Nürtingen University of Applied Sciences

Transnational Business

“Cross-Cultural Negotiating”

Approved and supervised by &
University Of Applied Science, Nuertingen

by

Martina Mottl

SS 2001

Cross-Cultural Negotiating   3

1. Introduction   3
1.1 Why Cross-Cultural?  3
1.2 The Importance of knowing other cultures   4

2. The Japanese Management Style  5

3. The negotiation process  6
3.1 Group consensus in decision-making   6
3.1.1 Nemawashi   6
3.1.2 Ringi   6
3.2 Exchanging business cards   7
3.3 Contracts and lawyers   7
3.4 Negotiation teams   9
3.5 Gathering information   9

4. DaimlerChrysler AG and Mitsubishi – an example for a successful negotiation between Germans and Japanese?  10
4.1 Managing an international company   12

5. Conclusion   13

BIBLIOGRAPHY

THE ALLIANCE OF DAIMLERCHRYSLER AND MITSUBISHI MOTORS CORPORATION

1. Introduction

„Mitsubishi is certainly an interesting partner concerning busses and trucks, but he is already married,” said Rolf Eckrodt of DaimlerChrysler AG about the discussion on buying shares of Mitsubishi Motors Corp. (MMC)¹. In 1999 the Swedish utility truck manufacturer Volvo entered into an alliance with MMC by acquiring 3.3 percent of the shares. DaimlerChrysler AG – seeking for a Japanese partner in the field of busses and trucks – considers buying Volvo’s outstanding 3.3 percent stake in MMC. The problem at this point is that Volvo has already established a long-term relationship with MMC which is the basis on that future success rests. In the following, I will explain the problems which might arise in the negotiating process between the German-American company DaimlerChrysler AG and the Japanese corporation Mitsubishi. There are various differences between the Western and the Japanese society which have great influence on the negotiating process. The Germans have to pay attention to these differences, for instance, the strong hierarchical system, the group consensus in decision-making and the deference to seniors in Japan. Offending against certain rules of the Japanese society might harm the relationship between the counterparts in a negotiation.

1.1 Why Cross-Cultural?

In recent years economic activity has become increasingly globalized. The world leading enterprises have been faced with raising competition among themselves. To cope with these circumstances, many companies act globally. They set up branches overseas to be closer to the consumers, or - to reduce the costs of production - many German companies move the assembly of their goods to other countries where taxes and personnel costs are lower. One will not find a single piece of a Mercedes Benz that says “Made in Germany”: It is “Made by DaimlerChrysler AG” which reflects the global-sourcing of the corporation.

Referring to the joint venture of DaimlerChrysler AG and MMC, the German automotive and commercial vehicles manufacturer wants to strengthen its market share both in Japan and in the Asian markets via its new alliance with MMC. Together they want to develop new products, create new markets and drive down costs through increased synergies and economies of scale.

1.2 The Importance of knowing other cultures

The basic requirements for a successful formation of a contract and establishing a long-term relationship abroad are knowing the other side’s culture, the differences in managerial styles and the differences in negotiating, just to mention a few. Overcoming language barriers might be the least problem in international negotiations but it is not to be neglected. Not only is time required for translation, but important differences in the meaning of words can exist. Inadequate interpretation services can disrupt negotiations because the perspectives of both sides cannot be presented adequately. Besides helping in interpretation, bilingual members of a negotiation team familiar with the culture of the other party can also interpret facial expressions and body language.

“Culture influences negotiation through its effects on communication. Intercultural differences may cause misperceptions and misunderstandings. Failure to appreciate the cultural patterns of opponents is detrimental to the quality of the decision-making process.”²

2. The Japanese Management Style

There is no denying the fact that not anybody in Japan thinks or acts alike and, when one asks people about their own experience, everyone has a different story. Generalizations are therefore dangerous. On the other hand, an awareness of certain facts and trends helps in the initial stages of negotiation.³ Most successful Japanese companies have a clear philosophy which every employee shows great respect to. The employees are very proud of the company’s philosophy. Being involved in the company’s matters makes them feel being respected. Japanese employees are most satisfied with their work and are highly motivated when they know that they are part of the company and when they have the feeling of being respected. Here are some examples for guidelines in Japanese companies: fairness, harmony and cooperation, struggle for betterment, courtesy and humility, adjustment and assimilation and gratitude.⁴

[...]

1  Die Welt: Daimler und Volvo ringen um Mitsubishi-LKW, 01-04-04

2  Richard Mead, International Management: Cross-Cultural Dimensions, Cambridge, Massachusetts 1994, p. 267

3  http://www.jetro.go.jp/it/e/pub/negotiating1994/1.html

4  Andreas Kronschachner, Strategien japanischer Unternehmen, Stuttgart 1996, pp. 310