Global Marketing Mix, Pricing Strategies, and Expatriate Success

Posted on Oct 10, 2025 in Economy

4 Elements of the Promotional Mix

  1. Personal Selling

    • 1-to-1 communication.
    • Most effective element of the promotional mix because you can adapt the message to fit customers’ needs.
    • The seller can ask questions and probe the consumer in order to adapt.
    • Used for high-volume products (e.g., houses).
    • Disadvantages:
      • Time consuming.
      • Difficult to do well; requires skill by the seller.

  2. Advertising

    • Communication using mass media which requires payment.
    • Advantages:
      • Reaches a large number of people simultaneously with a standardized message.
      • Cost per contact is very low (though total cost is frequently high).
    • Mass media types:
      • Broadcast: Appeals to both sight and sound.
      • Print.
      • Other: Billboards, transit, internet.
    • Can be misleading, leaving consumers skeptical.

  3. Sales Promotion

    • Short-term marketing activities used to stimulate immediate change.
    • Stimulates customer purchases and improves retailer or middlemen effectiveness and cooperation.
    • May enhance advertising and personal selling efforts, and can be an effective substitute when environmental constraints prevent full advertising.
    • Examples: Coupons, giveaways, 2-for-1 sales, point-of-purchase displays.
    • Disadvantage:
      • Difficult to use internationally because cultural reactions vary (e.g., unknown coupon reduction rates).
      • Success of promotion may depend on local adaptation.

  4. Public Relations (PR)

    • Trying to get mass media to talk about your company without paying for it via press releases, press videos/conferences, or sponsorship.
    • Role: Creating good relationships with the popular press and other media to help companies communicate messages to their publics.
    • Advantages:
      • Good credibility: People believe PR over advertising.
      • Cheap.
    • Disadvantages:
      • Cannot control negative publicity.

Challenges in Sales Promotion

  • Success of promotion depends on local adaptation.
  • Major constraints are imposed by local laws, which may not permit premiums or free gifts.
  • Some countries’ laws control the amount of discount given at retail.
  • Others require permits for all sales promotions; in at least one country, no competitor is permitted to spend more on a sales promotion than any other company selling the product.

Challenges in Public Relations

  • PR can be perceived negatively.
  • PR works best when coordinated and reinforced with a consistent advertising campaign.

The International Communication Process (ICP)

The ICP affects the accuracy of the communication process. When not considered, different cultural contexts can increase the probability of misunderstandings (message is encoded in one culture and decoded in another).

7 Steps of the ICP

  1. Information Source: An international marketing executive with a product message to communicate.
  2. Encoding: Converting the message from the source into effective symbolism for transmission to a receiver.
    • Factors such as color, timing, values, beliefs, humor, tastes, and appropriateness of spokespersons can cause international marketers to symbolize the message incorrectly.
  3. Message Channel: The sales force and/or advertising media that convey the encoded message to the intended receiver.
  4. Decoding: The interpretation by the receiver of the symbolism transmitted from the information source.
  5. Receiver: Consumer action by those who receive the message and are the target for the thought transmitted.
  6. Feedback: Information about the effectiveness of the message that flows from the receiver (the intended target) back to the information source for evaluation of the effectiveness of the process.
    • Important as it is a check on the effectiveness of the other steps.
  7. Noise: Uncontrollable and unpredictable influences such as competitive activities and confusion that detract from the process and affect any or all of the other six steps.
    • Effectiveness of ICP can be impaired by noise.

Legal Constraints on Advertising

  • Laws controlling comparative advertising vary globally.
    • Illegal in Germany (competitors may sue).
    • EU directives allow implicit comparisons that do not name competitors but ban explicit comparisons between named products.
  • Comparative advertising is heavily regulated in other parts of the world (e.g., Asia, India).
    • Banning explicit comparisons rules out an effective advertising approach heavily used by US companies.
  • A variety of restrictions on advertising specific products exist worldwide.
    • Advertising of pharmaceuticals, toys, tobacco, and liquor is restricted in many countries (e.g., Canada, France).
    • Television ads are strictly controlled in many countries.
      • China is beginning to require proof of ad claims.
      • Kuwait restricts the number of advertising minutes per day.
      • Russia bans subliminal advertising and violence in ads.

