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Negotiating in Mexico

You may want to consider these issues when doing business in Mexico

Jason Arnold

on 15 November 2012

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Transcript of Negotiating in Mexico

Cultural 5 min
Style 2-3 min
Legal 2-3 min
Do's and Don'ts Negotiating in Mexico Culture Pace of Negotiations Negotiating Styles Competitive, but value long term relationships
Maintain positive attitude & avoid conflict
Reluctant to share information Welcome to Mexico City! Business Environment Mexico joined NAFTA in 1994
Increase in trades
Free Trade Agreements with over 50 countries
Guatemala, Honduras, El Salvador, the European Free Trade Area, Japan, etc.
GDP estimated at $1.683 trillion in 2011
GDP growth estimated at 4% in 2011
Labor force 49.17 million Economy Do's and Don'ts Legal Negotiating Style
Relevant Concepts Task oriented
Value promptness
Time focused
List makers and Planners
Clear separation of time spent on work and personal life Relationship oriented
Not as time focused – being late is the norm
Schedules are not viewed as important
All time is viewed as the same – personal and
work time is not separated Monochronic Time (M-time) Polychronic Time (P-Time) VS **Mexico has a P-TIME culture** Achievement
Material rewards for success
Traditional family structure
Ego oriented
Very competitive Cooperation
Caring for the weak
Prefer fewer working hours
Consensus oriented and less competitive
Feminine Values Masculine Values Mexico is a hierarchical society, and has a high power distance score. People accept a hierarchical order in which everybody has a place. Hierarchy in an organization in Mexico is seen as reflecting inherent inequalities, centralization in power, and subordinates expect to be told what to do. Mexico has a very HIGH preference for avoiding uncertainty:

Maintain rigid codes.
People have the urge to be busy, work hard, and feel secure Power Distance Uncertainty Avoidance Index (UAI) Loosely-knit social framework
Individuals take care of themselves and their immediate family only Individualism vs Collectivism (IVC) Tightly-knit social framework
People are all part of an “in-group”
look after everyone else’s families as well as their own Individualism Collectivism Mexico is a COLLECTIVIST culture. Loyalty is paramount and everyone takes responsibility for fellow members of their group Greetings
Body Language
Longer hugs
Other gestures Customs Initial meeting is important.
Trustworthiness, sincerity, and integrity are important to building relationships.
To get to know you better, they may ask personal background, family and life interests questions. Exchange business cards during the introduction meetings, once everyone is present.
English and Spanish
Professional and Educational qualifications
Present the business card with the Spanish side facing towards the recipient. Women might encounter difficulties. They should demonstrate their competence, skill, and authority.

Talk and behavior considered sexist and inappropriate. Women in Business Dress formally
Occasionally emulate their behavior
Maintain honest and cordial relations
Politeness is crucial
Be sincere, charismatic, and sociable
If communicating in English, speak in short, simple sentences Do! Make strong eye contact
Make sure both sides understand the payment terms
Consult a local legal expert before signing a contract
Expect late pay Do! Do not rush into serious business discussions before your counter partner is comfortable with you
Do not change key contacts often
Do not expose open conflict
Do not interpret a “Yes” as an agreement
Do not leave the room quiet for too long
Do not be overly direct Don't! Questionable Payments
Political Payments, Bribes, Extortion, Sales Commissions, or Payments to Expedite Routine Transactions (grease payments)
Grease Payments
In Mexico such payments are fairly common, and are called “la mordida,” or, “the bite.” Corruption Prohibits U.S companies from making illegal payments, political contributions, or other gifts to foreign government officials with the intent of influencing business transactions

Prohibits third party use as a channel for such payments

Requires that public companies file proper financial statements and maintain a system of internal controls

“Grease payments” are legal under the FCPA if they are simply used to speed the performance of a usual function

Detractors believe it is too broad Foreign Corrupt Practices Act of 1977 Signed by 36 countries including the U.S. and Mexico

Establishes legally binding standards for the bribery of foreign public officials in international business transactions

The only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction Organization for Economic Co-operation and Development Convention on Bribery Mexico has a corruption Perception Index of 3 out of 10 (the lower the number the more corrupt)

OECD Enforcement is listed as “Little or None”

Mexico is not rated high on transparency

7 out of 10 on the likelihood to bribe another countries officials (the higher the number the more likely to bribe)

Public perception: 75% believe that corruption has recently increased, and 52% believe that government efforts to curb corruption are ineffective Transparency International Polls Shrewd bargaining techniques
Difficult to change position
Final offer not always final
Silence is often used
MPP rarely used Bargaining Executive members
Translators Negotiating Planning Avoid Confrontation
Higher Authority
Make Time Your Ally Secrets of Power Negotiating by Roger Dawson Long term focused

Do not sequence plan
Independent events of negotiating Behaviors of Successful Negotiators Choose the right team members Mutual understanding of terms

Decide the level of relationship you want to develop Assess your needs Sometimes yes does not mean yes Take Away Points Long Term
Relationships Distributive
Negotiation Style Slower Paced,
Low Structure
During Negotiations Respect, Trust,
and Loyalty Unethical
Business Practices Relationship & Communication Building Business Setting Culture “Live in order to work” “Work in order to live” Mexico leans more toward a masculine culture
Business Setting Culture Business cards •Competitive, but value long term relationships
•Maintain positive attitude & avoid conflict
•Reluctant to share information

Negotiating Style •Slow
•Attempts to rush are offensive
•Common to bounce around
•Reluctant to give the final No
Long term vs. Short term Questions? •The World Factbook on Mexico. https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html Date accessed: 11 November 2012.
•Crouch, Ned. Mexicans & Americans: Cracking the Cultural Code. Yarmouth: Nicholas Brealey Publishing, 2004: pg 96, 140.
•Katz, Lothar. "Negotiating International Business." Negotiating International Business. (2008). <http://www.globalnegotiationresources.com/cou/Mexico.pdf>.
•Lewicki, RJ., Barry, B., and Saunders, DM. Negotiation: Readings, exercises, cases. New York: McGraw-Hill Irwin, 2007: pg. 101, 105, 106, 173-74.
•Transparency International: the Global Coalition Against Corruption. http://www.transparency.org/country#MEX
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