Impact on international business negotiations

Impact on international business negotiations Cultures Impact On International Business Negotiations International Negotiations And Culture Nowadays there is not product or service that does not have any international mark in its story. According to Thomas, D. (2008:3) â€Å"virtually all business conducted today is global business. It is difficult to identify a product or service that is not somehow influenced by a cross-border transaction of some kind†. Czinkota et al. (2009:53) suggests that when a firm expands its operations across international borders, it acquires new customers and new partners in new environments. It is essential for the company to understand cultural differences and the way they manifest themselves and to determine similarities across cultures and exploit them in the formulation of strategy. The success in new markets is determined by the capability of the firm to adapt to the new culture. Patience, flexibility and appreciation of others beliefs are essential qualities. Unlike economic, legal, and political aspects of the country, which are recognizable, cultures effects are mostly hidden and difficult to observe. For this reason, Thomas (2008:11) states that culture is the aspect of the management context most often neglected. Even large multinational corporations like Unilever need to observe the cultural features in a new market before launching a product. For example, when Unilever decided to enter the Indian market, it began its business by spending weeks living in rural villages to spend time with locals and come in touch with their uses and customs. Doing this, it discovered that to sell soap to Indian women it had to develop differently its product. Because of the use of the women of this region to use the same soap for body washing as for shampoo, Unilever developed a low-cost soap that could be used for body and for hair. (Johnson et all. 2006:302) To deal with culture it is necessary to understand what it is and what it is made of. ASPECTS /COMPONENTS INVOLVED IN PARTICULAR INTO THE BUSINESS WORLD, IN RELACION CON EL MUNDO COMERCIAL Definition Of Culture Czincota et al. (2009:54) defines culture as an â€Å"integrated system of learned behaviour patterns that are characteristics of the members of any society†. Any society has interrelated and interdependent features that characterize the direction and guidance in all phases of human problem solving. Culture is dynamic in time and develops through interactions among groups of people, societies, regions and nations. The key to success in international operations is to adjust and adapt to a specific culture in order to understand and later satisfy its specific needs. This activity is called â€Å"process of acculturation†. Reseacrh in this field has demonstrated that culture affects peoples behaviour. Its internal elements as values and attitudes can influence the way a person approach new products and some companies might find necessary to adapt dramatically its goods to the societys requirements. These elements are: language (verbal or nonverbal), religion, values and attitudes, manners and customs, material elements, aesthetics, education and social institutions (Maureen 2005: 42; Czinkota et al. 2009: 57). THE LATES PROVIDED A VERY USEFUL DEFINITION OF THESE ELEMENTS THAT CAN BE SUMMARIZED AS FOLLOW: 2.1. Language has been described by Czincota et al. (2009: 58) as the mirror of culture. Language capability serves three distinct roles in international business. Firstly, business meeting are aids by language knowledge. Speaking the national language would make the people more comfortable and inclined to make a deal. Secondly, it provides access to local society. It is reccomendable to become part of the market rather than observe it from the outside. Finally, language capability is increasingly important in company communications because using an interpreter takes long time and the manager could not be sure the message has been translated correctly. The company has to pay also attention at the different translations that a word could have in countries with the same language. For example, Goodyear has identified five different terms for the word â€Å"tyres† in the Spanish-speaking Americas: cauchos in Venezuela, cubiertas in Argentina, gomas in Puerto Rico, neumaticos in Chile and llantas in most of the other countries. Dealing with language invariably requires local assistance. Manager also must to analyse and becoming familiar with nonverbal language. Key topics are: time, space, material possessions, friendship patterns and business agreements (Czinkota et all 2009: 60).Following, this aspect will be applied at the Spanish culture. 2.2. Religion has an impact on international business that is seen in a cultures values and attitudes toward entrepreneurship, consumption and social organization.(SINTASSI) Although the impact of religion may be indirect in Protestant northern Europe, its impact in countries where Islamic fundamentalism is on the rise may be profound. .(Czinkota et all 2009: 60). 