Media Planning and Analysis

Tactical Considerations in Media Planning

  • Availability: Some countries have too few media; others have too many.
  • Cost: Media prices are susceptible to negotiation in most countries.
  • Coverage: The majority of the population in Less Developed Countries (LDCs) cannot be reached readily through traditional mass media.
    • Due to lack of adequate coverage by any single medium in Eastern European countries, companies must resort to a multimedia approach.
  • Lack of Market Data: Verification of circulation or coverage figures is difficult.
    • Radio and TV audiences are difficult to measure, but geographic coverage is known in most countries.
  • Newspapers: Suffering from lack of competition in some countries.
  • Magazines: Use of foreign national consumer magazines by international advertisers has been notably low.
  • Radio & TV: Have become major communications media in most nations.
    • Radio has been devalued to a subordinate position in the media race where TV facilities are well-developed.
    • Television and radio advertising availability vary between countries, following three patterns:
      1. Competitive commercial broadcasting: Countries with free competitive commercial radio and TV broadcasting normally encourage competition and have minimal broadcast regulations.
      2. Commercial monopolies: Local or national monopolies are granted by the government, and individual stations or networks may then accept radio or television commercials according to rules established by the government.
      3. Non-commercial broadcasting.
    • Lack of reliable audience data is another major problem in international marketing via radio and TV.
  • Satellite and Cable TV:
    • Advertisers and governments are concerned with the impact of satellite TV.
      • Governments fear further loss of control over their airwaves and the spread of “American Cultural Imperialism.”
    • One of the drawbacks of satellites is also their strength: their ability to span a wide geographical region covering many different country markets (a single message is broadcast throughout a wide area).
    • PVI (Princeton Video Imaging) is an innovation that will make regional advertising in diverse cultures easier than it presently is when using cable and satellite TV.
  • Direct Mail: Important when other media are not available.
    • Industrial advertisers are heavy mail users and rely on catalogs and sales sheets to generate large volumes of international business.
  • Internet: Can reach a large portion of B2B markets.
    • Although penetration of households globally is limited, it is being used by a growing number of companies as an advertising medium for consumer goods.
  • Other Media:
    • Restrictions on traditional media or their availability cause advertisers to use lesser media to solve local-country problems.
      • Cinema is an important medium in many countries; billboards are used for countries with high illiteracy rates. In Spain, private cars are painted with advertisements for products and serve as moving billboards.

Global Advertising Agencies

  • A multinational agency with local branches offers the sophistication of a major agency with local representation.
  • These agencies are better able to provide a coordinated, worldwide advertising campaign.
  • Many companies with a global orientation employ one or two agencies to represent them worldwide.
  • Compensation arrangements are often based on the US system of 15% commission.
  • Services provided by advertising agencies vary greatly, but few foreign agencies offer the full services found in US agencies.

Chapter 17: Managing International Personnel

Living Abroad: Stages During the Assignment

  1. Honeymoon Stage
    • Upon receiving the international assignment, satisfaction booms—it is something new, similar to a vacation. You earn a high level of respect.
  2. Reality Stage
    • The vacation wears off; the reality of the job and living overseas sets in.
    • Two main causes of unhappiness:
      • Family adjustment: Spouse and children bear the bulk of the burden of adjusting to the culture—they often have nothing to do.
      • Culture shock: Gradually increasing anxiety and tension felt when living in a place where all cultural rules are different.
  3. Adjustment Stage
    • Some people become so unhappy that they either quit or adapt to the culture.

