials translated into Persian (Farsi). To not be impatient as business negotiations often take quite a long time (Vayama, 2013). 3. Business Structures 3.1 Developing Relationships Building effective relationship is considered to be a very crucial factor that drives a business towards its success, irrespective of the country and Iran is no exception to this theory. In addition to that, this aspect should be combined with a clearly outlined and well presented proposal. Building an effective relationship with an Iranian counterpart is a very critical process. The person involved in this process should be mindful of the fact that the locus of the first meeting should be solely on getting to know each other. Once a relationship is established, the next step should be to direct the subsequent meetings into discussing business matters. 3.1.1. Building Client Relations A business is always defined by the way it serves its clients. Stepping up to the client’s expectations is always considered a stepping stone towards success for a business entity. Making regular communication with clients should be the top priority of business establishments in Iran. The business has to give proper value to the dependability of the client. Being a useful resource and addressing client issues is an important strategy that should be followed by businessmen, those planning to set a business in Iran. In addition to that, the entity has to demonstrate honesty and transparency through its services (Forbes, 2013). 3.1.2. Giving Gifts  Gifts are generally given during social occasions in Iran such as, when somebody returns from a trip or achieves major success in their personal or business life. Bringing flowers or desserts to the hosts is also considered as a good gesture while attending invitation. The person who brings the gift should remember to apologize for its inadequacy. Gifts should be elegantly packed and should not be opened immediately after receiving (Kwintessential, 2013a). 3.2 Meetings Business meetings should be planned well in advance. Appointments can be set both via telephone or in writing and the same should be confirmed a week prior to the meeting. Business hours are typically between Saturday and Thursday 9AM to 5PM. Friday is considered a holiday. No-Rooz is a major national holiday in Iran and thus, meetings should be avoided at this time period which lasts for about 2-3 weeks. Although, entrepreneurs and government officials have reasonably good command over English, yet it is suggested that foreign business officials arrange for one’s own interpreter for facilitating a smooth negotiation (Kwintessential, 2013b). 4. Women in Business 4.1. Breaking into Business Climate In the late nineties, after reforms were made by the then Iranian President, Mohammad Khatami, female entrepreneurs had struggled due to the discrimination that they had to face while trying to win enhanced opportunities. Since then, the path has not been even. The underlying problem behind this discrimination is that the Iranian culture perceives a man to be more capable. Despite the few policies against working women, females belong to a very inferior position in the Islamic society. Being a nation where social practices and beliefs are strictly followed, the efforts made by enterprising women to bring about a change has always met with resistance (Pocha, 2012). 4.2. Appropriate Business Attire As far as the attire is concerned, a woman should wear clothes which are conservative and non-revealing. They must cover their hair with a scarf while in public. However, over the last ten years, a huge change has been witnessed in the dressing style of women, although that depends upon what the authorities are willing to tolerate. 5. Negotiation Tactics 5.1. Diplomatic Precautions A foreign entity setting up a business in Iran needs to adopt certain diplomatic precautions in order to facilitate a smooth business negotiation and thereafter, operation. The business entity needs to know whether they are allowed to conduct business activities in Iran. They should be aware of all the national rules that are associated with conducting business in Iran. Alongside, the business entity should also be mindful about the diplomatic relationship that exists between Iran and their country and precautions should be taken accordingly. 5.2. Pace of Negotiation Business negotiations in Iran take quite some time because Iranians in general take a while before easing towards business officials from a foreign country. Effective interpersonal relationships are a key factor driving business dealings to successful completion. Foreign businessmen should keep in mind that Iranians are deliberate negotiators whose primary objective is to drive a stiff bargain. Being patient and staying calm is the key to achieve success. 5.3. Bargaining Iranians are very good at bargaining. They will try their level best to convince their counterpart to make choices that they deem appropriate for them. Sometimes they do resort to pressure tactics such as, walking out of meetings for creating pressure on the counterparty in order to change their position. However, the counterparty has to stay put in his or her position and be patient. Pressure tactics should not be used by any means as it might start working against the business official itself. The foreign business officials need to engage them into a conversation and try to convince them with clearly outlined proposals. 