Question

The coronavirus pandemic is a human tragedy, affecting hundreds of thousands of people globally. It is also
having a growing impact on the global value chain, hence the global economy. All serious companies around
the world have therefore found innovative ways of keeping business going nonetheless. One of such notable
companies is Ghana’s Kantanka Inc. The company has established a dedicated team to ensure a simple but well-
managed set of processes that maximize the health and safety of colleagues and customers. This team is led by
the CEO of the company. The focus of the team has been broken down into five distinct work streams:
 Employee management and wellbeing
 Financial stress-testing and contingency planning
 Supply chain monitoring
 Marketing and sales
 Any other business
Kantanka Inc. is a car manufacturing company originating from Ghana which produces low-end vehicles. The
company’s competitive advantage stems from its unconventional but effective and energy efficient technology
which is not found in most vehicles around the world. The dashboard and other interior parts of the vehicles are
made from wood, and the vehicles are powered by car batteries and solar energy.
Recently, they have added on aircrafts and mechanized farming technologies. The company is set to take the
African market by storm. The company decided in 2015 to enter Nigeria and Germany. With the backing of the
government of Ghana, negotiations with both countries succeeded as negotiators from Nigeria and Germany
were in natural sync with the Ghanaian lobbyist contracted.
Once the company has gone international, it was only natural that value chain activities of the company would
have to be rationalized to deal with the expansion, as well as all forms of risk with respect to exchange rate
fluctuations. Speaking of financials, in this coronavirus pandemic period, companies such as Kantanka Inc. that
entered into future contracts and used currency options as hedging instruments would have less to worry about
since excuses from business partners would almost be non-existent.
Recently in 2017, a company from Sậo Tome and Principé, called PreZi contacted Kantanka Inc. to obtain
permission to use its technology. As to whether to agree or not to the agreement is still under scrutiny by
Kantanka’s international expansion team.
a) Discuss five (5) ways the two negotiators can get along in order for their cultural backgrounds not to
affect the outcome of their bargaining process. [5 marks]
b) Explain three (3) financial risks Kantanka Inc would definitely encounter. [3 marks]
c) What five (5) benefits is Kantanka Inc likely to gain from entering the German market?
[5 marks]
d) Explain five (5) problems Kantanka Inc’s international expansion team should anticipate before entering
the German market. [5 marks]
e) Explain the contractual strategy that would best characterize the Kantanka-PreZi agreement once agreed
to. [2 marks]

Answer 1

International business deals not only cross borders, they also cross cultures. Culture profoundly influences how people think, communicate, and behave. It also affects the kinds of transactions they make and the way they negotiate them. Differences in culture between business executives—for example, between a Chinese public sector plant manager in Shanghai and a Canadian division head of a family company in Toronto– can create barriers that impede or completely stymie the negotiating process.

The great diversity of the world’s cultures makes it impossible for any negotiator, no matter how skilled and experienced, to understand fully all the cultures that may be encountered. How then should an executive prepare to cope with culture in making deals in Singapore this week and Seoul the next? In researching my book The Global Negotiator: Making, Managing, and Mending Deals Around the World in the Twenty-First Century (Palgrave Macmillan, 2003), I found that ten particular elements consistently arise to complicate intercultural negotiations. These “top ten” elements of negotiating behaviour constitute a basic framework for identifying cultural differences that may arise during the negotiation process. Applying this framework in your international business negotiations may enable you to understand your counterpart better and to anticipate possible misunderstandings. This article discusses this framework and how to apply it.

1. Negotiating goal: Contract or relationship?

Negotiators from different cultures may tend to view the purpose of a negotiation differently. For deal makers from some cultures, the goal of a business negotiation, first and foremost, is a signed contract between the parties. Other cultures tend to consider that the goal of a negotiation is not a signed contract but rather the creation of a relationship between the two sides. Although the written contact expresses the relationship, the essence of the deal is the relationship itself. For example in my survey of over 400 persons from twelve nationalities, reported fully in The Global Negotiator, I found that whereas 74 percent of the Spanish respondents claimed their goal in a negotiation was a contract, only 33 percent of the Indian executives had a similar view. The difference in approach may explain why certain Asian negotiators, whose negotiating goal is often the creation of a relationship, tend to give more time and effort to negotiation preliminaries, while North Americans often want to rush through this first phase of deal making. The preliminaries of negotiation, in which the parties seek to get to know one another thoroughly, are a crucial foundation for a good business relationship. They may seem less important when the goal is merely a contract.

It is therefore important to determine how your counterparts view the purpose of your negotiation. If relationship negotiators sit on the other side of the table, merely convincing them of your ability to deliver on a low-cost contract may not be enough to land you the deal. You may also have to persuade them, from the very first meeting, that your two organizations have the potential to build a rewarding relationship over the long term. On the other hand, if the other side is basically a contract deal maker, trying to build a relationship may be a waste of time and energy.

