This reports aims to provide information that can result in an increased understanding of how intercultural communications makes an impact upon how, where and when negotiations should take place. A coherent discussion takes place in reference to negotiations between a British company and an Indian Web Design company with findings which demonstrate how win win negotiations are likely to take place between these two countries.
This report aims to explore ideas of negotiations. Theory-based on sound secondary research will be applied, along with practical examples in order to demonstrate a good understanding of negotiation theory, particularly in regards to communication in business. Intercultural differences will be highlighted and discussed and an explanation of what they can impact upon negotiating will be outlined. Following this, negotiation skills in an international context will be reviewed to bring this report to a close. For the purpose of this report, the hypothetical scenario of requesting the services of an Indian web design company in order to create a UK company website will be applied.
2.0 The Theory of Negotiation and Targeting the Negotiation
Negotiation is used almost everyday within a business context, the definition of negotiation is described by Walton and Krabbe (1995) as a process where interaction takes place amongst and between a group of agents that have a desire and need to cooperate, but they have potentially conflicting interests, therefore negotiation is used in order to reach a mutually understanding and beneficial outcome or selection of a task of strategy. When negotiating, the available information will influence the target of the negotiation; according to Fatima et al (2001), include information will make an impact on the negotiation taking place. It is not possible for an individual or business to have complete information regarding the negotiation, therefore the target of the negotiation may have more information that will enable them to benefit.
In regards to negotiating a website design with an Indian web design company, the available information for the company, regarding how much British companies quote web design services for, can impact upon the negotiation process because they would be attempting to get a much lower quote for their design. In addition, the limited knowledge of the working environments and business processes an Indian company would go through to produce the website will mean that the business has little information about this, and therefore this can influence the target, being the Indian company in raising their prices. Reservation points can influence the level of power in a negotiation, according to Hogg and Cooper (2003). A reservation point for the British company could be a set price that they have in mind in which they are determined not to pay more for the website design. Bazerman (1997) describes a reservation point as the least acceptable terms that a party would be willing and happy to accept. Having limited information about what the companies reservation point should be could mean that they end up paying more than they should be for the website design.
Where the negotiation takes place can either benefit of hinder the British company, according to Volkema (1999), by selecting a favourable time and location of the negotiation that is unfamiliar to one of the negotiators, then this can make them feel uncomfortable and give the other negotiator an unfair advantage, therefore in this case, the negotiation should not take place in Britain or India but perhaps over the Internet where the negotiators are both in their own comfortable surroundings to be able to negotiate as best they can. Although you can save time and money by negotiating over the Internet (Whitton and Hollingworth, 2002) the negotiators have to bear in mind there is no human interaction. The negotiation for the website design with the Indian company should be completed within one day, the preparations required for the negotiation may take longer as research needs to be conducted to find out costs for the website design form other Indian companies, this will take longer than if a British company was being used.
3.0 The Impact of Intercultural Differences on Negotiation
Different cultures are likely to use possibly harder negotiation tactics, so the negotiators find it harder to understand, according to Ghauri and Usunier (2003). Nationalistic feelings are more likely to be aroused and these will impact upon the negotiation, additionally negative feelings of India by the British or vice versa will also affect the tactics of the negotiation. Negotiations tend to be less favourable when they are carried out with intercultural differences according to Sawyer and Guetzkow (1965).
Research by Moran and Stripp (1991) shows that negotiations with Indian companies should be conducted with high pressure tactics and thus when the British company negotiates with the Indian company in regards to web design, they should not give up on their reservation points and should remain determined. The goals of the web design should form the basis of the negotiation, as well as the timing and the budget. According to The Negotiation Guru (2009) every transaction in India is a negotiation, and therefore the Indian website design company may be more used to negotiations than the British company. According to Kumar (2005), the key point for British and other Western companies when attempting to negotiate with an Indian company is to carefully navigate the cultural divide. If negotiations with different countries are not effectively managed, according to Kumar (2005) negative emotions, such as distrust and even anger can occur. The Indian website design company is likely to negotiate with tactics that are complex and imaginative and the Indian company can prefer for the negotiation to be more drawn out than the British company, according to Kumar (2005).
This extra time taken for the negotiation can provide the British company with time for reflective thinking which according to Luecke and Patterson (2008) can help create win win negotiations. If this negotiation takes on problem solving strategies then it can also lead to a win win negotiation. The British company is likely to approach the negotiations as if a problem needs to be solved, taking the concept of problem solving negotiations form the Americans, according to Samover and Porter (1993) and therefore a win win negotiation could occur.
Within the website design negotiation, there are only two parties involved in order to keep it simple and to keep the focus on the goals of what the British company hopes to achieve with the website.
4.0 Negotiation Skills in an International Environment
This negotiation is unlikely to be a one shot negotiation as a good relationship will need to be formed with the Indian website design company as an element of trust is involved in making sure that they can complete the design to time and to design specifications. According to Cleary (2001) one-shot negotiations should only be used when no relationship needs to be formed with either party. Additionally, future design amendments and additions may need to be applied, so repetitive negotiations may need to occur. This is especially as problem solving concepts will be involved in the negotiation, as well as ensuring an optimised website is created, that may involved several additions that could result in more negotiations, for example costing for SEO campaigns.
The cultural style of Britain and India will greatly impact upon the negotiation; scholarly research has been conducted to attempt to lead to a better understanding of cultural differences and negotiations (Weiss, 1994 and Faure and Sjostedt, 1993). According to a study by Salacuse (1998) the British favour general agreements and win win negotiations and therefore would strive towards this when negotiating with the Indian website company. The research by Salacuse (1998) also found that both the British and Indian companies are likely to be risk takers when negotiating, therefore if both companies recognise this, they could use it to their advantage. Indians have a low sensitivity to time when negotiating, according to Salacuse (1998) therefore the British company must be aware that the negotiation may go on for longer than they would like it to and should therefore prepare for this.