Primary Problems Associated with Living Abroad

  • Family Adjustment
    • If the family travels with the assigned member, adjustment can be hard; they struggle to survive and often have not gone through cultural training.
    • If the family stays in the US, they sometimes pressure the assigned family member to return home.
  • Culture Shock
    • It is hard to adjust to new and strange cultures.
    • It is often worse for families because the expatriate usually receives cross-cultural training; this is sometimes called “out of sight, out of mind.”
    • The sum total of anxiety felt every time one encounters unpredictable minor changes tends to build up.
  • Re-acculturation (Reverse Culture Shock): Occurs after returning home.
    • Your perspective of the world has changed; you realize everyone is essentially the same, so you are put off by unfair stereotypes.
    • Your company puts you back where you were.
    • You miss what you had abroad.
  • Problem with keeping personnel abroad for their assigned time.
  • Female members often cannot be employed and face social restrictions.
  • New consumption patterns have to be learned.
  • Low morale and growing attrition among returning expatriates.
    • Financial and lifestyle adjustments: They must readjust when they have to give up compensation packages in the home country.
  • Repatriation (Moving back to the home country):
    • It is a problem because expatriates have to relearn the rules of how to get along in their home country.
    • The home company may not know what to do with you; they often put you back in the same position.
      • The company doesn’t appreciate how you’ve changed.
      • New skill sets may not fit with the current position.
      • Missed out on the social network—don’t know what’s going on with the firm and employees.
    • This transition can be so difficult that some decide to quit.

Strategies to Improve Expatriate Success

  • Candidates are picked thoughtfully, returned to the home office at the right moment, and rewarded for good performance with subsequent promotions.
  • Evaluate their family situation.
  • Cultural training is more popular because it eases adjustment.
  • Hardship allowances cover special education requirements, including private schools, housing, and all-expense-paid vacations.
  • Hire the Right Person:
    • Easily adaptable and flexible, not set in their ways.
    • Capable of independent work.
    • Language fluency.
    • Illegal questions/guidelines that cannot enter into the equation (factors often discussed):
      • Young vs. Old: Younger people may be more adaptable but get bored quickly and may not stick to things. Older people are set in their ways but may stick it out.
      • Single vs. Married: Married individuals have a friend on the trip to confide in versus being single.
      • Man vs. Woman: Women listen better and pick up more easily on contextual cues; some companies won’t send women to places deemed too dangerous.
  • Training: More training is better (job, culture, political, language).
  • Pre-Assignment Visit: Allows the employee to visit so they know what to expect and how to prepare for the move.
  • Allowances: Cash bonuses paid to employees for various reasons.
    • Completion bonus: If you complete the assignment, you get a percentage of your total salary earned while there.
    • Hardship allowance: Given to people for working in undesirable places.
    • Education & Housing allowance.
  • Repatriation Plan: Developed before leaving for an assignment.
    • Develop a career path.
    • Plan what is being done on assignment and upon returning home.
    • Assign “pen pals” to keep the company updated.

