SISTEMA INSTITUTO TECNOLOGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY
Bargaining with the gringos: a mexican view of negotations with U.S. firms
Bryan Husted
Cuadernos del Centro de Estudios Estratégicos
CENTRO DE ESTUDIOS ESTRATEGICOS
JUNIO DE 1993
Bargaining with the Gringos: A Mexican View of Negotiations with U.S. Firmsi
Mexican and U.S. business people are increasingly coming into contact with each other at the negotiating table. The sheer volume of business transactions between the two countries is staggering. In 1989, Mexico was the United States’ third largest trading partner supplying six percent of total U.S. imports and purchasing seven percent of total U.S. exports. Likewise in 1989, the United States was Mexico’s
largest trading partner, responsible for 70.8 percent of its imports and 71.6 percent of its exports (United States International Trade Commission, 1991). Despite the close proximity between these two nations and their strong commercial ties, there has historically existed considerable mistrust which has bred misconceptions of the other (Riding, 1984). With the recently negotiated North Ameritan Free Trade Agreement, contact between the two peoples will only increase. Thus, it becomes ever more important for each to understand the differences in their bargaining styles and
expectations. Misconceptions need urgently to be corrected as business people come to the negotiating table in order to arrive at mutually satisfactory agreements.
Unfortunately, interested managers face a number of obstacles in their search for information to overcome such misconceptions.
The first obstacle is that the business literature has surprisingly little to say about negotiations in Mexico. Moran and Stripp (1991), in a study based largely on anecdotal and secondary sources, have emphasized the importance placed by Mexican negotiators on status, formality, risk-avoidance, and centralized decision-making.
Adler, Graham, and Schwarz Gehrke (1987) performed laboratory simulations of
*The author wishes to thank Sabrina Jara for her able research assistance tbroughout the project as well as Elvira González who helped in gathering and processing the survey data. Mary Jane Saxton and Theodore Schwarz Gehrke made helpful comments about the survey instrument. The author also acknowledges support from a grant of the Hewlett Foundation to the Center for Strategic Studies which helped make this study possible.
negotiations involving Mexican, Canadian, and U.S. business people. They found that Mexicans used individualistic negotiation strategies and that satisfaction depended greatly on the personal attractiveness of their counterpart. Finally, Weiss (1990) reported the process of negotiations involved in the IBM-Mexico agreement on investment in the microcomputer industry. He highlighted the complexity of such negotiations and the importance of authority in bringing about agreement among disparate elements of the Mexican govemment. Beyond these three studies, almost no work has been done on bargaining in Mexico.
The second obstacle is that cross-cultural negotiation studies typically look at the experience of U.S. negotiators in a particular foreign country, such as China or Japan (Stewart and Keown, 1989; Tung, 1982; Tung, 1984). Although it is useful to leam what one’s compatriots believe are key factors in negotiating in that country, it would also be helpful for prospective negotiators to leam what their counterparts in other countries think of them. By understanding the problems Mexican negotiators face in their dealings with U.S. business people, readers in the United States will be able to directly address the issues that trouble the people with whom they are dealing rather than their own, possibly mistaken, perceptions of what those problems may be.
In order to fil1 the gaps in our understanding of the elements essential for success in Mexico-U.S. business negotiations, this study takes a rather novel look at how Mexican business people perceive negotiations with their U.S. counterparts. The Mexican business members of the Monterrey Branch of the Ameritan Chamber of Commerce of Mexico were surveyed using a Spanish-language questionnaire based on ones successfully developed and used by Tung (1982, 1984) and Stewart and Keown (1989) in their studies of Asian negotiations. In each company, the person responsible for negotiations with U.S. firms was identified and the questionnaire was sent to that person. Surveys were originally sent and some were collected by a private courier service. However, more than three quarters of the surveys were completed during
follow-up visits by graduate research assistants. Of 201 surveys that were originally sent, 104 usable responses were obtained.