2.3. The differences in cultural values and attitudes affect the way planning is executed, decisions are made, strategy is implemented and personnel are evaluated. In some counties many middle-aged bureaucrats and company officials believe that buying foreign products is unpatriotic.(Czinkota et all 2009: 63). 2.4. Manners and customs: understanding manners and customers is especially important in negotiations, because interpretations based on ones own frame of reference may lead to a totally incorrect conclusion. To negotiate affectively abroad, all types of communication should be read correctly. For example, gift giving is one area where preparation and sensitivity are called for. (Czinkota et all 2009: 65). 2.5 Material elements: material culture refers to the results of technology and is directly related to how a society organizes its economic activity. Many US exporters do not understand the degree to which Americans are package conscious; for example, cans must be shiny and beautiful. (Czinkota et all 2009: 67) 2.6 Aesthetics: each culture makes a clear statement concerning good taste, as expressed in the arts and in the particular symbolism of colours, form and music. What is and what is not acceptable may vary dramatically even in otherwise highly similar markets. In Spain, for example, sex is a big selling point while Japanese in order to preserve the purity of their women use foreign models to make the point in provocative adverts. (Czinkota et all 2009:67). ESEMPIO PUBLICITA PROVOCATIVA IN SPAGNA 2.7 Education: education levels effect various business functions. For example, a high level of illiteracy suggests the use of visual aids rather than printed manuals. (Czinkota et all 2009: 68). In Lanzarote the labels of many products are written in Castellano, English and French to adapt to the mix of nationalities population †¦ of the island. (COME FACCIO LA REFERENZA?) 2.8 Social institutions: It affects the way people relate to each other. The family unit, which in Western industrialized countries consists of parents and children, is extended in a number of cultures to include grandparents and other relatives. This affects consumption patterns and must be taken into account, for example when conducting market research. social organization also determine the roles of managers and subordinates and how they relate to one another. In some cultures, managers and subordinates are separated explicitly and implicitly by various boundaries ranging from social class differences to separate office facilities. (Czinkota et all 2009: 68) Controllato Fino A Qua Spanish Culture This chapter analyses the main characteristics of Spanish culture paying particular attention at the Lanzarotes context. To understand a culture, one must first understand the people – where they come from, who they are the values and traditions they live by, as well as their customs and etiquette. (Graff 2006: about the series). Spain is a land of contrasts. A fascinating mixture of cultures, architecture, landscapes and climates, it is a country begging to be explored and offering newcomers as wide a choice of lifestyles, business opportunities and entertainment as any other country in Europe. (Graff 2006: vi) Spaniard love to gather together and talk. They are sociable people, generally vivacious, ready to enjoy a party and join in celebrations. They are passionate about their family, their conviction and their arts, but also enjoy modest pleasures such as a good meal with friends. Spanish temperament is strongly individualistic. (Graff 2006: 30) In Spain there is the usage to kiss people on the cheeks when meeting at an event or in the street. Foreigners must be aware of this customs and adapt to it. Women will kiss the men and the other women, but men will only kiss women. It is possible that at the end of a friendly conversation a man may give another man a big hug that it is just an expression of friendly feeling. (Graff 2006: 32) Settling In Spanish bureaucracy is a critical factor for foreigners and locals. Because of the slow administrative system, it could take also a day to get a simply permit. Patience will be tried to the extreme on occasion, and it must be learnt to remain calm and reasonable under quite severe stress. Spaniards find these long waiting a chance to do conversation and make new friends. (Graff 2006:57) Food And Entertaining Spaniards have a real veneration for food. A meal it is an expression of community spirit, to everyone meeting to enjoy the food and the company (Graff 2009:97). Language There are different languages and dialects spoken throughout the country. The local languages may create difficulties to foreigner when travelling from a region to another as road signs might be written in the local language. Castilian is the official language of Spain used by the majority of the mass media and also in official documents. However, Catalan, Galician and Basque are widely spoken in their regions (Graff 2006:140). Non-Verbal Communication Spaniards use non-verbal language more than British people. Particularly when speaking with foreigner, Spanish people wave their hands to describe or to emphasise what they are saying. Handshakes are never prolonged and only used at first introductions, after which