Intercultural Management How Can Mncs Effectively Negotiate

Intercultural Management

How can MNCs effectively negotiate with local employees, local suppliers, and local governments in the Middle East?

Over the last several years, the Middle East has been playing an important part in the global economy. This is based upon vast reserves of oil and natural gas. At the same time, there is a focus on its close proximity to Asia and the West. However, negotiating any kind of business deals can be challenging. This is because of cultural differences which are embraced among many countries around the globe. (Cellich, 2012)

Those who understand the various aspects of them will be able to effectively interact with a variety of stakeholders and create lasting relationships. While those that are not taking these variables into account; will become increasingly frustrated by their inability to effectively communicate with other parties. To avoid these kinds of issues requires understanding the best ways MNC's can negotiate with employees, suppliers and local government throughout the region. This will be accomplished by: carefully examining specific cases, how negotiating can solve certain problems and the roles different cultures will play in the process. Together, these elements will highlight the best approach for addressing the needs of stakeholders and the way they are creating viable strategies for all parties go forward. (Cellich, 2012)

What are some examples of negotiation cases in the Middle East?

Throughout the Middle East, Western oil companies are seeking to gain influence in the process. This is achieved by having them establish agreements inside select regions for access to different oil fields. For instance, inside the Kurdistan region of Iraq, the government is offering lucrative deals. This is a part of an effort to attract more foreign direct investment and encourage these firms to sell larger reserves on the world markets. What made them so successful, is different companies (most notably: Exxon Mobile, Chevron, Total and Gazrpom) all signed long-term contracts with the regional government. During the negotiating process, they were concentrating on utilizing various cultural aspects in reaching out to officials. These include: avoiding direct confrontations between opponents, establishing respect / trust, controlling emotions, using conferences as mediation and understanding the disregard officials will have towards time. These factors were essential in implementing contracts. That provided these firms with greater access to the oil fields inside Kurdistan. ("The Kurdish Opening," 2012) (Deresky, 2011)

However, Occidental Petroleum failed to win any kind of significant bids in Iraq. This is because they did not focus on honor, respect and dignity in the process. Instead, they demanded that certain conditions must be met in order to ensure they received the contract. The results were that the Iraqi government awarded access to these fields to Russian and Chinese firms. This is illustrating how not understanding the importance of culture, can cause companies to lose out on lucrative business opportunities. (Walt, 2009) (Deresky, 2011)

How do MNCs use negotiation to solve problems?

The way that MNCs are able to utilize negotiations, is to understand the challenges impacting them and the role different cultural variables will have on stakeholders. This means that they must reframe the issue from an Arab perspective vs. their own. The best way this can be achieved is to focus on a number of areas in the process to include:

Not engaging in direct confrontations with the other party.

Coming up with creative and honorable solutions for everyone.

Safeguarding self-respect, honor and dignity.

Establishing trust and respect among the various parties. (Deresky, 2011)

These different areas will help to resolve problems for MNCs, by enabling them to negotiate win - win solutions for everyone. When this happens, all parties are more willing to work with each other in addressing the long-term challenges impacting various stakeholders. This is the point where strong accords can be reached, in order to address these issues and protect the interests of all parties. (Deresky, 2011)

What roles do different cultures have in negotiation?

The roles that different cultures will have on negotiations; is they will help to bridge any kind of potential challenges which is creating misunderstandings. This is occurring because of attitudes about common practices when working out an agreement. However, the reality is that most people are influenced by their culture and various interpretations of the underlying meanings. (Deresky, 2011)