Sources of International Sales Staff

  • Expatriates
    • The number of companies relying on expatriate personnel is declining as world trade increases and more companies use locals to fill marketing positions.
    • Expatriate salespeople may have advantages of greater technical training, better knowledge of the company and its product line, and proven dependability.
      • Because they are not locals, they can sometimes add to the prestige of the product line in the eyes of foreign customers.
      • They effectively communicate with and influence headquarters personnel.
    • Major disadvantages are high cost, cultural and legal barriers, and the limited number of high-caliber personnel willing to live abroad for extended periods.
  • Virtual Expatriates
    • The internet and other advances in communications technologies, along with the growing reluctance of executives to move abroad, are creating a new breed of expatriate.
    • Virtual expatriates manage operations in other countries but do not move there.
      • They stay in hotels, make long visits, and maintain their family at home.
      • Some people spend up to 75% of their working time traveling.
    • Close contact with subordinates and customers is tougher for virtual expatriates.
    • From the firm’s perspective, virtual assignments may be the only option and often a good way to avoid the extra expenses of an actual executive move.
  • Local Nationals
    • The historical preference for expatriate managers and salespeople is giving way to a preference for local nationals. At the sales level, the picture is clearly biased in favor of locals because they transcend both cultural and legal barriers.
    • Local salespeople are better able to lead a company through the maze of unfamiliar systems and referral networks.
    • Pools of qualified foreign personnel available in some places cost less to maintain than a staff of expatriates.
    • Disadvantages:
      • Tendency of headquarters personnel to ignore their advice.
      • Lack of availability in some markets.
  • Third-Country Nationals (TCNs): Expatriates of their own countries working for a foreign company in a third country.
    • A group whose nationality has little to do with where they work or for whom.
    • American companies often seek TCNs from other English-speaking countries to avoid the double taxation costs of their American managers.
    • TCNs are often sought because they speak several languages and know an industry or foreign country well.

Chapter 18: International Pricing Strategies

Demand-Based vs. Cost-Based Pricing

  • Demand-Based Pricing: How much are people willing/able to pay?
    • Advantage: Maximizes sales.
    • Disadvantage: No relationship to cost—may not cover costs or yield profit.
  • Cost-Based Pricing: Sum of costs (fixed, variable) plus a profit margin amount.
    • Advantage: Never lose money.
    • Disadvantage: Price may be too high, and consumers won’t buy.
    • Full-Cost Pricing: Total cost of any one product equals the fixed costs plus variable costs associated with that product.
      • Formula: TC = (FC / # products) + VC

Recommendation: Should use a combination of demand and cost to determine the product price.

Variable Cost Pricing (Marginal Cost)

  • The firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.
  • Such firms regard foreign sales as bonus sales and assume that any return over their variable cost makes a contribution to net profit.
  • These firms may be able to price most competitively in foreign markets, but because they are selling products abroad at lower net prices than domestically, they may be subject to charges of dumping.
    • In that case, they open themselves to Anti-Dumping tariffs or penalties that negate the competitive advantage.
  • Variable cost pricing is a practical approach when a company has high fixed costs and unused production capacity.
  • Any contribution to fixed costs after variable costs are covered is profit to the company.
  • Total Costs = Variable Costs (This is only true if fixed costs are recovered elsewhere).
    • Can be used when you have recovered other costs from somewhere else.
    • Allows companies to charge different prices depending on the market.
  • Example: Baby Formula—US $5 vs. UK $2.

Parallel Imports (Gray Markets)

  • Develop when importers buy products from distributors in one country and sell them in another to distributors who are not part of the manufacturer’s regular distribution system.
    • Profitable when wide margins exist between prices for the same products in different countries.
  • Restrictions brought about by import quotas and high tariffs can lead to parallel imports and make illegal imports more attractive.
  • The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets. (It is not unusual for companies to find themselves competing in one country with their own products imported from another country at lower prices.)
  • Exclusive distribution can create a favorable condition for parallel importing (e.g., perfume).
  • Parallel imports can do long-term damage in the market for trademarked products.
    • Customers who unknowingly buy unauthorized imports have no assurance of the quality of the item, warranty support, or authorized service or replacement parts.

Price Escalation in International Trade

When you produce a product in one country and sell it in another, you incur many added costs.

