Cross Culture Negotiation Simulation - Assignment Example

Introduction Summary of Simulation The negotiation simulation involved interaction between Jeneryn which is an American company owned by a Russian American known as Ms. Katerina Poliakov, CEO with help from her associates, Ms. Margaret Aharoni, Chief Project Manager and Mr. Theo St. Paul, Director of Operations. They are meeting with an Indian transcription firm known as Dragonfly. The participants from Dragonfly are Dr. Ajay Srinivasan, CEO with help from Mr. Vidyarana Paranjpe, Executive Vice President. And Ms. Nanda Malhotra, Chief of Operations. I am an observer in this process, analyzing how well they manage their negotiations. This is a simulation and participants were urged not to over play their roles. The guidelines for points to note include cultural mapping, discovering which approach is likely to be used by both sides. The consensus was that the Indians were likely to employ a relationship based approach in order to put the Americans at their ease. It would be critical for the Indians to identify a key leader although their approach was expected to be implicit rather than explicit. The Americans in turn were expected to be more explicit. A point to note is that the Indians were all related to each other led by Dr Ajay who is the uncle, likes to be known as Dr Jay and considers himself to be sophisticated and a man of the world. Their main issues that they would be concerned with are emphasis on the breadth of their experience and trying to get as high a price as possible for their services. The question arose as to whether Indians would be comfortable negotiating with a woman, but the consensus was that especially with international firms, the Indians are acclimatized to dealing with women different to how it was in the eighties and seventies. However, Dr Jay’s comfort zone was speculated to be seeking out the leader and addressing his remarks to her. Should Katrina identify himself as the owner, he may have trouble addressing her associates but generally gender issues are not usually associated with India. The Americans’ focus is likely to be quality, and low price. They are offering ten cents but would wish for the best quality. Jeneryn is not their only option in India and SE Asia. Margaret Aroni is the authority and her focus would be on issues of insurance and such, while Theo was initially pushing for this deal but has since reconsidered. As an observer, I will be looking out for non-verbal cues, such as the Indians attempting to do an American handshake. Although Nanda is taking the role of traditional Indian woman and would probably do the Namaste instead, while the American reaction to this is to be noted. The Indians started out by welcoming the Americans to India, and trying to make them feel at home. The Americans maintained a formal distance between them at this time. The Namaste greeting was used, which the Americans were not very familiar with and so after introductions Dr Jay explained the meaning of Namaste. This did not lead to understanding from the Americans as Theo seemed to think it had some sort of religious significance and informed them that he goes to church. Katya then introduced herself and stated that they were on a fact finding mission to decide whether or not they would go further with their business endeavors. They attempted to establish common ground by discovering whether the Indians had been to Rhode Island or not, and Dr Jay reveals that his son studies there. He also lets them know that he and his colleagues are family and that everyone at the Dragon Fly is regarded as family. He also takes care to tell them that the company is prospering and attempts to put them at their ease by asking after their experience of Indian cuisine. Theo answers that they have not had time to sample Indian food but have been eating fast food. He complains at the lack of steak or beef burgers at the McDonald’s prompting Nanda to explain that many Indians are Hindus who revere cows and therefore would not eat beef. After further complaints, Dr Jay urged Lakshmi to make a booking at a five star hotel so they could sample Indian food. They were also offered some Indian tea with biscuits. Katya asked for a background of the company which Dr Jay provided. He talked about the fact that India had a lot of experience in offshore outsourcing, had a very skilled workforce which was strong in the pharmaceutical industry. The quality of professionals emanating from Indian medical schools was top notch he continued and India was an economic powerhouse expected to overtake Germany by the year 2040. He also offered the statistic that there were 500 million Indians under the age of nineteen. Nanda went on to explain the training they give to employees and the international tests given. Katya wanted to know who designs these tests and had to repeat the question in three different ways before it was answered. At the end of the day, what it came down to was how much? How much Jeneryn were willing to pay vis a vis what Dragonfly was willing to accept. After extended negotiations, they agreed on ten cents with eighteen hours. Dragon fly wanted a time frame for this amount but Jeneryn was unable to give one. Analysis and Description of Strategies Used The world had increasingly become a global village with international corporations developing organizational cultures on a local level and implementing them on a global level. This may be justified by the argument that the speed of transport and communication has led to a homogenous middle class culture that permeates every society and therefore differences in culture can be disregarded. The opposing argument as subscribed to by this simulation is that although cultural diversity may not be overt in certain situations they are nevertheless specific to certain situations. A specific area that has featured in this simulation is that of the authority concept (Hofstede 1991; Inglehart, 1997; Schneider 1999a) which is a significant factor in the issues that arise in global strategies facing international corporations. The potential bottlenecks that could be presented by cultural differences in cross cultural negotiation could be tackled by focusing on affective meaning. Another factor to consider is dominance which can be described as an individual’s need to articulate their opinions and to influence the direction that other people take (Ray, 1981). This construct is depicted as assertive, aggressive confident, determined, argumentative and influential (Burgoon, Johnson and Koch, 1998). This description can be descriptive of Dr Jay although not in its entirety as he showed no sign of aggression or argumentativeness. However, the possibility of him seeking to dominate the proceedings was discussed. Dominance is sometimes obscured by extraversion within the broader tenets of the Five Factor Model which also incorporates positive affect and being outgoing (Hough and Ones, 2001). However, it is dominance which is pertinent to negotiations involving multiple parties. Narrowing the focus on behavior characteristics increases the specificity of predicted outcome according to researchers (Harrison, et al, 2006). There is a critical relationship between dominance and the inclination to take on leadership positions in groups (Smith and Cook, 1973). The key points to be analyzed therefore include the cultural mapping that highlights the differences in interaction practices between the Indian group and the American group. The second issue is the approach used by both groups to communicate and how the effective that communication is. Thirdly are the cultural differences that bring about misunderstanding. Becoming involved in international business is a decision that a company makes depending on the size of the domestic market, what the production capacity of the firm is as well as its capability. This is in addition to the financial commitment necessary to operate internationally. This enables firms to be classified on an internationalization scale that spans the scales from domestic single nation to totally globalize (Tayeb, 1998). The relevance of national culture to a firm is shown in the table below. The home culture of a company is highly relevant whether or not the company managers are aware of it, or not. Other cultures become relevant as the company spreads its wings and interacts with foreigners (Tayeb, 1998). Character of the Firm Relevance of National Culture Home Culture Foreign Culture Domestic, single nation without foreign ties High Nil Single-nation, import/export High Low to Moderate Multi-nation, featuring franchising and licensing High Moderate to high Multi-nation, manufacturing/service sector based abroad High High Global firm with universal presence High High Table 1: Managing Multicultural workforces (Tayeb, 1998) Language is a major issue when it comes to negotiating with trade partners from other cultures (Tayeb, 1998). Several studies have indicated that there is a significant correlation between successful company performance and obtaining foreign business when the business is able to communicate in the client’s language (Tayeb, 1998). There are also various cultural factors that come up in a negotiation situation. There is not only a difference in language between different cultures but also different ways of thinking and different priorities in their manner of conducting business (Tayeb, 1998). For example, while the Americans are eager to go immediately to the discussion of the specific details on how the Dragon fly can be of service, the Indians wish to put them at their ease first and establish a social relationship with them. Some people are partial to formality in their business dealings and would prefer to keep a social distance while others are more informal and use of first names indicates camaraderie. This can lead to misunderstandings during negotiations if the prior values of each party are unknown or if assumptions are made about attitudes and knowledge. Benefits of culture can come up from different values and world views. In order to harvest a competitive advantage from this, it is necessary to understand these cultural underpinnings as well as manage them effectively. Hoecklin (1994) proposes four strategies from managing cultural differences. These are: A robust international corporate culture. Development of a common technical and professional culture globally. Reliance on sturdy financial and planning systems. Detaching oneself from every culture. The manner in which a negotiation is carried out is heavily dependent upon the cultural values and traditions of the parties involved. There are variations in the styles in which people negotiate especially in cultures as separate as India and America. One significant difference is the amount of authority available to the negotiator to rubber stamp an agreement (Rugman, 2000). Recommendations for Improvement One of the major issues that come to the fore when analyzing this simulation are the misunderstandings that come up during discussions, especially on the part of the clients. They fail to understand various aspect of the host’s culture and thus this leads to dissatisfaction with the experience. The first misunderstanding involves explanation of the use of Namaste as a greeting when the Americans assume it is some sort of religious symbolism and respond by stating their devotion to their own faith. This ignorance of a common facet of Indian culture may be misunderstood as facetiousness at best or contempt at worst. The advantage in this case, is that it is the client who has not bothered to find out anything about the host country, and that Dragonfly is more interested in obtaining the business than in being understood. However, when dealing with availing information about the origin of tests given to their employees, the Americans had to frame the question in three different ways to get an answer. This could be due to the American assumption that the Indians did not understand the question rather than actual misunderstanding of the question by the Indians. This would seem to indicate a low level of confidence of the capabilities of the Dragonfly in terms of keeping up with Jeneryn. If this is true, it would seem to indicate that Jeneryn’s confidence in Dragonfly is too low for successful business negotiations to occur. In order to solve these problems, better cross-cultural communication needs to be employed in such a way that both parties feel that their needs are being met and they are able to access the information that they need in order to come to a decision on whether to proceed with the relationship or not. References Burgoon, J. K., Johnson, M. L., & Koch, P. T. (1998). The nature and measurement of interpersonal dominance. Communication Monographs, 65, 308–335. Harrison, D. A., Newman, D. A., & Roth, P. L. (2006). How important are job attitudes? Meta-analytic comparisons of integrative behavioral outcomes and time sequences Academy of Management Journal, 49, 305–325 Hoecklin, L. (1994). Managing Cultural Differences, United Kingdom: Addison-Wesley Hofstede, G. (1991). Cultures and organizations. London: McGraw Hill. Hofstede, G. (2001). Culture’s Negation-Comparing values, Behaviors, Institutions, and Organization across Nation, USA: Sage Publication Hough, L. M., & Ones, D. S. (2001). The structure, measurement, validity, and use of personality variables in industrial, work, and organizational psychology. In N. Anderson, D. S. Ones, H. K. Sinangil, & C. Viswesvaran (Eds.), Handbook of industrial, work, and organizational psychology (Vol. 1, pp. 233–277). Thousand Oaks, CA: Sage. Inglehart, R. (1997). Modernization and post- modernization: cultural, economic, and political change in 43 societies. Princeton: Princeton University Press. Ray, J. J. (1981). Authoritarianism, dominance, and assertiveness. Journal of Personality Assessment, 45, 390–397. Rugman, A. (2000). International Business- A strategy management approach, England: Prentice Hall. Schneider, A. (1999a). ‘Denotative clusters of affective meaning’. Electronic Journal of Sociology. Vol. 4, 2 Smith, R. J., & Cook, P. E. (1973). Leadership in dyadic groups as a function of dominance and incentives. Sociometry, 36, 561–568. Tayeb, M. (1998). The Management of a Multicultural Workforce, England: John Wiley & Sons. Read More