Crossculture in international business negotiation the case study of C food international group in Vietnam

PHAM KHAC HUY CROSS-CULTURE IN INTERNATIONAL BUSINESS NEGOTIATION THE CASE STUDY OF C-FOOD INTERNATIONAL GROUP IN VIETNAM MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION PART-TIME

PHAM KHAC HUY

CROSS-CULTURE IN INTERNATIONAL BUSINESS

NEGOTIATION THE CASE STUDY OF C-FOOD INTERNATIONAL

GROUP IN VIETNAM

MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION

(PART-TIME)

Tutor’s name: Dr Nguyen Huu Than

Ho Chi Minh city (2011)

I confirm that this thesis is a presentation of my original research work which I have studied and researched Wherever contributions of others are involved, every effort is made to indicate this clearly, with due reference to the literature, and acknowledgement of collaborative reseach and discussions

This work is done for the study purpose Copying or using this paper for any other purpose must be subject to the written acceptance of the author

Pham Khac Huy

This project would not have been done without the contribution and encouragement from many people

First of all, I would like to express my grateful thanks to my supervisor, Dr Nguyen Huu Than, for his valuable guidance, advice and recommendations during the study

I am also grateful for the help and contributions from the Purchasing Manager,

Mr Maher Arayssi Without his help and contributions, this study would not have been done successfully

I would like to express my deep gratitude to my colleagues, Ms Nguyen Thi Mai Khoi and Ms Nguyen Thi Hong Xuan, who shared their intensive understanding and experience about C-Food

I am in my parents’ and my grandparent’s debts for their continual supports spiritually and financially

Finally, I would like to thank the members of the Board of Jury for spending time examining and giving valuable comments to improve this study

HCM city, February, 2012

PHAM KHAC HUY

At the age of globalization, cross-country business has now been emerging as a new trend worldwide In this new trend, cross-culture negotiation play a vital role Understanding this vital role will facilitate companies doing business internationally The more you understand cross-culture negotiation, the greater your chance of success will be In Vietnam, more and more companies are involving themselves into cross-country business in general and cross-culture negotiation in particular However, there have been few studies about cross-culture negotiation For this reason, the study was conducted to get a better understanding

of the new term ‘cross-culture negotiation’

The scope of the study is the business cooperation among C-Food International group –C-Food in short, a Lebanese located company – and its Vietnamese seafood suppliers Vora’s twelve cultural variable model1 was used in the study to examine the case Another nine factors obtained by the author from his actual working experience at C-Food were also used The study was begun with in-depth interiew The interviewee was the Purchasing Manager of C-Food The aim of this qualitative research was to get the viewpoints of C-Food about its Vietnamese partners in negotiation These viewpoints were served as a base to structure questionnaire which would be sent to Vietnamese suppliers to their viewpoints about C-Food in negotiation 9 out of 14 suppliers responded, accounting for 64% The next step is telephone interview Phone calls were made to reconfirm the answer of these nine suppliers Finally, C-Food’s viewpoints and Vietnamese ones were compared to describe the differences in negotiation between two sides

1 Vora, D (2001), Notes from lectures, University of South Carolina, Columbia, US

RESEARCH PROBLEM

STATEMENT OF THE PROBLEM

THE OBJECTIVES OF THE STUDY

SCOPE AND LIMITATIONS OF THE STUDY

STRUCTUE OF THE STUDY

1 CHAPTER 1: LITERATURE REVIEW

1.1 CULTURE

1.1.1 ELEMENTS OF CULTURE

1.1.2 HOFSTEDE’S DIMENSIONS OF CULTURE

1.1.3 HIGH CONTEXT VERSUS LOW CONTEXT CULTURES 1.2 ORGANIZATIONAL CULTURE

1.4.2 INTERNATIONAL NEGOTIATION PROCESS

1.4.3 POSSIBLE PROBLEMS IN CROSS-CULTURE NEGOTIATION

2 CHAPTER 2: INTRODUCTION TO C-FOOD INTERNATIONAL GROUP

2.1 PRODUCTS AND SERVICE

2.2 BUSINESS PERFORMANCE

2.3 PROBLEMS IN NEGOTION PROCESS

3 CHAPTER 3: RESEARCH METHODOLOGY

4 CHAPTER 4: RESEARCH FINDINGS

4.1 NEGOTIATION PROCESS BETWEEN C-FOOD AND ITS PARTNERS 4.2 RESEARCH FINDINGS

5 CHAPTER 5: DISCUSSION AND RECOMMENDATIONS TO CULTURE BUSINESS NEGOTIATION

CROSS-CONCLUSION

CONCLUSION

LIMITATION AND SUGGESTION

Figure 3: Research process 25 Figure 4: Negotiation process 27

GCC: Gulf Cooperation Council

HACCP: Hazard Analysis and Critical Control Points

LC: Letter of Credit

LCL: Less than Container Load

NAFIQAD: National Agro – Forestry – Fisheries Quality Assurance Department TT: Telegraphic Transfer

