International Negotiations- A Legal Risk Management Tool

February 17, 2015

International Negotiations-Negotiate At Your Own Risk

As more and more companies are entering the international marketplace in search of new territories and markets for their products and services, it is becoming apparent that culture and communication is having a direct impact on business negotiations due to the international aspect of the transactions.  International business transactions are in turn effected by negotiations between the international parties which are in turn effected by culture and communications.  After all, it is about culture isnt it?  But failure to appreciate the culture and background of your counterpart can actually lead to disaster. When conducting international negotiations you must try and understand your counterpart, which when dealing with two distinct and different cultures maybe difficult.

Companies entering into new markets must in essence be mindful of:

  1. Cultural issues
  2. Communication issues
  3. Intercultural Communication Issues
  4. International Business Issues

In reality, international business and associated risks are to a certain extent dictated by international business communications and culture.  International negotiations are much more complex than domestic negotiations by the fact they involve different cultures, different languages and perhaps different views of the world.   Culture will determine how companies and their negotiators look at negotiations.  Certain societies will have a greater risk tolerance than others.  Some cultures will look at the future differently or will value compromise differently. Some cultures promote problem solving while others promote individualistic goals with little concern for the other side.  Negotiating with other cultures can lead to a clash of values, disagreements over the meaning of words, confusion over inaction or action, and of course failed negotiations.  There are a number of factors which make international negotiations as well as international business more challenging such as :

  1. Political and legal pluralism
  2. International economics
  3. Ideology
  4. Culture
  5. International communications

Understanding the culture of your counterpart becomes important.  If you understand the culture of someone you negotiate with you have a better chance of succeeding.  Understanding a different culture means you will communicate more effectively than if you had no idea as to the culture of the person sitting across the table form you.  If you are to negotiate effectively with people from different cultures and perhaps different countries a number of steps should be taken:

  1. Learn the culture’s priorities
  2. Learn what kind of behavior is offensive
  3. Learn what kind of behavior is expected
  4. Learn what international influences are at play
  5. Learn how that particular culture addresses conflict

Successful negotiations normally involve a decision amongst the parties to search for an agreement instead of fighting.  Parties must be able to manage tangibles such as price and terms as well as intangibles such as the underlying motivation to negotiate.  How does one view negotiation itself?  Usually, different cultures view negotiations as well as success differently.   So the challenges to successful international negotiations are apparent.  One has to understand the multiple influences of culture and communications on the international negotiation process and update that understanding regularly as circumstances change.  Remember, culture is not static but is always changing.  Remember- when conducting international negotiations you do so at your own risk.  However, if conducted properly, it can be a very effective risk management tool.

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