Negotiation in international market

INTRODUCTION

As everyting is becoming globalized so companies are also interested in expanding their businesses outside the country to make them globalized. Doing business internationlly is not a new concept but know it has gained the momentum because compnaies want to became financially sound and want to expand their business all over the world. International business helps the companies to showcase their product and services worldwide and reap the maximum benefits out of it. International business is making your products and services to the customers across national boundaries.

The reason why companies are preferring for doing businees across the countyr is that they have good opportunities and incentives and also they can obtain foreign currencies, they can beat the competition, and also they can achieve the economies of scale. Before their was so many barrier for doing business internationally because many of the countries are not interested such as china, but know they are also into international business to make their economy strong as comapared to others. But while doing business internationally there are two aspects which company should understand and handle carefully they are negotiation with the other company and the cross culture because their working culture can be totally different from us. Apart from cultural difference the company also has to face the legal aspect and the economic enviornment which include the per capita income, the regulatory barrier and the tariff barrier.

So before understanding how negotiation takes place in international market first lets see what is negotiation and how it is done. Negotiation can be a midway between the disputes of the two organisation or it can be the outcome of the problem to satisfy the interest of the two organisation.“Negotiation is a cognitive decision-making process involving the consideration of the appropriate dispute objects and determination of accceptable behaviours to reconcile incompatible interests. The key theme is that a negotiation situation elicits a well-defined cognitive structure based on a negotiator’s past experience as well as present concerns”(pinkley 1990). It is primary method to solve the disputes and generally it happens while doing businesses, government offices and in many areas.

Negotiation can be said as influencing the other organisation to build a long term relationship with them. Negotiation is very important of any business so it has to be done carefully because if we are not good at negotiation, the company may loss the opportunity which can be a long term relationship. The purpose of studing the negotiation in international market is that because of different culture in different country. We cannot negotiation in same manner as we are doing within the country with them because of different working culture, different language and different thinking, it is very difficult to make other to think in same manner as you are thinking. Competency therefore is an important skill in any international negotiation (FayerWeather and Kapoor, 1972, 1976;Root 1987; Well 1977). One more important thing is that while negotiation process if the business of one company is running successfully and it is more stronger and powerful as compare to other company then probability is high thatdeal will done in favour of that company and according to their likings.

The purpose of this project to under the negotiation and give some insight of information to the readers. In this project first I will discuss about the definition of negotiation,then types of negotiation, stages of it, and what effect the negotiation in the international market. Second, I will define what is cross cultural negotiation and how it going to effect the negotiation in the international market. Third, we will see what litectures are saying about this negotiation in international market by doing the litecture review for this study.

OBJECTIVE OF THE STUDY

As businesses are growing so fast the negotiation is becoming very difficult job for a company when it comes for the international market. It is a kind of communication between the two organisation to finalise the deal and the term and condition what they will follow during it. The main objective of the project is to understand how negotiation takes place in international market and and how cross culture will effect the negotiation in the international market. The way of doing negotiation in international market is totally different as compared to same country because in mono cultural environment we can predict the process more accurately, we don’t have any problem with the language, culture or any physical barrier. Apart from this there are several other aspects which I have included in this project which effect the negotiation in international market and they can be like language, physical barrier, personality of the person who ia negotiating, communication skills and many more.

THEORETICAL FOUNDATION

As we have discussed about the negotiation, it is deal done by seeing the interest of both the companies. There are some basic and common charateristics situation which generally happens while negotiation and they are, there should be two or more parties involved while negotiation, parties do negotiation because they think they can get better results than by taking what other side will give them(Fisher, R & Ury, W., 1991.). As the companies have brand image and the employees working there are highly professionals so they generally prefer negotiation because they cannot fight openly, they cannot break the contract, and also they cannot their matter to others because it will harmful to their brand image. Both the parties believe in give and take relation so if one company will dominant the other then they will lose that opportunity. Generally negotiation is done for price, terms for agreement or the services what the compnay is providing.

NEGOTIATION AND CONFLICT MANAGEMENT

As we have seen that negotiation happen for the mutual benefits of both the parties but the main reason for the negotiation to happen is the conflict which can be defined as the struggle or the contest between the two parties with the opposing ideas, beliefs, values and the goals. Conflict can lead to non productive results for both the parties which can give the scope for the negotiation for mutual benefits. If both the parties is unable to solve this conflict then they may not go for the long term relationship that’s the reason why they have to manage this conflict which can help them to achieve their particular goals. Therfore learning to manage conflict is integral part of a high performance team and the main reason for the conflict to happen is the miscommunication between the people of both the parties.

Source: Literature Review

Conflict management is a principle that all conflicts cannot be necessarily resolved but it reduces the chance of occuring the non productive results in the business deals. If we learn to manage the conflict between the parties then we can reduce the impact of conflict on negotiation. For resolving every conflict there is requirement of skills so that’s why conflict management involves acquiring skills related to conflict resolution, awareness about the conflict modes, conflict communication skills, and establishing the struture and enviornment to solve the conflict.

All parties can take the benefit of negotiation by learning the conflict management skills and the five modes of conflict management which can resolve the conflicts are:

Competing

Avoiding

Accomodating

Compromising

Collaborating

The competing conflict mode is highly assertive and less cooperative and this kind of mode can only be used in negotiation when one party is more strong then the other party. When one party have all the power to take the business decision. The skills required under the competing conflict modes are:

Arguing and debating

Using ranks and influence

Asserting your opinions and feelings

Standing your ground

Stating your position clearly

The avoiding mode is low assertiveness and the low cooperative that’s why parties generally apply this mode and avoid conflict out of fear in engaging in the conflict becuase they want to tension to run the business properly. The skills required under the avoiding modes for the negotiation happen in a better way are:

Ability to withdraw

Ability to sidestep issues

Ability to leave things unresolves

Sense of timings

The accomodating conflict mode is low assertive and high cooperative and the parties will apply this at the time when they want the reasonable amount of mutual benefits and want to keep peace. Some parties use the accomodating mode when tge issues and the outcomes are of less importance to them and the skills required under the accomodating modes for the negotiation are as follows:

Forgetting your desires

Ability to yeild

Selflessness

Obeying orders

The compromising mode of conflict management is moderate assertiveness and moderate cooperative, some parties take this mode as give up more than you want but some parties take it as win-win situation. This mode can be used for negotiation when both the parties have equal power status or when they have the strong commintment about the particular goal. The skills required for negotation are:

Assessing values

Finding a middle ground

Making concession

Negotiating

The collaborating mode is high assertiveness and high cooperative where both the parties will create a solution which is not taken by the single individual or by the single party, they have the common interest in the business deals and they will take care of both the parties goal. Generally parties prefer to use the collaborating mode of conflict management because of positive results and the outcomes. The skills required for negotaition with the other parties are as follow:

Active listening

Identifing concerns

Analysing inputs

Nonthrentening confrontation

Productively engaging in the conflict is always valuable for the companies because they can negotaition in a better ways to hold the interest of both the companies. Generally parties handle conflicts in two ways one where they will simply avoid the conflicts and the secong is that they take on anyone who comes their way. There are many factors which influence the conflict management while doing the negotiation and they are like gender, position, power of the parties, situations, expectations of both the parties and communications skills.

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