2. Negotiating attitude: Win-Lose or Win-Win?

Because of differences in culture, personality, or both, business persons appear to approach deal making with one of two basic attitudes: that a negotiation is either a process in which both can gain (win-win) or a struggle in which, of necessity, one side wins and the other side loses (win-lose). Win-win negotiators see deal making as a collaborative, problem-solving process; win-lose negotiators view it as confrontational. As you enter negotiations, it is important to know which type of negotiator is sitting across the table from you. Here too, my survey revealed significant differences among cultures. For example, whereas 100 percent of the Japanese respondents claimed that they approached negotiations as a win-win process, only 33% of the Spanish executives took that view

3. Personal style: Informal or formal?

Personal style concerns the way a negotiator talks to others, uses titles, dresses, speaks, and interacts with other persons. Culture strongly influences the personal style of negotiators. It has been observed, for example, that Germans have a more formal style than Americans. A negotiator with a formal style insists on addressing counterparts by their titles, avoids personal anecdotes, and refrains from questions touching on the private or family life of members of the other negotiating team. A negotiator with an informal style tries to start the discussion on a first-name basis, quickly seeks to develop a personal, friendly relationship with the other team, and may take off his jacket and roll up his sleeves when deal making begins in earnest. Each culture has its own formalities with their own special meanings. They are another means of communication among the persons sharing that culture, another form of adhesive that binds them together as a community. For an American, calling someone by the first name is an act of friendship and therefore a good thing. For a Japanese, the use of the first name at a first meeting is an act of disrespect and therefore bad. Negotiators in foreign cultures must respect appropriate formalities. As a general rule, it is always safer to adopt a formal posture and move to an informal stance, if the situation warrants it, than to assume an informal style too quickly.

4. Communication: Direct or indirect?

Methods of communication vary among cultures. Some emphasize direct and simple methods of communication; others rely heavily on indirect and complex methods. The latter may use circumlocutions, figurative forms of speech, facial expressions, gestures and other kinds of body language. In a culture that values directness, such as the American or the Israeli, you can expect to receive a clear and definite response to your proposals and questions. In cultures that rely on indirect communication, such as the Japanese, reaction to your proposals may be gained by interpreting seemingly vague comments, gestures, and other signs. What you will not receive at a first meeting is a definite commitment or rejection.

The confrontation of these styles of communication in the same negotiation can lead to friction. For example, the indirect ways Japanese negotiators express disapproval have often led foreign business executives to believe that their proposals were still under consideration when in fact the Japanese side had rejected them. In the Camp David negotiations that led to a peace treaty between Egypt and Israel, the Israeli preference for direct forms of communication and the Egyptian tendency to favor indirect forms sometimes exacerbated relations between the two sides. The Egyptians interpreted Israeli directness as aggressiveness and, therefore, an insult. The Israelis viewed Egyptian indirectness with impatience and suspected them of insincerity, of not saying what they meant.

5. Sensitivity to time: High or low?

Discussions of national negotiating styles invariably treat a particular culture’s attitudes toward time. It is said that Germans are always punctual, Latins are habitually late, Japanese negotiate slowly, and Americans are quick to make a deal. Commentators sometimes claim that some cultures value time more than others, but this observation may not be an accurate characterization of the situation. Rather, negotiators may value differently the amount of time devoted to and measured against the goal pursued. For Americans, the deal is a signed contract and time is money, so they want to make a deal quickly. Americans therefore try to reduce formalities to a minimum and get down to business quickly. Japanese and other Asians, whose goal is to create a relationship rather than simply sign a contract, need to invest time in the negotiating process so that the parties can get to know one another well and determine whether they wish to embark on a long-term relationship. They may consider aggressive attempts to shorten the negotiating time as efforts to hide something. For example, in one case that received significant media attention in the mid-1990’s, a long-term electricity supply contract between an ENRON subsidiary, the Dabhol Power Company, and the Maharashtra state government in India, was subject to significant challenge and was ultimately cancelled on the grounds that it was concluded in “unseemly haste” and had been subject to “fast track procedures” that circumvented established practice for developing such projects in the past. Important segments of the Indian public automatically assumed that the government had failed to protect the public interest because the negotiations were so quick. In the company’s defense, Rebecca Mark, chairman and CEO of Enron International, pointed out to the press: “We were extremely concerned with time, because time is money for us.

This difference between the Indian and U.S. attitudes toward time was clearly revealed in my survey. Among the twelve nationalities surveyed, the Indians had the largest percentage of persons who considered themselves to have a low sensitivity to time.

Thank You,