kissing becomes the accepted form of greeting (Graff 2006: 143). MAÑANA Punctuality In order to do not have unpleasant hours of waiting it is necessary to understand what Spaniards mean with maà ±ana, (tomorrow). According to Spanish courtesy it is more acceptable to keep scheduling an appointment maà ±ana, even knowing there are just a few possibilities it will happen, instead of refusing it (Graff 2006: 145). Spaniards do nothing in a hurry. While they expect foreign visitors to be punctual for business meetings, they are lax about their own punctuality for social occasions or business appointments (Bosrock 2006: 399) Meetings And Business Lunches Spaniards prefers to do business face to face. For this reason, when it is possible, they like to arrange a meeting in a cafà © or a restaurant. Business meeting are frequent occurrences and likely to be noisy affairs where a foreign could probably be constantly interrupted. These kind of lunches tend to become lengthy affair. It is so advised to do not schedule any important appointment after the lunch (Graff 2006: 151). (Bosrock 2006: 393) Because of the richness of Spanish culture and history it is recommended to know some of the basic fact. Applying this to the Spain it results an useful list..: Its official name: Spain The collective name of its people: Spanish/Spaniards The language(s) spoken: Castilian (official), Basque, Catalan, Its presidents name: Zapatero Its political system: democracy Its currency: Euro Whether it belongs to the European Union (EU): yes Main events of the past century, (the more details you know, the better your conversation will be.) Current issues and event (Bullfighting, ETA, ) (Bosrock 2006: 20) What To Wear According to Bosrock 2006 (397) â€Å"appearance is extremely important to Spaniards, and they will judge you on how you look. Wearing high-quality designer clothing and accessories will suggest professionalism and social standing. Spaniards dress well, and their casual attire is smart casual It is recommendable to be aware about the Spanish tortura de la galanteria when loud comments are made about someone appearance as walking by someone Spanish. This must be taken as something simply complimentary (Graff 2009:152). Business Dealings With Spaniards Graff stances that ‘most foreigners say that they find doing business with Spaniards â€Å"straightforward† generally speaking. The ‘problems seem to arise from the Spaniards wish to enjoy what he happens to be doing at any particular moment with the frequent result that he will completely forget an appointment made a few days ago in order to pursue the business being discussed with the client sitting in front of him. One of the chief complaints voiced by many foreigners id ‘unpunctuality and, as this aspect of Spanish existence is much in evidence in all the spheres; you will need to learn how to deal with: Sudden change of plan Being stood up with no excuses whatsoever offered Business meetings dragging on with the result that you too, will be late for your next appointment (Graff 2006: 153). Spanish Corporate Culture (Bosrock 2006:400) Structure: conflict and stress exist in business between the old bureaucratic, authoritarian management style that managers over age fifty use and the new, more participative management style that younger managers use. The boss asserts authority and solve problems but in the real organizational structure that is social, people on the third or fourth level may have more actual power then those at the top. While subordinates accept criticism from the boss, theyre likely to resent criticism from colleague or outsiders. When reprimanded, a person often wont admit fault. Communication (Bosrock 2006:400) large companies conduct business in English and Spanis, but Spanish usually predominates. Check ahead to see whether youll need an interpreter. Spaniards may hesitate to express disagreement to your face; they believe that open disagreement is disrespectful, instead, they will discuss their disagreement with others, who will eventually pass it on to you. (Smiles dont always mean you have done well) Be Aware Spaniards are very proud people. Dont mistake their self-relaince and sense of worth as intolerance. Never embarrass anyone. Expect delays and procrastination. Spanish bureaucracy menas odd office hours, plenty of paperwork, seemingly random rules and regulations, and unhelpful staff. Spaniards dismissal of rules and regulations produces a constant crisis atmosphere Spaniards loyalty lies with people, not institutions. Especially For Women Spanish society is aggressively pursuing equality between the sexes. Nevertheless, machismo persist. Few working women are on the fast track; female lawyers and doctors are extremely rare. In addition, society expect even working women to be the primary caretakers of the family and home. progress for professional women has been slow, but educationally qualified women are gradually gaining acceptance in the business community. While Spaniards accept foreign businesswomen, its important that women immediately establish credentials and ability. Spanish men are charming. Be especially careful of making eye contact with