  • Costs of Exporting
    • Added costs incurred as a result of exporting from one country to another.
    • Situations in which ultimate prices are raised by shipping costs, insurance, packaging, tariffs, longer channels of distribution, larger middlemen margins, special taxes, administrative costs, and exchange rate fluctuations.
    • The majority of these costs arise as a direct result of moving goods across borders.
  • Taxes, Tariffs, and Administrative Costs
    • Tariffs are one of the most pervasive features of international trade.
    • Taxes and tariffs affect the ultimate consumer prices; the consumer usually bears the burden.
    • A tariff, or duty, is a special form of taxation.
      • May be imposed for protecting the market or for increasing government revenue.
    • A specific duty is a flat charge for a physical unit imported (e.g., 15 cents per bushel).
    • Ad valorem duties are imposed as a percentage of the value of the goods imported.
    • A variety of administrative costs are directly associated with exporting or importing a product.
    • Administrative pricing end goal is to reduce the impact of price competition or eliminate it.
  • Inflation
    • In countries with rapid inflation or exchange variation, the selling price must be related to the cost of goods sold and the cost of replacing the items.
    • When payment is likely to be delayed or is working out on a long-term contract, inflationary factors must be figured into the price.
    • Companies use techniques to inflate the selling price to compensate for inflation pressure and price controls (e.g., charging for extra services, inflating costs in transfer pricing, or breaking up products).
  • Deflation
    • The Japanese economy has been in a deflationary spiral for years.
    • In a deflationary market, it is essential for a company to keep prices low and raise brand value to win the trust of customers.
  • Exchange Rate Fluctuations
    • Companies increasingly insist that transactions be written in terms of the vendor company’s national currency, and forward hedging is becoming more common.
    • The added cost incurred by exchange rate fluctuations must be taken into account, especially where there is a significant time lapse between signing the order and delivery of goods.
  • Varying Currency Values
    • When the value of the dollar is weak relative to the buyer’s currency (fewer units of foreign currency buy a dollar), companies generally employ cost-plus pricing.
    • To remain price competitive when the dollar is strong (more units of foreign currency buy a dollar), companies must find ways to offset the higher price.
    • Currency exchange rate swings are considered a major pricing problem by many global companies.
  • Middlemen & Transportation Costs
    • Channel length and marketing patterns vary widely; in most countries, channels are longer and middlemen margins are higher than is customary in the US.
      • Diversity of channels and lack of standardized markups leave many producers unaware of the ultimate price of a product.
      • Marketing distribution channels and infrastructure are underdeveloped in many countries.
    • The international marketer must rely on experience and marketing research to ascertain middlemen costs.

Approaches to Minimize Price Escalation

  • Lowering Cost of Goods: Attempt to reduce manufacturing costs.
    • Eliminating costly functional features or lowering overall product quality.
    • The lower price to the buyer may also mean lower tariffs.
  • Lowering Tariffs: Some products can be reclassified into a different and lower customs classification (lower tariff category).
    • A lower tariff rate applies when imported unassembled; repackaging also helps.
  • Lowering Distribution Costs: Shorter channels can help keep prices under control (fewer middlemen reduces markup).
  • Using Foreign Trade Zones (FTZs): Utilizing FTZs can control price escalation resulting from layers of taxes, duties, surcharges, freight charges, etc.
    • FTZs permit added charges to be avoided, reduced, or deferred so that the final price is more competitive.
    • Exemption of duties on labor and overhead costs.
    • Tariffs may be lower because duties are typically assessed at a lower rate for unassembled vs. assembled goods.
    • Lower labor costs result in savings in the final product cost.
    • Ocean transportation rates are affected by weight and volume—unassembled goods may qualify for lower freight rates.
  • Dumping: Selling a product at a loss—selling for a price lower than it costs.
    • WTO rules allow for the imposition of a dumping duty when goods are sold at a price lower than the normal export price or less than the cost in the country of origin (plus a reasonable amount for sales cost and profits), when this is likely to be prejudicial to the economic activity of the importing country.
    • Not primarily an economic issue, but political.
    • Puts other companies out of business that cannot afford to lower prices.
    • Thought of as predatory pricing: increasing market share by offering a lower price, which in turn puts other companies out of business.