It should be noted that business firrns in Monterrey are not representative of al1 Mexican firms. In fact, there probably is no typical region in Mexico. Among other factors, workers in Monterrey have higher education levels than those in other parts of the country (Kras, 1990). In addition, Monterrey is more industrialized than any other region except for Mexico City and is one of the few areas in Latin America where locally-owned businesses predominate (Riding, 1984; Vellinga, 1979). Culturally speaking, Monterrey is very influenced by popular U.S. culture. Santa Claus, Halloween, and rap music are al1 well known in the northem part of Mexico (Castellanos Guerrero and Lopez y Rivas, 1989). More importantly, managerial culture in Monterrey is highly influenced by the United States (Vellinga, 1979). Due to these factors, Monterrey cannot in any sense be considered typical of Mexico as a whole.
Despite these drawbacks, Monterrey is an appropriate place to begin a study of U.S.-Mexican business negotiations. E3ecause of the marked regional differences in Mexico, a nationwide survey which would attempt to fínd a representative Mexican way of negotiating with U.S. business people would be meaningless. This kind of study must proceed region by region. Monterrey is a good place to start because, being one of the cities most culturally similar to the United States, problems identified by Monterrey business people are undoubledly going to be even more signifícant in other regions where the differences will be accentuated even more. In addition, since Monterrey will probably be the entry point for many U.S. businesses interested in Mexico, the opinions of its business community should be especially interesting to U.S. readers.
3
BACKGROUND Profíle of the Mexican Firm
Al1 the firms were located in the Monterrey metropolitan area. The fírms in the sample had been an average of 23.1 years in existence. Fifty-eight percent were small businesses with one hundred or fewer employees, seventeen percent were
medium-sized businesses with 101 to 250 employees, and twenty-fíve percent were large-sized businesses with more than 250 employees. Only 9.8 percent of the firms were subsidiaries of U.S. fírms. The remainder were Mexican owned and operated.
The typical fírm in the sample had 9.3 years of experience negotiating with U.S.
fírms. Almost twenty percent of their total sales were to the United States, while 35.6% of their total purchases came from the United States.
Profile of the Mexican Negotiator
The average Mexican negotiator was thirty-six years old. Fifty-four percent of the respondents had completed an undergraduate degree, while thirty-four percent had completed graduate studies. Twenty-four percent were currently studying. A third of these were studying some graduate degree, while another sixteen percent were studying English. Thirty-six percent of the respondents were either presidents or general managers of their companies. Twenty-three percent had prior work experience in a U.S. fírm doing business in Mexico and an amazing forty-two percent had lived in the United States, either for study or work. Taken as a whole, the Mexican
negotiators represent a well-prepared group with significant intemational experience.
Negotiation profile
The most sahent characteristic of Mexican-U.S. business negotiations is that the parties find such negotiations to result in moderately satisfactory agreements. In rating satisfaction with the reached agreements on a five point scale with five
representing “very satisfied” and one representing “very dissatisfied,” the respondents rated their satisfaction at 3.9. Twenty-six percent of the respondents were indifferent or dissatisfied to some degree. Thirty-nine percent were satisfied and another thirty- three percent were very satisfied. As Tung (1984) noted with respect to a similar finding of satisfaction in her study of Japanese negotiations, such a response represents a fairly satisfied group of respondents.
Of the firms that responded, 89.3% of the fírms were currently involved in negotiations of some sort with U.S. fírms. Sixty-one percent of the negotiations took place in Mexico and thirty-seven percent in the United States. The remainder occurred in both countries. By far, most agreements were negotiated in English. Only twenty- one percent of the negotiations used Spanish entirely or in part. Sixty-six percent of agreements were with U.S. manufacturing firms, while the remainder were with non- manufacturing firms. The most common types of negotiations dealt with the purchase or sale of goods, distribution agreements, technological assistance, licensing
agreements, and representation agreements. U.S. firms were generally selected according to their expertise in either the manufacturing process, their technological competence, their commercial experience, or price characteristics, rather than for their capital contribution or connections with the govemment. Slightly over three quarters of the respondents noted that they sought a long-term relationship of three years or more with the U.S. company.
