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Negotiating Across the Pacific Case Solution & Answer

Negotiating Across the Pacific Case Solution

Major Issues:

Although negotiation tends to be a purely domestic business deal negotiation of international transactions which was quite common. (SALACUSE, 1999)Therefore, the major issues between APCG and BBT were considered to be a breachment of faith through withholding information and restricting themselves from being upfront at the time of communication between different parties, leading to a lawsuit from BBT. Such issues were primarily caused by differences in cultural values like relationship building, as Chinese people used to pay more attention to build guanxi.The emphasis on building personal relationships as compared to a legalistic approach i.e. based on facts with distinct variations in how the business was done. Similarly, it was also followed by the individual parties which did not conform to the methodology of the business with which they were familiari.e. Mr. Tang should have notified to Mrs. Ming about indirect deal with the manufacturer and a contract should have been signed by Mr. Smith with Dr. Fisher.

Analysis:

Relationship Building:

The process of relationship-building is to be acquainted with the individualsyou deal with or plan of dealing with them. Relationship buildingis considered to be a mutual trust before getting started with transactions or business discussions. Therefore, the process of relationship-building in a number of countries has significant importance except forthe United States. The approach of this process in the United States of America is primarily to get down to business operations straight away without wasting any time on the people associated with it.

This is in clear contradiction to China’s process where the key emphasiswas based on building “Guanxi”i.e. quite complicated and pre-dominant personal relation network. The methodology of the United States might turn out to be a major issue in continuing business operations with China. The effectiveness of America obstructsthe development of a patient based on the mutual trust relationship – the base of any business agreement in Asia. Considering the facts,Mr. Smith had performed his own examinationand was well aware of the methodological approach of Chinese trade, but he did not consider it as significant to be able to apply.

Although Mr. Tang advised Mr. Smith, pointing out the key features of how the business operations were conducted in China and America, Mr. Tang did not stress Mr. Smith to better comprehendhispotential impact. Similarly, Mr. Tang also put his relation with Mrs. Ming in danger,despite the fact that they knew each other for the past many years,by not revealingthat they did not have a direct dealer.

Guanxi versus Adversarial Methodologies of Business:

            The business approach of Americans towards the business operations tend to be straight forward and a practical one. The key belief of Americans towards business operations areprimarily based on negotiation and driving hard bargains. Whereas the Chinese tend to be more focused on respect, honor, reputationfollowed by an intricate and pervasive personal relation’s network in their business manner. As Mr. Smith was a represent ativeent repreneur in America regardless of considering the consignment price decided to proceed with it. According to him, this seemed quite a natural approach. This is due to the fact that they either stated about the high price or just accepted it.

The prevalence of such situations tends to be completely acceptable in the work ethics and industry of America. Whereas according to the Chinese perspective, they significantly consider it as a sign of lack of respect and being more sensitive and emotional, intended not to respond to such unnecessary offering and had put off for about a period of the month. This demonstrated their humbleness to even title a value they assumed to be right and intended to hold on until the other dealer re-contact with improved conditions. This has greatly influenced in such a way that they believed the Americans were not concerned about the new terms and the business that ended up with the reduction in cost through 50 percent.

Hofstede Cultural Theory:

According to the study conducted by Hofstede, the culture of any state is regarded as collective programming of mind for the determination of behavior, attitudes, and values. The differences in culture tend to demonstrate profound implications in terms of negotiating and restricting the extent through which the theories of negotiation and practices can be generalized through the boundaries at the national level. (Liu, 2008)The description of the differences between the focus on the similarities and the differences are considered to analyze on the basis of four key dimensions on the basis of national cultures i.e. power distance, individualism-collectivism,masculinity and femininity, uncertainty avoidance, andlong term orientation.(Najla Podrug, 2006 )

Power Distance:

This dimension of the cultural theory is used for the measurement of the acceptance of the unequal distribution of powers across different countries.The United States of America demonstrates the small power distance in society. This is due to the fact that businessmen in America tend to be straight forward and do not easily get influenced.Similarly, if any state demonstrates the high value of this dimension then the individuals living in the society agree to the hierarchical system and distance.This dimension also suggests that the level of inequality in any society is followed by the fault of the people living in that society as well as its leaders. Any individual representing international experience would significantly realize the fact that each society is bound to be imbalanced but some are even more.

Individualism:

This dimension of the Hofstede’s framework of cultural dimensions is the representation of the loyalty and respect that any individual has towards their respective society. Whereas countries upholding high values in this dimension is not considered valuable in terms of sharing responsibility beyond their friends and family. Therefore, in this dimension, each individual is himself/herself responsible for his/her as well as their family’s care and safety. In this approach, individuals in such society tend to be more independent such as in the United States of America and other western states around the world.

On the other hand, countries who represent low value in individualism are known to display strong cohesion of the group with respect as well as loyalty, particularly for the group members. In this regard, each individual maintains a strong connection with their society i.e. primarily with their friends and family members and significantly shares a sense of unwavering loyalty…………….

 

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