INTERCULTURAL NEGOTIATIONS : CASE STUDIES

MINI-CASE STUDY 1
Topic: Negotiation Styles Countries: USA & Japan

A well-known US candy company was interested in selling its products overseas.

The company found a possible partner based in Tokyo. The Tokyo company seemed to
be perfect for the deal. After many phone calls between the two parties, a decision was made
to meet in Tokyo. The US company chose one of their businessmen, Mike Waller, to represent it
. He was the company ́s most persuasive negotiator.
Before Waller left the United States, he and the company lawyer worked together to write
a detailed contract for the deal. The contract was fifty pages long. The deal would be
advantageous for both firms. It promised big prfits.
Waller left for Japan with the contract. He was pleased with his careful preparation. He
thought his future partners would be satisfied with his work and would be ready to bargain about
the details of the contract. He had studied their company interests and was sure they would want
to change a few conditions in the contract. He planned to agree to those changes as
concessions. He was certain the meetings would result in go od negotiations and a quick
final agreement.
On the day of the meeting in Tokyo, Waller entered the boardroom with copies of the contract for
the Japanese businessmen at the meeting. He handed them each a copy and began discussing the
details. The representatives of the Tokyo firm did not open the contract. They didn t́ discuss
the contract at all, but instead spoke about general business issues. They spoke about the
proposed cooperation between the two companies but they didn t́ make any promises.
Waller then went back to the United States. He felt extremely surprised and disappointed.
The Japanese had never asked him one question about the contract. No agreements or
commitments had been made. He wasn ́t even sure if there would be another round of negotiations.

NEGOTIATION STYLES:
♦WHAT ARE THE CULTURAL DIMENSIONS INVOLVED IN THIS CASE?
♦WHY DID WALLER FAILED TO REACH AND AGREEMENT?

EXPLICIT IMPLICIT
Relationship of the Parties
• The relationship between the parties is • The relationship is based on personal
based on the contract relations
Communication Between the Parties
 • Limited (brief) • Extensive (lengthy)
• Verbal • Verbal and nonverbal
• Formal • Formal and informal
Exchange of Promises in the Contract
• Detailed • General
• Obligations are carefully explained • Obligations are not carefully
• Breaches are clearly defined explained
• Breaches are not clearly defined
Time Orientation
• Future can be predicted an dis • Future cannot be predicted an dis not
included in the contract included in the contract
• Clear beginning and ending to time of • No clear beginning and ending to time
agreement of agreement
• No future relationship or cooperation • Future relationship and cooperation is
is assumed after contract is over assumed after contract is over
Responsibilities of the Two Parties
• Responsability is only to your • Responsability is to both companies
company • Conflicts of interest are not common
• Conflicts of interest are accepted • Belief in cooperation
• Belief that selfishness is natural in • If business transaction doesn`t work,
business both companies try to work together to
• If business transaction doesn`t work, solve the problem
each company tries to protect its
interests
Source: Moran, Robert T. and William G. Stripp. Dynamics of Successful International Business
Negotiations. Houston: Gulf Publishing Company, 1991. Used with permission. All rights
reserved.

Look at these two contracts with a partner. Answer the following questions together.
 EXCERPT FROM AN AMERICAN STYLE CONTRACT
14.1 Should any circumstances preventing the complete or partial fulfillment by either of the
parties of the obligations taken under this contract arise, namely: fire, floods, earthquake,
typhoon, epidemics and other actions or force of nature, as well as war, military operations of
any character, prohibitions of export or import, the time stipulated for the fulfillment of the
obligations shall be extended for a period equal tot hat during which such circumstances will
remain in force.

14.2 If these circumstances continue for more than six months, each of the parties shall have
the right to refuse in full or in part from any further execution of the obligations under this
contract and in such case neither of the parties shall have the right for reimbursement of any
possible damages by the other party.

14.3 The party for whom it becomes impossible to meet its obligations under this contract
shall immediately advise the other party as regards the commencement and cessation of the
circumstances preventing the fulfillment of its obligations.

14.4 The delayed advice of the commencement or cessation of force majeure circumstances
exceeding 15 days will deprive the party of the right to refer to these circumstances at a later
date.
Source: Smart Bargaining Doing Business with the Japanesse, Rev.Ed. by John I., Graham and
Yoshihiro Sano. Copyright 1984 by John I., Graham and Yoshihiro Sano. Copyright 1989 by
Ballinger, A Division of Harper & Row, Publishers, Inc. Reprinted by permission of
HarperCollins Publishers, Inc.

A SAMPLE JAPANESE STYLE CONTRACT

Article 1: This agreement is made this 4th day of October 1989 between „A” located in Tokyo,
and „B”located in Shibuya-ku Tokyo, to maintain mutual prosperity and coexistence and
lasting amicable relations.

Article 2: B shall continuously develop products based upon all of B’s copyrighted materials
or designs, and actuvely conduct sales of such products in Japan and other nations. A shall not,
without B’s consent, have third parties in the aforementioned areas develop products based
upon any of A’s copyrighted materials or designs, provided, that this limitation shall not apply
to written materials.

Article 3: B may register designs to protect B’s rights against third parties.

Article 4: The content and proofreading of the said copyrighted materials shall be the
responsability of A.

Article 5: The costs required for the writing of the said copyrighted materials shall be borne by
A, and the costs of producing, selling and advertising shall be borne by B.
 Article 6: As a royalty for the production of A’s copyrighted materials and designs, B shall
pay A 3 percent of the cost thereof.

Article 7: With A’s consent, B shall have the right to have third parties produce totally or
partially products based upon A’s copyrighted materials or designs. In such cases, B shall pay
A the royalty set forth in Article 6.

Article 8: In the event that either A or B suffers damages duet o violation by the other party of
the terms set forth in this contract, the first party may claim damages.

Article 9: Two identical counterparts are to be prepared, signed and sealed to evidence this
contract, whereupon each party shall retain one copy.

A:___________________________________

B:___________________________________

1. Which contract looks like a complete contract from beginning to end?

2. Which contract talks about a wide range of possible future situations?
3. Which contract seems to have more details?
4. Which one do you think is more implicit, which one is more explicit? Explain your answer.