Spanish man, whi may interpret your gaze as flirting. Although its rare to whistle at women, staring is common and acceptable. If someone stares at you, just ignore it. For dinner, dont dine alone in restaurants or bars. Its acceoptable for a foreign woman to invite a Spanish man to a business dinner, but she may have trouble paying for the meal. Spanish men expect to pay. If you want to pay, arrange payment with the wait staff beforehand. Working Hours Dati Popolazione Lanzarotegna Da Wikipedia that a company should understand before initiate any negotiation. Bases Of Negotiation In An International Business In markets such as China and Taiwan, companies such as KFC (Kentucky Fried Chicken), McDonalds and other fast food entities dramatically changed eating habits, especially of the younger generation. The example of KFC in India illustrates the difficulties that companies may have entering culturally complex markets. Even though the company opened its outlets in two of the Indias most cosmopolitan cities (Bangalore and New Delhi), it found itself the target of protests by a wide range of opponents. KFC could have alleviated or eliminated some of the anti-Western passions by tailoring its activities to the local conditions. First, rather than opting for more direct control, KFC should have allied itself with local partners for advice and support. Second, KFC should have tried to appear more Indian rather than using high-profile advertising with Western ideas. Indians are ambivalent toward foreign cultures and its ideas may not always work well there. Finally, KFC should have planned for competition, which came from small restaurants with political clout at the local level. (Czinkota et all 2009: 56) Main Issues About International Relationships In Lanzarote On May 2009, the only English magazine on Lanzarote island, The Gazette, carried out a research about customer services quality on the island. It found out the quality level was very low due to the attitude of certain shop assistants and their unwillingness to assist customers and solve their problems. One factor that The Gazette suggested to take into account was the cultural divide. It took as example the fact that the Spanish do not say â€Å"please† and â€Å"thank you† as much as the British do. As explained in the article titled â€Å"Service not included!†, in Britain it is common to sat these words around four or five times during the most simple transaction in a shop. As a result, what is normal in Lanzarote may seem brusque to a visitor on the island. (The Gazette 2009) Products are not just products: they become what they are as the result of their integration into particular context. For example, MD Food, a Danish producer of dairy products, marketed Havarti cheese in Spain that was physically the same marketed in Denmark. However, it did not think about the different uses and criteria of evaluation of the two different countries. While the cheese in Denmark may be eaten on black bread accompanied by milk, the souths European eat it on white bread and take it with wine. (Maureen, G. 2005) For this reason, it is highly recommended to carry out a research based on the probable use the consumer may do of a product. How To Do Business Across Culture Mention Artic spa (book about how an Artic spa should be sold) First thing to ask yourself: â€Å"Are my actions considerate and respectful?† (Bosrock 2006: 5). According to the article â€Å"Going native† published on The Gazette on April 2009, English people living on the island should â€Å"go native† and live day at the Spanish way in order to fully integrate with the local culture. The article suggest to firstly start the day with a traditional Lanzarotes breakfast, dress like local, and not like tourists, have fun like local and get ones self attitude right. (The Gazette: April 2009) How can a company explain and predict the behavior of people in a specific country ? From the management perspective, first at all, managers must ensure smooth interaction of the business with its different constituents and must assist others to implement programmes within and across markets. (Czinkota et al 2009: 73) The international managers task is to distinguish relevant cross-cultural and intra-cultural differences and then to isolate potential opportunities and problems. A good example is the Indian subculture in Britain McDonalds in Europe is an excellent example of how an organization has used an appreciation of culture as a competitive business advantage. When McDonalds restaurants first approaches France did have hard work. French activists attempt to destroy a McDonalds restaurant under construction. The French are a nation for whom good food and quality dining are cultural icons akin to the Eiffel Tower. Yet somehow McDonalds is thriving in France, with revenues second only to those in the United Estates . The company has about 950 restaurants in France, and in 2006 its sales in France grew by 8 percent, which is a pretty good growth for a county that treasures fine dining (Solomon and Schell, 2006)p.7 While maintaining a global brand, it has adapted it to be respectful of local tastes and values. Some of the restaurants have leather upholstery, and some have fireplaces and candles.