The negotiation teams on both sides were fairly small. Sixty-four percent involved only one or two members, while thirty-fíve percent involved three to four
5
members. Only one percent involved teams with five to seven members. In twenty- three percent of the cases, the ultimate decision-making authority rested with someone outside of the negotiating team. In fifty percent of the cases, the maximum authority rested with a member of the team who could make those decisions. In only twenty- seven percent of the cases was decision-making authority shared equally by al1 members of the team. When asked the number of levels between the respondent and the chief executive officer, the average was 0.9 with a standard deviation of 1.05, indicating that the principal negotiator was very close in hierarchical leve1 to the CEO’s Office. These results confirm the observation of Moran and Stripp (1991) that Mexican companies are quite centralized in their decision making style during the negotiation process.
U.S. -MEXICAN BUSINESS NEGOTIATIONS Preparation for the Negotiations
Only half of the respondents formally prepared for negotiations with U.S.
companies. This fact is particularly interesting in light of a finding to be mentioned later that lack of preparedness was often cited as an important cause of failed negotiations. Respondents were asked to consider possible ways of preparing for negotiations. As listed in Table 1, the most important preparation involved the study of English. Prior discussions with business consultants, bankers, academics, and other negotiators were the second most important type of preparation. FinaIly, respondents read books on U.S. business practices and social customs. Formal preparations such as the use of simulated negotiations or hiring experts to train negotiators were not very common.
Table 1 about here ---
In general, formal preparation was quite limited. Why was this so? As indicated in Table 2, the respondents did not attribute the lack of formal preparation to a lack of time or resources. Neither did they see preparation as having only a remote impact on the “bottom line. ” Rather, the most important reasons given for the lack of preparation were the confidence they had in their negotiating ability and their prior commercial experience with U.S. firms. This result is not surprising given their satisfaction with the agreements reached with U.S. firms and their 9.3 years average of negotiation experience.
--- Table 2 about here
---
Respondents were asked about the timing and types of contacts which preceded the onset of formal negotiations. Slightly more than a third of the respondents
reported that the onset of their last negotiation with a U.S. company occurred within a month of the initial contact with the company. Forty-two percent reported that
negotiations began within one to four months after the initial contact. In Sharp contrast with the Chinese and Japanese (Tung, 1982, 1984), Mexican business people do not wait a long time to begin to do business. According to Table 3, the most common form of contact involved the sending and receipt of product samples and of formal quotation bids. 1nitia.l visits from U.S. representatives were also fairly common as well as attendance at trade fairs and exhibitions. This would indicate that many of the organized efforts by both government agencies and industry associations to foster contact between Mexican and U.S. executives are effective means of leading the way to future business dealings. Other means such as advertising and direct mail were seen as less important ways to initiate contact prior to negotiations.
Table 3 about here
Comparison of Negotiation S tyles
Respondents were asked to compare their negotiation style with the style of the U.S. negotiators. The most significant differences in the self reported style and the perceived style of their U.S. counterparts are the following:
--The U.S. negotiators appear to be much more structured in their approach to negotiations than do the Mexicans.
--The Mexicans viewed themselves as significantly more flexible than their U.S.
counterparts in bargaining situations.
--The U.S. executives were seen as being more direct in getting to the issue at hand, while the Mexicans viewed themselves as more indirect, often taking digressions.
--The Mexicans were more concemed with the general wording of the agreements, while the U.S. business people were seen as being more focused on the specific wording of the agreements.
There was a marginally significant difference in the tendency of U.S.
negotiators to emphasize profits and the tendency of Mexican negotiators to emphasize
“face saving” (significant at the .06 leve1 of significance). Face-saving can be defined as “the act of preserving one’s prestige or outward dignity” (Victor, 1992: 159).
There was also a possible difference in the perception that U.S. negotiators were more assertive, while Mexican negotiators were more accommodative (signifícant at the .08
leve1 of significance). Interestingly, there was no significant difference found with respect to perceptions about either side’s ability to cooperate, emphasis on short-term or long-term relationships, tolerance for silente, or in the efficiency or speed with which either side implemented a negotiated agreement.
