International negotiations need the parties to follow legal, procedural, and political regulations of more than one nation. These laws and procedures are often inconsistent, or even directly opposing in nature. International business agreements should look into these differences. Arbitration clauses, specification of the governing laws, and tax havens should be well defined in the agreements. We have listed here the most common attributes and elements that must be taken into account while doing international negotiations.
- The presence of different currencies should be taken into account. As the relative value of different currencies is not fixed, the actual value prices may vary, and result in unanticipated losses or gains.
- Each government tends to control the flow of its domestic and foreign currencies. Therefore, business deals should look for the governmental willingness to make its currency available. Some policies of government may be detrimental as well.
- Governments often play a significant role in foreign business. Extensive government bureaucracies can affect the negotiation process. Legal complications may also set in.
- International ventures are vulnerable to political and economic risks. These risks require the negotiator to have knowledge and social insight.
- Different countries have different ideologies about private investment, profit, and individual rights. Effective negotiators will have to present ideologically acceptable proposals to the other.
- Finally, cultural differences, such as language and values, perceptions, and philosophies may result in very different connotations according to culture and norms. The international negotiator must be aware of this.
Role of International Agencies in Negotiations
The role of international agencies in the negotiation process is indispensable. The agencies play a key role in finding an amicable and mutually beneficial negotiation. Organizations like the WTO have a big role in making the MNCs find a good solution to their international disputes. The requirement of such agencies become critical mainly in three areas.
When the business is unfamiliar with the issues and rules at hand
In many cases, business negotiations occur in a situation and place that is unfamiliar to the organization. These negotiations lead the managers out of their comfort zone and into unfamiliar territory. Often, the managers may not be quite knowledgeable in legal and cultural matters.
In such situations, the international agencies can play a big role. If the organizations’ managers are unsure of the issues under discussion or do not know the perfect rules of the game, an agency may be quite helpful in offering a helping hand.
When issues of time or distance present in the process
If the negotiation process takes place in an unfamiliar territory, the customs and rules are generally unknown to the key managerial decision makers. In this case, an international agency may be handy.
This also applies when the managers of an organization are under a tight deadline. When these managers don’t have the time and resources to meet with the other parties in a distant location or cannot participate in all steps in the process, they are quite unlikely to represent themselves well. In this situation also, an international agency may fill the gap.
When there is a poor relationship with the negotiating partner
If the organization is dreading to have negotiations with a party they had clashed earlier, then an international agency may play a key role. The agency may calm both the parties and ensure that the business negotiation remains a matter of business.
This is a good strategy in case of contentious diplomatic contexts, such as the negotiation of a cease-fire between warring armies. In the business world, if the rancour between a company and another over a business contract is deep-seated and ongoing, both sides may get benefits by employing experienced agents to move the negotiation process forward.
If the business thinks that they won’t be able to pursue their business interests effectively – especially when there are chances of aggressive behavior on the other side, an international agency may bridge the gap in finding an amicable and win-win negotiation.