( Solomon and Schell, 2006) it also developed relationship with local suppliers. McDonalds is thriving in Europe b ecause it gets the culture right. According to Maureen G, (2005) cultural differences are known to affect peoples purchasing behavior. For example, Scandinavian countries have much faster take-off rates for adopting new technical products such as DVD recorders or third generation mobile phones, than those of the big European economies such as Germany and Britain. For these reason technical products companies as Nokia could find Scandinavian countries a good place to test new products. One way is to employ foreign people of the same foreign country the company wants to expand in. in this way the company itself could use these international employees as example of what the new customers will be and in this way find out how they could approach the companys new product (before launching it on the market) Another way could be to organize long-term â€Å"holiday† abroad for some of the employees. In this way these employees will learn how the new potential customers behave and what they would really aspect from a product. In these period it could be possible to test and make changes to the product. (Maureen 2005: †¦) Bosrock suggests to approach international travels with the same attitude and behaviour used when attending a party in ones bosss home. the invited person would be sensitive, would dress appropriately and bring a suitable gift (Bosrock 2006: 4). To achieve success in international business negotiation it is imperative to show respect and consideration to others but to do this it is firstly necessary to learn about those people and their cultural features. The best method to learn is to observe, ask, listen and mainly try and make errors. (Bosrock 2006: 5) The Ten Things To Do Before Visiting A Host Country 1. Recognize and respect uniqueness. 2. Need basic knowledge of each countrys culture and history will greatly benefit you 3. Build relationships. 4. Never compare countries to one another or to your country. 5. Never judge another countrys political or social system. 6. Be patient. Business may be very different from your countrys. 7. Be flexible. adapt to the environment. Dont pretend others to adapt to your style. 8. Always be sincere. 9. Ask, look and listen. 10. Assume the best about people and their actions. Most behaviour is rational once we understand its rational. (Bosrock 2006: 6) Sources Of Cultural Knowledge Books, Movies, Exchanges, The concept of cultural knowledge is broad and multifaceted. Cultural knowledge can be defined by the way it is acquired. Objective and factual information is obtained from others through communication, research and education. Experiential knowledge, on the other hand, can be acquired only by being involved in a culture other than ones own. The more a manager becomes involved in the international arena, the more he or she is able to develop a meta-knowledge; that is, ground rules that apply whether in Kuala Lumpur, Malaysia, or Asuncià ³n, Paraguay. Market-specific knowledge does not necessarily travel well; the general variables on which the information is based to. (Czinkota et all 2009: 73) In a survey of managers on how to acquire international expertise, they ranked eight factors in terms of their importance (see appendix 1). The managers emphasized the experiential acquisition of knowledge. Written materials played an important but supplementary role, very often providing general or county-specific information before operational decisions were made. Interestingly, many of todays international managers have pre-career experience in government, the Peace Corps, the armed force or voluntary work. Although the survey emphasized travel, a one-time trip to New York with a stay at a very large hotel and scheduled sightseeing tours does not significantly contribute to cultural knowledge. Travel that involves meetings with company personnel, intermediaries, facilitating agents, customers and government officials, on the other hand, does contribute. HOWEVER, FROM THE CORPORATE POINT OF VIEW, GLOBAL CAPABILITY IS DEVELOPED IN MORE OAINSTAKING WAYS: FOREIGN ASSIGNMENTS, NETWORKI NG ACROSS BORDERS AND THE USE OF MULTi-country, multicultural teams to develop strategies and programs. At Nestlà ©, for example, managers move around a region (such as Asia or Latin America) at four- or five-year intervals and may serve stints at headquarters for two to three years between such assignments. Such broad experience allows managers to pick up ideas and tools to be used in markets where they have not been used or where they have not been necessary before. In Thailand, where supermarkets are revolutionizing consumer-goods marketing technique perfected elsewhere in the Nestlà © system are being put to effective use. The experience the, in turn, are used to develop newly emerging markets in the same region, such as Vietnam. (Czinkota et all 2009: 73) Other oversights may lead to more costly mistakes. for example, Brazilians are several inches shorter than the average Americans, but this was not taken