Many of the perceived differences relate to the typical differences found
between high-context and low-context cultures. As Boyacigiller and Adler (1991: 276) explain: “In high-context cultures, the extemal environment, situation, and non-verbal behavior are crucial for understanding communications. By contrast, in a low-context culture, a much greater portion of the meaning in a given communication comes from the spoken Word. ” Low-context cultures tend to be more literal and have a greater focus on detail than high-context cultures which are more interpretative and focus on the intention of the speaker (Victor, 1992: 153).
Mexico has a typically high-context culture. Since meaning is conveyed by context, it is reasonable that Mexicans would view the emphasis placed by their U.S.
counterparts on explicit communication and the specific wording of agreements as being more structured, rigid, and direct. Related to the high-context culture in Mexico is the emphasis they place on face-saving. Often the inability of the Mexican to speak frankly about some matter is due to his or her desire to save face. The U.S. tendency to say what one means and focus on profits is often viewed by the Mexican as being cold and tactless. U.S. business people need to take into account the high-context, indirect approach of the Mexicans in negotiations. They should thus exercise patience with such indirections and seek to maintain the outward dignity of their counterpart by not asking questions or attacking ideas which may be taken personally (Victor, 1992).
Factors related to success or failure in U.S.-Mexican business negotiations
The respondents were asked to consider the last successful negotiation which they conducted with a U.S. company and evaluate the importance of a list of items possibly related to the success of that negotiation. Each respondent also considered a list of items related to failed negotiations with U.S. companies. The respondents evaluated each item on a scale of one to fíve in which five meant that the item was
9
very important and one meant that the item was not at al1 important. Average ratings for each item were then calculated.
The fifteen most important items related to success were then subjected to factor analysis. The results are reported in Table 4. Five separate factors were found.
The first and most explanatory factor dealt with good communications. This factor included items related to preparedness on the part of both the Mexican and U.S.
teams, the sincerity of both sides, and the clarity of the requirements of each side. In addition, patience on the part of the Mexicans was closely associated with this factor.
It is interesting to note an element of reciprocity in the communications factor. Both sides need to be prepared, clear, and sincere. Mexican negotiators will only be as forthcoming as their North American counterparts.
The second factor related to successful negotiations refers to the importance the Mexicans attach to knowledge of the negotiating context of their U.S.
counterparts. Such knowledge consists of familiarity with U.S. business practices, knowledge of the English language, as well as an understanding of the political and economic situation of the United States. Interestingly, the unique characteristics of Mexican services and products was related to this factor. It may be that knowledge of the U.S. business environment is necessary for the development of these unique characteristics. These aspects of knowledge indicate an area where Mexican
negotiators believe it is important for them to learn more about their counterparts. It demonstrates a recognition and willingness of the Mexican to meet the U.S. executive on his or her own terms. This focus on the negotiating context flows naturally from the Mexican emphasis on the understanding of context as necessary to effective communication.
The third factor is related to the good faith of both sides in arranging countertrades. This factor reflects the Mexican emphasis on flexibility mentioned earlier in the give and take of business negotiations. This factor also underscores the
importance seen by the Mexican of reciprocity. As in the case of communication, the Mexican wants to see a similar willingness on the part of the U.S. business person to negotiate and make concessions.
The Mexican understanding of U.S. delivery requirements was the only item included in the fourth factor. Delivery requirements are closely related to conceptions of time which differ dramatically between the United States and Mexico. Kras (1990:
42) discusses these differences extensively and notes that in Mexico time
commitments are desirable objectives, but not firm promises. It is thus a positive sign for U.S. negotiators that Mexican respondents see fulfillment of delivery requirements and consequently compliance with U.S. notions of time as an essential element for
success.
Finally, a good personal relationship between the negotiators was the fifth factor that emerged from the factor analysis. The role of good personal relations in high context cultures cannot be underestimated. As Victor (1992: 150) writes:
To the low context party, the written Word is binding, regardless of whether the two drafting parties remain the same or not.. . .In contrast, to the high context party, the contract is a sign of good faith between the two individuals who drafted it; the relationships between the negotiators--not the contract itself--is what matters. The contract is a symbol of the bond between its drafters. As a result, the contract itself is less binding than the personal relationship of the negotiators.
