Tuesday, November 14, 2017

Cultural Issues in Strategic Alliances & Negotiations

One of the greatest cross cultural successes in the business world is the Renault Nissan Alliance. If one reads the differences between the two cultures, it appears too good to be true. In fact, almost unreal.With Mitsubishi joining the alliance recently, there is another spice in the curry!

Despite the obvious contrasts in the French and the Japanese cultures, how do such alliances succeed? The large question is, what are the dynamics of cross cultural alliances, howsoever big or small they are? How does one negotiate in a culture that is markedly different? The Hofstede dimensions provide us a clue!


Power distance often tells us the how the communication channels may work. If Power Distance in that culture is high, there is no point in seeking a meeting with the senior most executive. It is unlikely that an appointment will be granted easily! Instead, it is advisable to work with junior executives initially, who will report everything in detail to the boss!!

If negotiating as a team, one must ascertain the Individualism vs Collectivism score of that culture. This helps in determining whether the decision will be taken by the senior most person(middle east, maybe), or the entire team(as in Japan). One can plan the discussions accordingly.

Uncertainty Avoidance scores tell us whether the other party is likely to keep things vague, or prefer to have clear stands. If the native culture is low on uncertainty avoidance(India!), it is okay to expect some vagueness and open endedness.

Long Term vs Short Term Orientation: When meeting a client in an alien culture for business negotiations, it is important to ascertain his country and organisational orientation on this score and plan accordingly. For example, if the alien culture is very short term oriented, a 5 or 10 year long plan may be of little interest to the client.

Masculinity vs Femininity: In a business negotiation context, this parameter is extremely significant. It helps plan gifts, for example. In high masculine environment, the gifts need to be ego touching. Example, one can plan a better gift for the boss than the rest of the team. However, in high feminine environment, same gifts may work well, despite the hierarchy.


Contextuality

By knowing this aspect one can ascertain some aspects of communication and behaviour. In High Context cultures, one can expect a lot between the lines, and therefore body language has to be observed very closely. In low context culture, one can expect direct communication.

Keeping these factors as part of the negotiation or alliance plan can remove unwanted anxieties, and make the discussions productive.

Test

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