into account when the US store Sears erected American-height shelves that block Brazilian shoppers view of the rest of the store. (Czinkota et all 2009: ) International business success requires not only comprehensive fact finding and preparation but also an ability to understand and fully appreciate the nuances of different cultural traits and patterns. Gaining this interpretative cultural knowledge requires ‘getting ones feet wet over a sufficient length of time. Over the long run, culture can become a factor in the firms overall success. (Czinkota et all 2009: 75) Research has shown that the take-off point for new products (i.e., when initial sales turn into mass-market slaes) is six years, on average, in Europe. However, in northern Europe new products take off almost twice as fast as they do in southern Europe. (when will it fly? The Economist , 9 August 2003, 51) It is important to position the product as a continuous innovation that does not require radical changes in consumption pattern. (Steenkamp and Hofstede, 1999) Since the United States higly regards individualism, promotional appeals should be relevenat to individual empowerement. also messages should be informal and friendly. In opposite situations, marketing communications have to emphasize thet the new product is socially accepted. However, if the product is imported it can sometimes utilize global or foreign cultural positioning. For example in China, individualism is often used for imported products but almost never for domestic ones. (Czinkota et all 2009: 77) Understanding the implications of the dimensions helps businesspeople prepare for international business encounter. For example, in negotiating in Germany one can expect a counterpart whi is through, systematic, very well prepared, but also rather dogmatic and therefore less flexible and willing to compromise. Efficiency is emphasized. In Mexico, however, the counterpart may prefer to address problems on a person and private basis rather than on a business level. This means more emphasis on socializing and conveying ones humanity, sincerity, loyalty and friendship. Also, differences in the pace and business practices of a region have to be accepted. (Czinkota et all 2009: 77) Adjusting to differences requires putting ones own cultural values aside. The following analytical approach is recommended to reduce the influence of cultural bias: 1. define the problem or goal in terms of the domestic cultural traits, habits and norms. 2. Define the problem or goal in terms of the foreign cultural traits, habits and norms. Make no value judgements. 3. Isolate the self-reference criterion influence in the problem and examine it carefully to see how it complicates the problem. 4. Redefine the problem without the self-reference criterion influence and solve for the optimum-goal situation. This approach can be applied to product introduction. If Kellogs Co. Wants to introduce breakfast cereals into markets where breakfast is traditionally not eaten or where consumers drink very little milk, managers must consider very carefully how to instill the new habit. In France, Kelloggs commercials are aimed as muchat providing nutrition lessons as they are at promoting the product. In Brazil, the company advertised on a soap opera to gain entry into the market because Brazilians often emulate the characters of these television shows. ( Czinkota et al 2009: 78) The increase in the overall international activity of firms has increased the need for cultural sensitivity training at all levels of the organization. Further, todays training must encompass not only outsiders to the firm but also interaction within the corporate family as well. However inconsequential the degree of interaction may seem, it can still cause problems if proper understanding is lacking. Consider, for example, the date written as follow: 11/12/04. A European will interpretate this as the 11th of December; an American as November the 12th. Some companies try to avoid the training problem by hiring only nationals or well-travelled individuals for theit international operations. This makes sense for the management of overseas operations but will not solve the training need, especially if transfers to a culture unfamiliar to the manager are likely. International experience may not necessarily transfer from one market to another. The foster cultural sensitivity and acceptanc e of new ways of doing things within the organization, management must institute internal education programmes. The programmes may include: 1. Culture-specific information (data covering other countries, such as video pack and culture grams); 2. General cultural information (values, practices and assumptions of countries other than ones own)and 3. Self-specific information (identifying ones own cultural paradigm, including values, assumptions and perceptions about others). One study found that Japanese employees assigned to the United States get mainly language training as preparation for the task. In addition, many companies use mentoring, whereby an individual is assigned to someone who is experienced and who sends time advising and explaining. Talks given by return