Although U.S. negotiators may be used to doing business at the first meeting, they will need to take time to know their Mexican counterparts personally.
_______-_---
Table 4 about here ___________---
The twin themes behind these five factors are reciprocity and contexting. The Mexicans act according to a kind of tit-for-tat strategy (Axelrod, 1984). Reciprocity is
11
the key to this working relationship. But as Axelrod notes, it is best to start with a friendly opening move--an unreciprocated gesture of cooperation. Luhmann (1979) calls this gesture a “supererogatory performance.” For the Mexican, this
unreciprocated gesture is his or her knowledge of the U.S. business environment. This knowledge includes the Mexican awareness of differences in sense of time between the two countries and the need to meet the U.S. negotiators’ delivery requirements on their own terms. Apart from these unreciprocated gestures of goodwill, the Mexican then responds according to the reaction of the other party. In tum, this reciprocity represents a form of non-verbal communication and places the negotiation within a context which signals the personal commitment of both sides to sustain the
relationship. Without this context, the trust needed for successful negotiations with Mexican executives will never develop.
The eleven items most closely related to failure in negotiations with U.S. firms were also subjected to factor analysis. Five factors were found and reported in Table 5. The most important factor groups various items which deal with problems
encountered in negotiations with U.S. teams. The Mexicans view such teams as lacking authority to make decisions and as failing to resolve their doubts in a timely manner. The insincerity of the U.S. team was also related to this factor. It may very well be that the inability to resolve the doubts of the Mexican negotiators and the perceived lack of authority of U.S. representatives to make decisions is related to their perceived insincerity. As mentioned earlier, thirty-six percent of the respondents were the presidents or general managers of their companies. In half of the cases, the
respondents reported that a member of the Mexican team had ful1 authority to make decisions. The high degree of centralization in the Mexican teams results in the expectation that the U.S. team should be able to make decisions as quickly and
authoritatively. When this expectation is not met, the conclusion appears to be that the
U.S. side is not as forthcoming and thus insincere since that would be the appropriate assumption if the counterpart were Mexican.
The second factor deals with several aspects of the negotiation process which may contribute to failure. Often there are significant differences in negotiation styles as we have seen earlier. The U.S. team sometimes quotes unreasonable prices, while the Mexicans suffer from a lack of knowledge of the delivery and distribution system in the United States. In addition, the lack of preparation on the part of the Mexicans contributes to these flaws in the process which lead to failed negotiations.
The third factor relates to cultural barriers which exist between the two sides.
Sometimes these cultural barriers may consist in differences in business practices or actual barriers to communication arising from such cultural differences. Cultural barriers can cause misunderstandings which undermine the development of trust--an element crucial to successful negotiations between Mexican and U.S. businesspeople.
Simple problems related to the different languages is the fourth factor which most contributes to failed negotiations. Language problems are themselves related to the cultural barriers just mentioned; however, clear language is so fundamental to a good working relationship that it stands apart. Interestingly, Walton and McKersie (1965: 140), in their famous study of labor negotiations, noted that “the parties will produce relatively low-grade solutions where . . . the meanings of words are not shared
fully.” The meaning of words in a high-context culture depends precisely on the context. Thus, the need to be clear cannot be satisfied with a good dictionary, but only through a shared understanding of the context of the negotiation.
The final factor refers to certain price constraints. The Mexican respondents viewed their inability to lower the price as significantly contributing to failure in bargaining. At times this inability to lower prices reflects the lower financial resources of some Mexican firms.