Skimming vs. Penetration Pricing

  • Skimming Pricing: Used when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received.
    • If limited supply exists, a company may follow a skimming approach to maximize revenue and match demand to supply.
    • When a company is the only seller of a new/innovative product, skimming may be used to maximize profits until competition forces a lower price.
    • Objective: Getting the most money from the wealthiest people in the shortest amount of time.
    • Only works in monopolistic and non-competitive environments.
    • Sell as much as possible at a given price.
  • Penetration Pricing: Used to stimulate market and sales growth by deliberately offering products at low prices.
    • Most often used to acquire and hold market share as a competitive maneuver.
    • In country markets experiencing rapid and sustained economic growth, penetration pricing may be used to stimulate market growth even with minimum competition.
    • May be a more profitable strategy than skimming if it maximizes revenue as a base for fighting future competition.
    • The price must be set at a point where the consumer perceives value received, and the price must be within reach of the target market.
    • Objective: Drive competitors out of the market (considered a predatory pricing strategy).
      • The company sets its price below market price and gradually lowers it over time (economies of scale).
      • When you set the price lower than competitors, you gain market share.

Countertrade

A pricing tool every international marketer must be ready to employ; the willingness to accept a countertrade often gives the company a competitive advantage.

Types of Countertrade

  • Barter: Direct exchange of goods between two parties in a transaction.
    • May be used to reduce a country’s foreign debt.
    • The seller must be able to dispose of the goods at a price equal to the expected selling price in a regular, for-cash transaction.
    • No money changes hands, no third party involved.
    • Most popular form of countertrade and the classic barter transaction (e.g., locomotive for palm oil).
  • Compensation Deals: Involve payment in goods and in cash.
    • Advantage over barter is the immediate cash settlement of a portion of the bill; the remainder of the cash is generated after successful sale of the goods received.
    • If the company has a use for the goods received, the process is relatively simple.
  • Counter-purchase (Offset Trade): The seller agrees to sell a product at a set price to a buyer and receive payments in cash.
    • Used in transactions involving high amounts of money or highly valued goods (which might cause inflation in the buying country). Goods going in one direction have to be offset by goods going in the other direction.
    • Most frequently used type of countertrade.
    • Two contracts are negotiated:
      1. The first contract is contingent on a second contract, which is an agreement by the original seller to buy goods from the buyer for the total monetary amount involved in the first contract (or a set percentage).
      2. This arrangement provides the seller with more flexibility than the compensation deal because there is generally a time period (6–12 months or longer) for completion of the second contract.
      3. During the time that markets are sought for the goods in the second contract, the seller has received full payment for the original sale.
      4. The goods to be purchased in the second contract are generally of greater variety than those offered in a compensation deal.
      5. Offset trades are becoming more prevalent among economically weak countries.

Reasons for Countertrade

  • To preserve hard currency: Countries with nonconvertible currencies look to countertrade as a way of guaranteeing that hard currency expenditures (for foreign imports) are offset by hard currency (generated by the foreign party’s obligation to purchase domestic goods).
  • To improve balance of trade: Nations whose exports have not kept pace with imports increasingly rely on countertrade as a means to balance bilateral trade ledgers.
  • To gain access to new markets: By imposing countertrade demands, foreign trade organizations utilize the marketing organizations and expertise of Western companies to market their goods for them.
  • To upgrade manufacturing capabilities: By entering compensation arrangements under which foreign firms provide plant and equipment and buy-back resultant products, the trade organizations of LDCs can enlist Western technical cooperation in upgrading industrial facilities.
  • To maintain prices of export goods: Countertrade can be used as means to dispose of goods at prices that the market would not bear under cash-for-goods terms.
  • To force reinvestment of proceeds from weapon deals: Many Arab countries require that a portion of proceeds from weapon purchases be reinvested in facilities designed by the buyer.

Problems of Countertrading

  • The crucial problem is determining the value of and potential demand for the goods offered.
  • Frequently, there is inadequate time to conduct a market analysis.
  • Preliminary research should be done in anticipation of being confronted with a countertrade proposal.
  • Reasons tax collectors dislike countertrade:
    • Easy to hide transactions altogether (no cash exchange).
    • Easy to misrepresent the value of a transaction (no cash involved).

