According to Leung (1997), the power of negotiation in all cultures rests on the expectation of reciprocity by each party. When each party makes some concessions to the other, this indicates good faith and reaching an agreement that satisfies both parties.
In this paper, I will discuss the concessions that can be expected between American and Saudi cultures when negotiating in the case of Bechtel and what I will need to know about bargaining behavior.
Types Of Concessions In Negotiations:
According to (Ma, Showail, Campagna & McLean Parks, 2006), the types of concessions in negotiations can be summarized as follows:
Style 1: Take it or leave it: This method involves the negotiator not making any concessions due to the strength of his/her service or product. The American negotiator may use this method without alternatives to the other party. Still, it is unsuitable for the Saudi negotiator, who views the negotiations as having long-term results based on the relations between him/her and the other party.
Style 2: Settlement: This method involves the two parties waiving some of their conditions to achieve a win-win situation. This style suits American and Saudi cultures because each party bases its negotiations on different aspects, such as speed for the American side and relations for the Saudi side.
Style 2: Adopting The Final Outcome: This method is built on limits that cannot be crossed. Anything less than that can be passed, and a waiver can be made. This also fits with American and Saudi cultures.
The Behavior of American Culture in Negotiation:
According to Sebenius (2002), the American negotiator's interest is based on the speed of obtaining the product or service, cost, and efficiency. Therefore, using information in front of the American side is a source of great strength. When the data is available on the other side without ambiguity, this leads to reaching an agreement with the American party.
The behavior of the Saudi culture in NegotiatiNegotiation According to (Al-Khatib, Malshe & AbdulKader, 2008), the Saudi negotiator's interest is based on price and personal relationships. However, profit is significant; it is not as essential as the price of the product or service in front of the available alternatives of the same quality; in addition to the strength of personal relationships between the two parties to the negotiatiNegotiationre, the negotiator should expect to reduce the price and build a stronger relationship that can be invested in the future.
Practical Example:
According to (Smith, 1991), when the Bechtel Company went to Saudi Arabia in the seventies to negotiate the construction of "Jubail Industrial City," it was and still is the largest industrial city in the world in terms of area, the Saudi negotiator aspired to a strong relationship and to continue working for a more extended period based on a better price, the American company had hoped to quickly obtain the contract, so they offered a better price than others. Therefore, they agreed to implement the industrial city, which lasted from 1975 until now. The value of the construction and maintenance contract for this city has reached 20 billion dollars.
Conclusion
Successful negotiatiNegotiationultures require an understanding of the differences between different cultures, and concessions are made by implementing the sequencing strategy in negotiatiNegotiationa, 2006); a quick renunciation is not good in any case and weakens the value of what was waived; the waiver is also not free, the treatment must be reciprocal for it to be successful for both parties, making concessions conditionally give the negotiator more power, if they do this, then the other must do this.
References
Al-Khatib, J. A., Malshe, A., & AbdulKader, M. (2008). Perception of unethical negotiation tactics: A comparative study of US and Saudi managers. International Business Review, 17(1), 78-102.
Leung, K. (1997). Negotiation and reward allocations across cultures.
Sebenius, J. K. (2002). The hidden challenge of cross-border negotiations. Harvard Business Review, 80(3), 76-85.
Malhotra, D. (2006). Four Strategies for Making Concessions. Unpublished paper, Harvard Business School (available online at http://hbswk. hbs. edu/item/5235. html).
Ma, L., Showail, S., Campagna, R., & McLean Parks, J. (2006, July). Concessions in negotiations: the roles of initial assessment and signaling on outcomes of a negotiated agreement. In IACM 2006 meetings paper.
Smith, J. C. (1991). Mega-project construction management--the Corps of Engineers and Bechtel Group in Saudi Arabia (Doctoral dissertation, Massachusetts Institute of Technology).