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Table 5 about here
These flve factors related to failure also reflect the twin themes of reciprocity and contexting which are essential to Mexican negotiations. They demonstrate the fragility of the reciprocated cooperation that is necessary for an effective business relationship with Mexican firms. The problems related to U.S. teams are al1 problems dealing with a failure to reciprocate: inability to make decisions, inability to resolve doubts, and insincerity. Other factors dealing with cultural barriers, language
problems, and the lack of preparation by the Mexican team demonstrate the failure to provide the unreciprocated gesture of cooperation which goes beyond the expected and sets a propitious stage for negotiations. The cultural differences in contexting cause misunderstandings which lead to a failed reciprocity. A failure to reciprocate is itself perceived by the highly context conscious Mexican as conveying an important message that the other side is not interested in doing business. Most importantly, the failure to reciprocate will result in a loss of face for the company which initiated contact. Tbese implicit messages further undermine the possibility of cooperation.
These conclusions were highlighted when the respondents were asked to list in order of importance four areas of improvement for future negotiations with U.S.
companies. The greatest priority was placed on improving communications.
Obviously, this was seen previously as an important factor related to both the success and failure in negotiations with U.S. companies. Second, they cited the importance of developing trust and confidence in the relationship reflecting the prior emphasis on the sincerity or insincerity of the parties. Third, the respondents saw a need on their part to learn to make decisions more quickly . Finally , they believed they could improve by responding to the questions and doubts of the other side more quickly. In each case, these areas for improvement reflect the Mexican desire to strengthen the slowly
evolving cooperation between the two countries and U.S. negotiators should take care to reciprocate and even offer their own unreciprocated gestures of goodwill.
Conflict and conflict resolution
The respondents were asked to identify the causes of conflicts in their negotiations with U.S. businesses.The most important conflicts revolved around differences in expectations about delivery, quality control, and pricing. Interestingly, the U.S. firm’s desire to specify formally al1 the details and contingencies was also a fairly important source of conflict in negotiations. Beyond those items, respondents specifically added other conflicts which they had faced in past negotiations with U.S.
companies such as the unwillingness of the supplier to commit itself, differences of opinion over the distribution of profits for reinvestment, disagreements over the determination of territorial exclusivity, and in the case of joint ventures, the assignment of important posts to foreign personnel and slowness in promoting Mexican nationals to executive positions.
In order to resolve conflicts, heavy reliance was placed on friendly discussion between the parties and compromise to iron out differences. The parties rarely took advantage of the advice of legal counsel to resolve such disputes. In light of the Mexican desire to save face, U.S. business people should avoid open confrontation when conflicts arise and seek to resolve them on the basis of the good personal relationships which should have been established prior to the onset of a conflict.
CONCLUSION
For Mexican business people, the human side of the negotiation process is more important than the technical aspects. Problems of communication and trust will
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undermine negotiations more than disagreement over product characteristics or pricing policies. Reciprocity is an essential key to the development of trust in negotiations with the Mexicans and is a concept well understood in the United States. Yet in light of signifícant differences in communication styles between negotiators of the two countries, the possibilities for miscommunication and misunderstanding are great.
U.S. negotiators are viewed as being very direct--naive at best and often tactless. The Mexicans prefer a more indirect approach, taking digressions to reach the point they want to make so that both sides may save face. Many of the difficulties in U.S.- Mexican business negotiations perceived by Mexican business people stem from differences in contexting in these two cultures. The U.S. desire to get to the point conflicts with the Mexican need to take time to leam the context of the business relationship. Thus, clarity of expression, a virtue in the United States, may in fact thwart good communication in high-context cultures like Mexico. Consequently, there needs to exist a better understanding of the differences related to intemational business comunications, including specifícally negotiation styles, business practices, and
contexting.
There are a number of specifíc actions that U.S. business people can taIce in order to improve negotiations with their Mexican counterparts. First, aside from factual information about cultural differences in style which can be acquired from books and seminars, U.S. executives need to communicate to their Mexican
counterparts a sense of personal warmth and trustworthiness--essential elements of the negotiation context.
Second, U.S. negotiators need to recognize the Mexican attitude that contracts represent desirable objectives, not binding commitments.What sustains the contract is the relationship between individuals on both sides of the transaction. It is important to maintain continuity in the people who will directly deal with the Mexican side. As
people change, new representatives will need to specifícally develop the same relationship and obtain the same commitment on the part of the Mexican side.