Getting Paid: Payment Methods

  • Open Account
    • Typical payment procedure for established customers in US domestic trade.
    • Goods are delivered, and the customer is billed on an end-of-month basis.
    • Sales on open accounts are not generally made in foreign trade except to customers of long standing with excellent credit reputations or to a subsidiary or branch of the exporter.
  • Letters of Credit (L/C)
    • Opened in favor of the seller by the buyer; handles most American exports.
    • L/Cs shift the buyer’s credit risk to the issuing bank.
    • Except for cash in advance, L/Cs afford the greatest degree of protection for the seller.
  • Cash in Advance
    • The portion of international business handled on a cash-in-advance basis is not large.
    • Cash places unpopular burdens on the customer and is typically used when credit is doubtful, when exchange restrictions may delay the return of funds, or when the exporter is unwilling to sell on credit terms.

Chapter 19: International Business Negotiation

Impact of Culture on Negotiation

Cultural differences cause four kinds of problems in international business negotiations, at the levels of:

  1. Language: Getting translations straight enhances the efficiency of interactions, and concessions often follow internal disagreements.
  2. Nonverbal Behaviors: When these differ between foreign partners, negotiators are most likely to misinterpret them without even being conscious of the mistake.
  3. Values: Harder to cure.
    • Objectivity
    • Competitiveness
    • Equality
    • Punctuality
  4. Thinking & Decision-Making Process: Harder to cure. Westerners divide the large task into a series of smaller tasks—one issue at a time.

The problems lower on the list are more serious because they are more subtle.

Pre-Negotiation Planning

Given time constraints, preparations must be accomplished efficiently. Recommendations for proper preparation:

  • Assessment of the situation and the people.
  • List of key facts to confirm during the negotiation.
  • Anticipate that managers from other cultures may put less emphasis on a detailed agenda, but having one to propose still makes sense and helps to organize the meetings.
  • Best Alternative to a Negotiated Agreement (BATNA).
    • The BATNA is how negotiation power is best measured.
  • Plan out and write down concession strategies.
  • Specific team assignments should be made clear.

Seven aspects of the negotiation setting should be manipulated ahead of time if possible:

  1. Location: A neutral location is preferred; speaks loudly about power relations.
  2. Physical arrangements (of rooms).
  3. Number of parties.
  4. Number of participants.
  5. Audiences (news media, competitors, fellow vendors, etc.) have crucial influence on negotiation.
  6. Communication channels.
  7. Time limits: Differences in time orientation should be planned for.

Stages of the Negotiation Process

  1. Nontask Sounding: Includes all activities that might be described as establishing rapport or getting to know one another, but does not include information related to the “business” of the meeting.
    • Preliminary talk helps negotiators learn how the other side feels that particular day.
    • Judgments are made about the “kind” of person with whom one is dealing.
    • Definite purpose: such time is often used to size up one’s client.
  2. Task-Related Exchange of Information: Regards the parties’ needs and preferences. Let foreign counterparts decide when to bring up business.
    • Implies a two-way communication process.
    • An excellent negotiation tactic is to “drain” information from one’s negotiation counterparts.
    • Using multiple communication channels during presentation minimizes errors.
    • Feedback is often difficult to obtain in many cultures (reluctant to voice objections).
    • First offers of price are different across cultures.
  3. Persuasion: Involves the parties’ attempts to modify one another’s needs and preferences through the use of various persuasive tactics.
    • Handling objections involves providing clients with more information.
    • The most powerful persuasive tactic is actually asking more questions.
  4. Concessions & Agreement: Involves the consummation of an agreement, which is often the summation of a series of concessions or smaller agreements.
    • Americans often make concessions early, expecting foreign counterparts to reciprocate.
    • Other cultures make no concessions until the end of negotiations.
    • Understand differences in decision-making styles.