Ibn

1 Introduction

As an exchange student in business study's I chose to follow the course International Business Negotiations. It sounded like an interesting subject, because nowadays companies don't stay in their country. They want to go across the borders. To get there you have to be able to negotiate with local people all around the world. So for me it is important to know how to negotiate.

In addition to this interesting course I have the opportunity to write a short essay about a theoretical framework given in the lectures. I've chosen for the importance of trust in negotiations. Afterwards I'll apply this information to the exercise case Albion in China.

I really learned a lot from this course, so I want to thank Mr A. Bird and Ms U. Ahlfors for teaching us all those things.

2 Theoretical Framework

2.1 Trust

Trust is very important for business negotiations. You can also see that in the life of everyday. Normally friends are people you trust. You tell you best friends everything, you don't hide things for them. If your friends want something from you, you don't have a problem to give it to them. When you work together on a project you don't have a problem to let them control some things. You know you can trust your friends and that everything will be fine. When there is a situation that both of you want a different thing, you sometimes give up the things you first wanted to please them. So we can say that when there is trust, you share information, you accept influence and you relinquish control. But by trusting others you get vulnerable. Maybe your friends do something you would have done different. Maybe they'll let you down one day. You can't control their behaviour, so you are vulnerable. Although you are more vulnerable it is good to trust people. When you don't trust each other you will get stuck with endless discussions. I will give some more explanation about this by using "the cycle of trust".

2.2 Cycle of trust and cultural differences

The cycle of trust shows that when there's distrust from the beginning, it only will create more distrust. It start with negotiator A who mistrusts negotiator B. So there is no trust and negotiator A doesn't want to give all the information to negotiator B, he will not change his first thoughts that quickly and he wants to have all the control. So of course B notices this and will respond to this. He also will keep his information etc. This behaviour proves what A already expected, he can't trust B and then we're back where we started

Because it is very difficult to break this cycle, you better create trust at the beginning. You can create trust to study the negotiating styles of other cultures. When they see that you try to adapt yourself to their habits, they will be more likely to trust you. Thus it is important to take all the culture differences into account. As an example I'll describe some cultural differences between Americans and Japanese. Americans are individually, a member can make a decision by his own. They are friendly, and they just call each other by their first names. Time is money, so they are very impatiently. Although they like to joke around they are very direct, they tell it like it is. They are a little bit extrovert, they can be very assertively, but also very warm. They negotiating style is aggressive; they like to use threats and warnings. Japanese people are almost completely the opposite; they are collective, formal, patient, indirect, unemotional and passive.

2.3 Some laws of trust

To conclude this theoretical framework I'm going to write something about my point of view on the four laws of trust we discusses in class.

Low trust drives out high trust.

Low trust refers to a specific behaviour. You are not willing to give much information, you don't accept influence and there is an external form of control. High trust refers to the opposite. Low trust drives out high trust means that in a negotiation with just one high trusting person, eventually both people will act as low trusting persons. The high trusting person sees this behaviour of low trust and the confidence is gone. So he's also going to behave as an low trusting person.

3 Albion in China.

3.1 Intro

Before I'm going to link this with the theory mentioned above, I will tell you where this case was about and what the outcome was of our negotiating.

Albion in China is an international role-play negotiation simulation. The purpose of the exercise was to practise everything we learned the previous days, the outcome wasn't that important. There were eight people involved in this role-play: two process observers (I was one of them), three Chinese and three Americans. First the two teams had to prepare themselves. Together they had to work on their strategy. What was their BATNA, their reservation price, which negotiation mode should they use. Already by doing this they had to play their role. After this session the U.S. team went to the Chinese team and the negotiation started.

The Albion Corporation is a high-tech giant who wants to launch a CMOS image sensor testing and design house in China. The plans for this launch started already in 1996 and in 2000 the U.S. and China finally agreed to a joined venture. During this negotiation they had to discuss five issues. Of course they both wanted different things so they had to be creative.

3.2