The paper is a case study of a UK based drilling company called Pentil that seeks to carry out business with a Russian firm; they must make negotiations on certain aspects of the contract. The research illustrates that issues such as divergent gender roles, slower rates of decision making, reopening of past agreements, use of seemingly unjustified tactics and respect for western expertise are some of the problems that the UK based firm will encounter with their new market in Russia. It was suggested that extreme patience, tracking of achievements, thorough assessment of external factors, respect for authority and sensitivity to intentions of Russian negotiators will assist tremendously in achieving their negotiating objectives.
The Nefanium Company is an international business organisation that facilitates transitions amongst local businessmen who plan on going international or international businessmen who plan on doing business with new countries. It offers a wide range of advise needed to make it in international arenas such as legal structures and logistics needed in target countries, government involvement in business and taxation or import restrictions, laws that affect international businessmen, cultural preferences as well as major social economic developments in target countries. The company can therefore provide information that assists individuals to be better prepared for new business deals, contracts, joint ventures and investments in a foreign country. This organisation is based in the United Kingdom and sources its clients from the region as well. Although most clients are commercially based, others emanate from the non profit sectors. Others may also government institutions or may even be amalgamations of a series of entities.
The client is a drilling company that it located, managed and owned by Britons and is know as Pentil Incorporated. It has recently secured a contract in Russia and this is the first client to come from the latter region. Although some basic aspects of the business have been laid out in the contract, other issues are yet to be discussed. The company is not sure about the logistics, technology and human resources that will be in charge of the project because this could go either way. Pentil have to come to a mutual consensus with their Russian clients and in order to do so, some negotiations will have to occur. Pentil are not familiar with the Russian negotiating style and they need to know what will be in store for them as they carry out their negotiations. (Rapaille, p. 93)
The client therefore requires information about Russian negotiating styles in general. They need to know how power plays are enacted in meetings with such individuals. Furthermore, they need to predict whether threats or pressure will form an essential component of these client’s agenda or whether more collaborative techniques will have to be used. The values placed in relationship building differ substantially and Pentil would definitely like to know if they are expected to ascribe to such a notion (Scott, 160). Approaches to conflict between these two negotiating sides may also be radically different and the concerned groups will therefore need to understand before hand what to expect and look for compromises in the event that their conflict resolution mechanisms are different. Lastly, the nature of tactics employed in negotiation between these two groups could also be divergent. The UK group may go for assertive techniques while their counterparts may be less confrontational. Some middle ground will have to be sought concerning these issues and a workable plan will need to be laid out by the UK based drilling company in order to be better prepared for the complex negotiation that are ahead of them.
Overview of the situation
The first major hurdle that needs to be overcome is creation of the right negotiating strategy for Pentil. This company needs to have an overall direction for use during their respective meetings. It is likely that their counterparts will also have their own strategy so the company should be prepared. However, this strategy ought to be informed since negotiations are firmly rooted in the culture and background of the said negotiators.
The company may also have a difficult time deciding what sort of image they need to portray to their clients. In this regard, utmost sensitivity should be given to perceptions of gender, authority and credentials or skills. Some countries value authority more than anything else and it is likely that they may look towards dealing with authoritative figures concerning these very issues (Geert, 137). However, image may not just be restricted to the organisation because individuals are also assessed. Differences may exist between the UK perception of image and the Russian one so adequate knowledge on these expectations needs to be gathered beforehand. Sometimes the wrong signals could be sent to opposing parties especially when one is not aware of the dos and don’ts in another’s society (Thompson, p. 83).
Since the deal itself involves a lot of technical aspects then Pentil is likely to have done immense amounts of research on it. It would be problematic if this knowledge is dispensed in an inappropriate manner that seems to put down members of the opposing team. Additionally, if Pentil are not aware of the degree of preparations made by the Russian based company, then they may not be in a position to handle the negotiations effectively.
During the actual negotiating process, Pentil need to know the right time and manner for making requests or asking questions about particular project related matters. In certain societies, it may be preferable to deal with specific elements one by one and complete them before moving onto the next agenda – sequential cultures. However, in others, continual reference to previous matters may be the preferred way of doing things. If the Russian clients prefer the latter approach then this is likely to bring problems to the UK based company that needs to think of the right way of handling such a matter. Since the meetings will be taking place within certain time limits, then utmost consideration should be given to the right manner of bringing forward arguments. When offers and counteroffers are made too early or too late in the meeting then no tangible results will be obtained. Furthermore, some cultures may regard direct requests for offers as inappropriate and this is quite contrary to the UK way. Utmost precedence should be given to understanding the Russian style. Despite the fact that the client is based in Russia, it may also be necessary to accept that every organisation and individual is unique. Consequently, making sweeping generalisations about the clients without paying attention to their organisational culture or their unique way of negotiating will also be a dangerous assumption since all companies in a country cannot behave in the same manner (Geert, p. 206).