Third, a unified and decisive front needs to be maintained before the
Mexicans. A lack of decisiveness can be interpreted as a lack of commitment on the part of the U.S. side to the proposed deal. Finally, it is vital that the U.S. be very sensitive to issues of “face. ” The dignity of the Mexican participants needs to be maintained before their peers. A failure to save face may well result in a loss of commitment on the part of the Mexicans.
Each of these recommendations relates to the very subtle, often imperceptible (to U.S. ears and eyes) messages that are transmitted in high context cultures like Mexico. Sensitivity to these issues will result in more positive results for both sides of the bargaining table.
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TAFKE 1: TYPES OF PREPARATION Method of preparation
(listed in order of importance)
Average rating of 104 respondents (5=very important, 1 = not at al1 important)
Study of the foreign language
Extensive prior discussions with business consultants, banks, academics,
trading companies, and other negotiators Reading of books on U.S. business practices and
social customs
Use of simulated negotiations
Hiring of experts to train negotiators
Use of U.S. staff to assist in the negotiations
4.02
3.50 3.00 2.84 2.23 1.60
Other ways to prepare: Study the cultural aspects, study al1 altematives, define objectives and bases of negotiation, seek legal advice, identify needs, advantages and disadvantages for the other party, investigate the other firm deeply, consult affiliated
!klTlS.
TABLE 2: REASONS FOR NOT PREPARING Factors related to lack of preparation
(listed in order of importance)
Average rating of respondents (5=very important, 1 =not at al1
important) Confidence in negotiating ability
Commercial experience with U.S. fírms
Negotiations were relatively unimportant to overall
3.90 3.63
profítability of the company 1.96
Lack of time 1.78
Lack of resources 1.54
Doubt effectiveness of such procedures 1.49
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TABLE 3: PRENEGOTIATION CONTACTS Type of prenegotiation contact
(listed in order of importance)
Average rating of respondents (5= very important, 1 = not at al1
important) Sendinglreceiving sampíes
Formal quotation bid
Visits from U.S. fkn’s representatives Attending exhibitions, trade fairs Sendingkceiving technical informacion Sendingkceiving preliminary proposals Regular sales calls on end users in factories Regular sales ca.lls on foreign trading corporations Advertising/direct mail
Giving seminars
Regular sales calls on govemment agencies
4.42 4.25 4.17 3.94 3.69 3.59 3.38 2.90 2.55 2.07 1.51
Factor very 10dillg important
Important Moderately important A-I-I-RIBUTES OF COMMUNICATIONS
-Preparedness on part
of the U.S. team .8345 39.2% 28.4% 16.7%
-Sincerity of the U.S.
team .7504 43.1 32.4 16.7
-Clarity of require-
ments of U.S. team .5217 57.4 21.8 5.9
-Preparedness of
Mexican team 5523 70.3 15.8 6.9
-Patience of Mexican
team .5647 33.7 31.7 20.8
-Sincerity of Mexican
team .6253 65.3 21.8 8.9
-Clarity of Mexican
requirements .5898 68.3 22.8 5.0
Eigenvalue: 3.1962 / Percent of var.: 21.3/ Cum. var.: 21.3 KNOWLEDGE
-Familiarity with U.S.
business practices .6632 50.5 28.7 9.9
Xnowledge of
-English .8323 69.3 16.8 5.0
Xnowledge of the political and economic situation
in the U.S. .8136 46.5 21.8 17.8
-Unique characteristics Mexican services/
products .6811 57.4 21.8 4.0
Eigenvalue: 3.10151 Percent of var.: 20.7/ Cum. var.: 42.0 GOOD FAITH IN COUNTERTRADES
-Good faith of U.S.