6. Communication 6.1. Verbal Communication Iranians are generally characterized by the usage of flowery language and enhanced linguistic ability. Their way of speaking reflects their humbleness and the respect that they have towards others. Thus, care should be taken that the Iranians are being spoken with in the same tone as theirs. Due respect should be given to Iranians while speaking as this is one major aspect of their culture. Majority of Iranians prefer to speak in Persian, however, business officials also have a good grasp over English. In spite of that, foreign business officials are suggested to arrange for their own interpreters. 6.1.1. Greetings Shaking hands is always considered a good gesture while meeting someone for business purpose. However, this holds true for same genders. As far as opposite genders are concerned, a male should wait and see whether the female is extending her hands. If not, then to simply nod and smile is considered as polite. Salam is the most common greeting while meeting somebody. Sticking to formalities is very important while conducting business. 6.1.2 Topics of Conversation While conducting business, initially the conversation should begin with asking about the well-being of the person and his family. Conversation regarding work field and nature of business is also suggested. When both the counterparties get acquainted to each other, a gradual transition in discussion should be made from general topics to business matters. 6.2. Non-Verbal & Written Communication Iranian people are in general conservative in nature. Thus, one should adopt measures of restraint while in public. Foreign business officials should consider certain codes of politeness in order to avoid embarrassment. They should be aware of non-verbal communications that involves interactions with the opposite sex as well as the personal space boundaries and proper greetings. All business materials and cards should be translated into Persian language for ease of use (Darnell, 2012). 6.3 Body Language  The body language of a foreign business official should reflect politeness and humbleness. They should follow proper communication tactics as highlighted in the above sections in order to build an effective relationship with their Iranian counterparties. 7. Market Economy 7.1 Selling U.S Products  Selling majority of the US products is banned in Iran following the sanctions that have been imposed on them by the United States government. The recent sanction involves the restriction in selling aircraft and maintenance parts to Iranian Aviation Company. 7.2 Investment Climate The current investment climate is relatively prospective because of the country’s political and economic stability, strategic location, labor privileges, adequate infrastructure and availability of natural resources, market proximity and potential, climatic characteristics and fiscal incentives (TPO, n.d). 7.3 Licensing & Taxation  The Ministry of Finance and Economic Affairs in Iran is responsible for imposing and collecting taxes in Iran. The taxation category includes income tax for salaried individuals, real estate tax, capital gains tax, corporate profit tax and taxation of foreign companies as well as tax on liaison, representative and branch offices. A businessman has to firstly register his business with the government and get a license for carrying out business operations. 8. Conclusion Iranian culture is basically of conservative nature. Thus, a foreign business official has to be mindful of certain intricacies while planning a negotiation with Iranian businessmen. Certain norms described within the study have to be followed in order to ensure a successful negotiation. The current economy in Iran is stable to a certain extent and provides prospective opportunities to foreign business entities for investing, provided certain criteria are met. Thus, a proper negotiation by considering the regulations as stated above will ensure a company’s successful expansion in Iran. Reference List Bar, S., 2004. Iran: Cultural values, self images and negotiation behavior. [pdf] Institute of Policy and Strategy Available at [Accessed 22 November 2013]. Circles of excellence., 2010. The Latest! Cultural Clues: Do’s & Taboos A series of cultural tips for countries from A to Z Communication Guidelines for Iran. [online] Available at [Accessed 21 November 2013]. Darnell, D. 2012. Nonverbal Communication in Iran. [online] Available at [Accessed 22 November 2013]. Dastmalchian, A., Javidan, M and Alam, K., 2001. Effective leadership and culture in Iran: An empirical study. Applied Psychology: An International Review, 50(4), pp. 532-558. Forbes., 2013. Tips for Building Long-Term Client Relationships. [online] Available at [Accessed 22 November 2013]. Global edge., 2013. Iran: Culture. [online] Available at [Accessed 22 November 2013]. Kwintessential., 2013a. Iran - language, culture, customs and etiquette. [online] Available at [Accessed 22 November 2013]. Kwintessential., 2013b. Doing business in Iran. [online] Available at [Accessed 22 November 2013]. Miller, D and Ewest, T., 2013. Rethinking the impact of religion on business values: understanding its reemergence and measuring its manifestations. [pdf] Princeton Available at [Accessed 22 November 2013]. Pocha, J., 2002. Iran's reforms open a door for women more can break into business. Changing attitudes is harder. [online] Available at [Accessed 22 November 2013]. TPO., n.d. Investment Climate. [online] Available at [Accessed 22 November 2013]. Vayama., 2013. Iranian Etiquette Tips. [online] Available at [Accessed 22 November 2013]. Read More