The Importance Of Negotiation

Most companies in the word have the need to negotiate to obtain the specific resources they require for their services or products. Negotiation is a process in which two or more parties interact trying to identify a solution to the “allocation of resources or the resolution of seemingly incompatible goals” (Palich, 2002, p. 780). The conviction that the parties has opposing interests or goals can increase when they have different cultures or origins, based on cultural stereotypes and commonly held beliefs. In many situations, the need to negotiate not only with companies from the same country, but also with foreign companies is increasing a cause of the globalization. An example of this is the negotiations between the international companies

Asian cultures were instructed to work together, while American cultures were raised to be individualistic. That is why Asians are inclined to use collaborative negotiation styles, trying to cooperate and work with their counterparts to find a solution (Ready and Tessema, 2009). In contrast, the American cultures tend to use competitive negotiation styles, trying to find a solution regardless of the other part (Ready and Tessema, 2009). Furthermore, these two cultures may not have the same expectations about the possible outcomes of the negotiation. Their cultural backgrounds support this aspect since Asians lean more to a win-win situation while the Americans would be more inclined on a win-lose approach. That is, Asian cultures try to find conciliatory and beneficial alternatives for both parties, while American cultures may be more interested in personal gains (Ma, 2007). The style of formalizing the results also vary between these two cultures. Asian cultures may prefer a written agreement with general points, while Americans are more likely to have a contract with the specifics details (Ready and Tessema, 2009). The parties in the negotiation can perceive these differences with suspicion in the fulfillment of the agreements. Therefore, trading styles used by Asian and American cultures that can be considered as incompatible may cause more discussions, which could ultimately affect the possibility of reaching an