team in arranging
countertrades .8196 51.0 25.5 18.6
Good faith of Mexican team in arranging
countertrades .8433 66.3 19.8 8.9
Eigenvalue: 2.62351 Percent of var.: 17.5 / Cum. var.: 59.5 DELIVERY REQUIREMENTS
-Mexican understanding of delivery
requirements .8211 60.0 14.0 5.0
Eigenvalue: 1.44161 Percent of var.: 9.6/ Cum. var.: 69.1 PERSONAL RELATIONSHIPS
-Good personal
relations .8197 62.7 21.6 9.8
Total
84.3%
92.2 85.1 93.0 86.2 96.0 96.1
89.1 91.1
83.2
95.1
95.0
79.0
94.1 Eigenvalue: 1.06921 Percent of var.: 7.1/ Cum. var.: 76.2
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TAFSLE 5: FAC~ORS RELATED TO FAILURE LN Busm~ss NEGOTIATIONS
Factor
10¿3dillg
Very
important
1mportant Moderately important
PROBLEMS WITH THE U.S. TEAM Lack of authority of U.S.
team to make decisions .8538 37.0% 20.0% 15.0%
U.S. team’s failure to resolve doubts of
Mexican team .8667 34.0 26.0 14.0
U.S. team’s lack of
sincerity .8449 41.0 20.0 9.0
Eigenvalue: 2.9009/ Percent of var.: 26.41 Cum. var.: 26.4 NEGOTIATION PROCESS
Differences in negotiation
styles .6768 26.5 28.4 22.5 77.4
U.S. team quoting
unreaaonableprices .7326 52.5 17.8 8.9
Mexican lack of knowledge
of delivery system .5665 42.0 19.0 11.0
Mexican lack of
preparation .7927 40.6 21.8 9.9
Eigenvalue: 2.35771 Percent of var.: 21.4/ Cum. var.: 47.8 CULTURAL BARRIERS
Differences in business
practices .8038 24.5 29.4 22.5
Communication
barriers .8176 37.3 17.6 12.7
Eigenvalue: 1.7976/ Percent of var.: 16.3/ Cum. var.: 64.1 LANGUAGE PROBLEMS
Language problems .9708 41.2 21.6 5.9
Eigenvalue: 1.07631 Percent of var.: 9.81 Cum. var.: 73.9 PRICE CONSTRAINTS
Mexican team’s inability
to lower the price .8882 32.0 22.0 18.0
Eigenvalue: 1.0433/ Percent of var.: 9.51 Cum. var.: 83.4
Total
72.0%
74.0
70.0
79.2 72.0 72.3
76.4 67.6
68.7
72.0
TABLE 6: TYPES OF CONFLICTS Types of conflicts
(listed in order of importance)
Average rating of respondents (5 = most important, 1 = not at al1 important, O=not applicable) Differences in expectations about delivery
schedules 3.47
Differences in expectations about quality control 3.11 Differences over pricing of products 2.98 U.S. firm’s willingness to specify formally al1
details and contingencies in the contract 2.46 Differences in areas of market interests 2.21 Differences over contribution (technological know-how,
machinery, etc.) 2.14
Differences in corporate objectives (retum on investment,
market size, profit margins) 2.10
Differences over the time horizon used in planning 1.95 Differences over the extent of management control
between both firms 1.81
Differences between both parties regarding the
measure of profitability of an operation 1.67 Differences between U.S. and Mexican firms regarding
objectives 1.53
Differences of opinion about the rights and
responsibilities of management and labor 1.33 Differences over remuneration policies 1.04 Differences over percentage of equity ownership 0.98
(Other types of conflict mentioned by the respondents included: Suppliers not willing to commit themselves, distribution of profits for reinvestment, assignment of
important posts to foreign personnel, slowness in promoting nationals to executive positions, and determination of territorial exclusivity).
23
Referentes
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norteamericana en la cultura de la frontera norte de MCxico,” in R. González Salazar, (ed.) La Frontera del Norte: Integracibn y Desarrollo, México, D.F. : El Colegio de MCxico.
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Riding, A. (1984). Distant Neighbors: A Portrait of the Mexicans, New York:
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Stewart, S. and Keown, C. F. (1989) “Talking with the dragon: Negotiating in the People’s Republic of China, ” Columbia Joumal of World Business, 24, 68-72.
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