Competitiveness and Equality in International Marketing

Simulated negotiations can be viewed as a kind of experimental economics wherein the values of each participating cultural group are roughly reflected in the economic outcome. The simple simulation used in our research represented the essence of commercial negotiations — it had both competitive and cooperative aspects. At least 40 business people from each culture played the same buyer-seller game, negotiating over the price of three products. Depending on the agreement reached the negotiation pie could be made larger through cooperation (as high as $10,400 in joint profits) before it was divided between the buyer and seller.
The Japanese were the champions at making the pie big. Their joint profits in the simulation were the highest (at $ 9,590) among the 18 cultural groups involved. The American pie as more average sized (at $9,030) but at least it was divided relatively equitably (51.8 per cent of the profits went to the buyers). Conversely the Japanese (and others) split their pies in strange (perhaps even unfair) ways with buyers making higher percentages of the profits (53.8 per cent). The implications of these simulated business negotiations are completely consistent with the comments of other authors and the adage that in Japan the buyer is king. By nature, Americans have little understanding of the Japanese practice of living complete deference to the needs and wishes of buyers. That is not the way things work in America. American sellers tend to treat American buyers more as equals and the egalitarian values of American society supports their behaviour .Moreover, most Americans will, by nature treat Japanese buyers more frequently as equals. Likewise American buyers will generally not take care of American sellers or Japanese sellers. The American emphasis on competition and individualism represented in these findings is quite consistent with the work of Geert Hofstede which indicated that Americans scored the highest among all the cultural groups on the individualism (versus collectivism) scale. Moreover, values for individualism / collectivism have been shown to directly influence negotiation behaviours in several other countries.
Finally not only do Japanese buyers achieve higher results than American buyers, but compared to American sellers ($ 4,350) Japanese sellers also get more of the commercial pie ($4, 430) as well. Interestingly, when shown these results, Americans in executive seminars still often prefer the American seller’s role. In other words, even though the American sellers make lower profits than the Japanese many American managers apparently prefer lower profits if those profits are yielded from a more equal split of the joint profits.
Just make them wait. Everyone else in the world knows that no negotiation tactic is more useful with Americans because no one places more value on time, no one has less patience when things are down and no one looks at their wristwatches more than Americans do. The material on P time versus M time is quite pertinent here. Edward T Hall in his seminal writing is best at explaining how the passage of time is viewed differently across culture and how these differences most often hurt Americans.
Even Americans try to manipulate time to their advantage, however, as a case in point, solar turbines Incorporated (division of Caterpillar) once sold $34 million worth of industrial gas turbines and compressors for Russia natural gas pipeline projects. Both parties agreed that final negotiations would be held in a neutral location i.e. the south of France. In previous negotiations the Russians had been tough but reasonable. But in Nice, the Russians were not nice. They became tougher and in fact completely unreasonable according to the solar executives involved.
Source: International Marketing

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