Discuss background factors in the framework for international business negotiations. How would these factors be in an EM setting?

Question

What will be an ideal response?

Answer 1

This group of variables serves as a background to the process. They influence the process of negotiation and atmosphere. The effect of different variables on the process and its different stages varies in intensity. One of these variables may influence one stage positively and another negatively. A positive influence means that the process saves time and continues smoothly, whereas a negative influence causes delays and hindrances. Background factors include objectives, environment, market position, third parties, and negotiators.

Objectives are defined as the end state each party desires to achieve. They are often classified as common, conflicting, or complementary. For example, parties have a common interest: both want a successful transaction to take place. At the same time, their interests may conflict because profit to one may be cost to the other. In terms of complementary interests, buyers in international deals are concerned with acquiring appropriate technology to build an infrastructure. Sellers want to enter a particular market and expect to do future business with it and the surrounding countries’ markets. Common and complementary objectives affect the negotiation process directly and positively, whereas conflicting objectives have negative effects. These effects in turn influence the atmosphere and the outcome. The opportunity for an agreement decreases as conflicting objectives dominate in a relationship; it increases as common and complementary objectives dominate.

The environment refers to the political, social, and cultural milieu of the parties. There are greater chances of interaction interferences when unfamiliar parties, having different behaviours, interact with one another. Some of the characteristics directly influence the process, whereas others directly influence the atmosphere. Political and social aspects influence the process, and cultural aspects plus the behaviour of the parties influence the atmosphere.

The party’s market position is another background variable influencing the negotiation process. The number of buyers and sellers in the market determines the number of alternatives available to each party, which in turn affects the amount of pressure imposed by its counterpart within the market. The process and bargaining position of the buyer or seller can be affected if either one has monopolistic power in the marketplace; for example, if there is a large number of sellers and only one buyer, the latter can dominate.