Pentil will be leaving the comfort and confines of its mother country and will be venturing in a different territory. There could be many potential challenges to such a scenario. First of all, the company’s representatives may be intimidated by their surroundings and most of them may actually be going through culture shock. Lack of familiarity is always a problem no matter what kind of business one is involved in. Therefore some degree of adaptation needs to come from the visiting team. It would have been better if the negotiations were to take place at some neutral location, however, because the actual drilling business will be carried out in Russia and also because the business must aim at pleasing its clientele, then the recipient of the services was justified to select the location of the meeting which was Russia.
In the event that the negotiations are to be carried out immediately upon entry into the country, it is likely that the UK based company will be experiencing exhaustion from the trip or may be dealing with the aftershocks of jetlag. This reduces their ability to effectively listen to and make offers to their clients who will definitely not be in the same position. Pentil may also be required to summarise or make all their deals in a short span of time. This implies that compromise will have to be reached on certain critical issues or compromises will have to be made. Sometimes resources might also be limited owing to the fact that Pentil will not be in its host country. This gives their counterparts an upper hand that may make them take advantage of Pentil’s vulnerabilities (Jankowski, p. 41).
Analysis of the situation
A SWOT analysis of the situations reveals that the major strength in this negation will lie in the fact that Pentil have taken the time to prepare for these negotiations by consulting with Nefanium. A well informed and prepared team will always do the right thing at the right time and may receive desired responses. Furthermore, their appreciation of cultural differences between themselves and their clients is an indication that they are willing to be flexible. They are aware that negotiations differ substantially from country to country and that the right cues or offers need to be made at the right time. Russians place a lot of precedence on expertise offered by westerners and this may be an advantageous point for the respective UK based company. Furthermore, the latter individuals tend to favour a negotiating style that includes a lot of figures and numbers (Katz, p. 373). The drilling company has been operating profitably in business for over fifteen years so they are likely to impress their counterparts.
Weaknesses in this scenario include the fact that Russians can be quite competitive during negotiations as that is their preferred style. This may be interpreted by representatives from Pentil negatively. Furthermore, Russians do not openly dispense information in negotiations because they feel that this would give them undue advantage in bargaining for a deal. The rate at which negotiations will take place is also another problem for Pentil because Russian style negotiations often involve polychronic approaches where different facets of the contract are handled all at the same time. Since Pentil is a UK based organisation, it therefore utilises a monochromic approach where sequential order is preferred in dealing with different elements of the deal. It is likely that members from the UK team may look at this pace as being very slow or as countering what had already been agreed upon. It has often been stated that the need to receive or give bribes in Russia has reached alarming levels. Consequently, members of the negotiating team may expect some benefits from conceding to the UK firm’s offers; more often than not, those gifts may be considered an ordinary part of the Russian negotiating process. Decision making processes in Russia are rarely done in isolation. They usually involve senior authorities as the country places a lot of precedence on authority. Additionally, it can be possible for government delegations or other powerful individuals to be involved in such decisions. This means that subordinates are rarely delegated to make these final decisions.
One of the opportunities that the firm can use is getting a good interpreter. Although the clients have stated that most of them understand English, it will be safer to come with an interpreter nonetheless because such an individual will make the difference between taking everyone on board and living some behind. Studies show that Russian negotiators sometimes assert that they know English but may not necessarily understand everything and this often impedes communication. Many Russians give a lot of consideration to relationships formed prior to, during and even after negotiations. The company can therefore embrace this tendency and therefore sustain communication with the company even after sealing the deal (Katz, p.311).
The threats in this scenario include meeting a stubborn client. Russians have been known for their firmness when bargaining. In fact, many of them may mistake compromise for weakness and it is common to find that they actually stick to stances made early on in the negotiating process without resulting to lucrative alternatives. To this end, negotiations are likely to take place but they may be quite extensive and a lot of losses may be experienced. Furthermore, Russians have been known to employ seemingly unethical tactics to seal deals. Sometimes they may tell a lie or may choose to quote prices that they know are inaccurate. They usually consider this an important phase of the negotiation process and do not think of it as bad business practice. The UK based company will therefore have to refrain from taking the matter personally. Gender perceptions in Russia and the United Kingdom are slightly different. Few women have managed to garner top executive positions. To this end, representatives from Pentil will have a hard time presenting female managers in the negotiations. It is likely that some sexual overtones may be prevalent amongst the Russians or that the females’ assertions may not be taken seriously.
