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Overcoming cultural barriers is as important as the details of deals
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IN 1998, the partnership between Chrysler and Daimler-Benz, based on the condition that it be a “merger of equals,” was doomed from the outset. After a series of roller-coaster years, Chrysler posted a US$1.5 billion loss in 2006. By 2009, Daimler had completely divested itself of Chrysler, which briefly sought bankruptcy protection before being bailed out by the US government.
Cultural differences were not the main reason the Daimler-Chrysler merger proved disastrous. Differing goals and reputations, decisions Chrysler made that predated the merger, and cost savings that failed to materialize played a larger role. Different norms and styles made the transition difficult.
According to analyst and author Peter Schneider, Daimler and Chrysler
employees were slow to adjust to each other’s different business practices and customs during and after the merger. The Germans were more hierarchical, formal, and methodical than the more casual Americans.
Taking your counterpart’s perspective can
help you negotiate higher-quality agreements, researchers have found. Is cultural perspective taking, considering the typical approach to negotiation your counterpart might take based on his/her culture — just as effective as looking at details of the negotiation from your counterpart’s point of view?
By highlighting cultural stereotypes rather than individual similarities, cultural perspective taking may prompt negotiators to compete to claim value at the expense of creating new sources of value, according to the researchers.
The message? Go ahead and study your counterpart’s cultural norms so you’re not surprised by unfamiliar practices — but spend even more time analyzing the intricacies of the negotiation at hand.
Building a long-term agreement
As compared with the 1998 merger between Daimler and Chrysler, the partnership negotiated the same year between French automaker Renault
and Japan’s Nissan has proven much more durable.
The methodical, slow approach the companies took to their partnership helped lay a foundation for trust and creativity that made cross-cultural differences less of an obstacle than they were in the Daimler-Chrysler merger.
There are four tips for durable cross-cultural partnerships:
• Earn their trust. Telling the other side that you respect their culture may secure you a contract. But to build a promising relationship, you’ll need to back up your words with respectful actions after the contract is signed.
• Respect differences. When it comes to business partnerships, merging distinct cultures can be a confusing, lengthy process. A better approach may be to maintain your unique identities and borrow from the best of both.
• Expect to be surprised. Because national culture is just one facet of our identities, try to view negotiating counterparts as unique individuals rather than cultural ambassadors.
• Prepare to adapt. Don’t assume that the business strategies you’ve cultivated on your home turf will work in a new culture. Arrive ready to listen and adapt your style.
Bridging the cultural divide
Differences in culture complicate business negotiations and relationships in many ways. First, they can create communication problems. For example, if in response to one of your proposals your Japanese supplier says, “that’s difficult,” you might erroneously assume that the door is still open for further discussion. In fact, your supplier, coming from a culture that avoids confrontation, may have been giving a flat no.
Second, cultural differences also make it difficult to understand each other’s behavior. Americans may view the hiring of relatives as dubious nepotism, but Lebanese counterparts may consider the practice to be necessary to securing trustworthy, loyal employees.
Third, cultural considerations influence the form and substance of the deal. For example, when McDonald’s first franchised its operations in Thailand, it insisted on strict adherence to its traditional American menu. Later, under pressure from its Thai franchisee, it permitted the sale of noodles, a dish traditionally served on auspicious occasions. Sales increased as a result.
Finally, culture can influence the way people behave and interact at the bargaining table. In some countries, such as Spain, business negotiators’ primary goal may be to achieve a signed contract, whereas negotiators in other cultures, including India, may be more focused on establishing an effective long-term relationship.
Here are a few simple rules for coping with cultural differences in international negotiations and transactions:
• Do your homework about your supplier’s culture. Through reading and conversations with those who know the country concerned, you can learn a lot.
• Show respect for cultural differences. Inexperienced negotiators tend to belittle unfamiliar cultural practices. It is far better to seek to understand the value system at work and to construct a problem-solving conversation about any difficulties that unfamiliar customs pose.
• Be aware of how others may perceive your culture. You are as influenced by your culture as your counterpart is by his. Try to see how your behavior, attitudes, norms and values appear to your foreign supplier.
• Find ways to bridge the cultural gap. A first step in bridge building requires you and your suppliers to find something in common, such as a shared experience, interest, or goal.
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