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Article Summary

The Hidden Challenge of Cross-Border Negotiations

diana brenchley

on 18 May 2010

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Transcript of Article Summary

Double click anywhere & add an idea The Hidden Challenge of
Cross-Border Negotiations Cultural Impacts on Negotiations
cultural tendancies influence how people interact as well as the processes involeved in negotiations
Who are the players? • Abroad you can find extra players that are different than you would find at home, furthermore, they are often non-obvious.

Example: in Germany, labour has virtually equal representation on many supervisory boards of directors.
Who decides what? • It can be very costly if you don’t understand each player’s role and who owns which decision.
• Cultural assumptions can sometimes make it very difficult to recognize who has formal decision rights.
• You need to understand both formal decision rights as well as cultural assumptions.

Pirelli (Italy) became a majority shareholder of Continental Gumminwerke (Germany) but was unable to influence its rival as German corporate governance provides a structure in which other key players can block the wills of a majority shareholder. What are the informal influences that
can make or break a deal? • Need to know who signs the contract and finalizes the deal – but that’s not enough

Many countries have informal webs that greatly influence the decision.
• Need to understand these webs and factor them into the negotiating approach.
o Many people underestimate the power of these webs, because they assume that the legal system is just as important or has just as much power as it does at home, but many are corrupt or controlled by political powers.
o There can be a huge difference between laws and the way things actually work.
Example: in Italy it could be a set of powerful families, or in Germany’s financial sector it could be the insurance giant Allianz. Adapting your approach
Now knowing who is involved is only half the battle, because the processes can vary across cultures. Different processes sometimes need radically different negotiation strategies. 3 forms of processes Top Down
Coalition Building •There is a real boss who ultimately
makes the decision
little to no delegation
•Who is the real decision maker
can be misleading
Honduran president who although was
the last to sign the approval,
had very limited power • Has many variations.
• Each unit has to bargain for compatible goals and interests –
•focus on building relationships rather than deals –
• Be prepared to provide an abundance of information
• Get your interests and incorporated into their consensus process!
• Be prepared for a long drawn out deal
actual implementation may be speedier than top down approach
•Don’t require agreement of every player,
but support of a sufficient subset of players.
•Sometimes there is a “blocking coalition”,
which can put a proposal to stop.
•Make sure as always, you understand the players’ interests.
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