Solutions
The company can decide to track what had been said by both parties such that evaluations can be made. The company needs to really know whether the Russian clients have already accepted the proposal and are simply looking for better ways of implementing or if they are trying to indicate that they are not happy with the proposal at all and are in fact signalling to their UK counterparts that they do not wish to proceed with the arrangement. Usually, this is a tactic that many Russians often use to make the negotiation longer and hence pressure western based individuals to give in to their demands. By accurately assessing why reopening of an already discussed issue is done, the company will be in a better position to respond to their clients needs and will also secure their own side of the deal (Yost, p. 4).
As mentioned earlier, Russians can use tactics such as lies to dissuade their opponents. Pentil will be better off dealing with this threat by doing their research on offers and counteroffers made by their clients. The use of external sources is fundamental here because behaviour can sometimes be deliberately wrong in order to give Russians an advantage. For example, some may assert that a higher authority requires them to carry out arrangements in a certain way. Pentil will be better off finding out whether this is actually true or whether their clients are merely using that as a tactic for creating time pressures.
In terms of the issue of time and employment of pressure related tactics by the Russian clients, it will advisable for Pentil to be prepared for anything. Russians can prepare to have finalised a deal and at the very end when they know that foreigners are pressed for time, may make a counter offer that requires their opponents to either take the offer or to leave it completely. Pentil needs to be aware of this tendency and they should actually exercise patience. The company’s team need to keep reminding their Russian counterparts that there are mutual needs that could come out of the deal that they are negotiating. It will also be fundamental to ignore some of the unethical methods or refrain from personalising them as this is likely to be perceived as a normal part of business negotiations amongst the Russians. Immense focus on Pentil’s goals should be made by the company’s team because distractions and other obstacles are likely to be many in the team (Katz, p. 407).
Members of the UK based team need not sit on a moral high horse where they appear to be more ethically inclined than their counterparts as this would offend them. Instead, Pentil members can simply brush over their company policies by stating that all offers – be they tangible or intangible must be documented and referred by back to their primary authorities. This needs to be done in context and not just out of nowhere so that no offenses are taken by the client (Ury, p. 26).
It is essential for Pentil to respect authority once negotiations begin to take place in Russia. They should be prepared for the role that political environments and office holders play in affecting decisions. The company should not just assume that they can work with subordinates and assume that everything will be alright. In fact, representatives would be better off using their high authorities and requesting for the same from the Russian based team. Once again, patience will be crucial to solving such misunderstandings. Nonetheless, if the external factors seem to drag down business, then Pentil would be better off taking a firm stand. They can tell the team that they will not bow to external interferences and may even look for markets in other areas if minimal objectivity can be achieved at the negotiating table (Graham and Requejo, p. 100).
Gender related matters need to be handled sensitively; female leaders from Pentil should try as much as possible to ignore negative treatment from their counterparts. On the other hand, if flattery and deference appear to be too much, female leaders need to tell their opponents that such behaviour is not common back home. However, before this is done, female executives need to show that they represent company interests so they need to carry evidence of authorisation at Pentil such that they can earn the respect of their Russian clients. Additionally, they need to convey confidence in themselves and their offers. This should not be overdone since aggressive females may be perceived negatively (Yost, p. 4).
Forecasts and outcomes
There are five major pathways that could be pursued by Pentil in Russia- they could choose to focus on winning at all costs, collaborate, create friendship, avoid conflict or negotiate. It is likely that the company will employ the last strategy which is to negotiate on agreements. Implementing this may not create a definite looser or winner. Instead, both groups stand to benefit by getting mutual agreements. Pentil will be better off with this strategy because it does not have an upper hand in a foreign country. Furthermore, because the company does not have time to forge relationships with their clients, then such an objective will not do.
If the company adheres to the various solutions offered on negotiating styles of the Russians, then it should be able to get through most of the obstacles. It is likely that not everything on the negotiating table will result in mutual benefits at the beginning. However, with continual persistence then there could be a mutually satisfactory outcome. Furthermore, the first meetings with the Russian clients could be employed to assess the credibility of Pentil so this could be the foundation for what goes on in the rest of the negotiations.
References
- Katz, Lothar. Negotiating in international business: Russia. NY: Palgrave, 2008
- Yost, Casimir. Russian negotiating- post cold war. Joint force quarterly, 3(2000), 4
- Ury, William. Negotiating to cooperation and confrontation. NY: Bantam, 1991
- Jankowski, Mark & Shapiro, Ronald. Negotiating until all win. NY: Wiley Inc, 1998
- Thompson, Leigh. Hearts and minds of negotiators. NY: Prentice Geert, Hofestede. Cultures, consequences. TO: Sage, 2001
- Scott, Bill. Negotiating skills. NY: Wiley, 1981
- Rapaille, Clotaire. Culture code. NY: Broadway press, 2006
- Graham, John and Requejo, Williams. New rules on global negotiation. London: Palgrave, 2008