VCCI: Vietnam Chamber of Commerce and Industry

INTRODUCTION

RATIONALE OF THE STUDY

Before considering the worthiness of conducting the study, we should revisit some main concepts and literature related to cross-culture negotiation The first one is negotiation Negotiation is the process by which at least two parties try to reach an agreement on matters of mutual interest1 Negotiations occur in all societies, and on all levels between various parties in various situations These situations can be of a social, economic or political art Individuals, companies, ethic groups and nations have always used negotiations as a way to try to satisfy their basic needs2 The second one

is cross-culture negotiation Conducting business and negotiating in one’s culture can

be complicated tasks, but these tasks are more complex when they are conducted across cultures Negotiating styles that work within one culture often do not work within a different culture and because of this, business negotiators working in foreign cultures have a complex task to manage3 Therefore, culture definitely has a major impact on negotiation styles4 Culture is also one of the most challenging elements of the international marketplace The influence of the culture diversity on international business negotiation will continue to increase in importance as a result of the liberalization of markets worldwide and cross-border mergers and acquisition5

1 Gulbro, R & Herbig, P (1996), Cross-cultural negotiating process, Industrial Management & Data Systems

Volume 96 Number 3 1996 pp 17-23, MCB University Press

2 Nilsson Molnar, 1997, extracted from Johan Lintzen & Anne Svedjehlm (2006), The Impact of Culture on

Business Negotiations between Swedish and US Businessmen: A Case Study of Two Swedish Businessmen,

pp.6, Master Thesis, Lulea University of Technology

3

Rodriguez, C (2001), International Management: Cultural Approach, 2nd edition, Cincinnati, Ohio: South-

Western College Publishing extracted from Johan Lintzen & Anne Svedjehlm (2006), The Impact of Culture on

Business Negotiations between Swedish and US Businessmen: A Case Study of Two Swedish Businessmen, Master

Thesis, Lulea University of Technology pp 2

4

Zoubir, Y.H (2003), International Negotiations: A Professional’s Approach Interview with Mr Josep

Chriqui, Senior Vice President, Alstom Power Turbo-Systems, Thunderbird International Business Review;

Nov-Dec 2003, Vol 45 Issue 6, p695, 6p

At this age of globalizaiton, cross-country business has become a common trend for any company involving international business In this business trend, cross-culture business negotiation plays a vital role Companies doing business internationally cannot be sucessful without realizing this vital role In Vietnam, more and more companies are involving themselves in this cross-country business process However, there have been few studies conducted by scholars or economists on this process especially for cross-culture business negotiation with Islamic partners Moreover, most

of Vietnamese enterprises do not pay much attention to this aspect in their business either

For the said-above reasons, conducting a study on cross-culture negotiation between C-Food and Vietnamese suppliers is worth doing because both sides are involving themselves in this international business process The research problem will be stated

in the next section

RESEARCH PROBLEM

It is worth going through the brief introduction of C-Food International group, hereinafter called C-Food, before we consider the problem It was founded in 2003 in Lebanon, an Islamic country in Middle East In 2004, the branch in Ho Chi Minh city was established C-Food is a seafood trading company in Middle East, Africa and Eastern Europe It is the market leader in these areas Until now, it has a distribution network covering 27 countries6

C-Food has a wide range of seafood products ranging from the farmed-raised to caught shrimps and fish More than 70% of its products are being bought from Vietnam to export to its markets Despite of being a creditable account and having cooperated with these Vietnamese suppliers since 2004, C-Food is still facing

6

www.c-food.info , www.siblou.com

difficulties in negotiating with them For the newly-cooperated suppliers, the difficulties are becoming tougher and tougher These difficulties strongly are strongly affecting the efficiency of C-Food’s supply chain

STATEMENT OF PROBLEM

As a trading company, negotiating to purchase goods for its distribution network is vitally important for C-Food Moreover, C-Food is pursuiting both expanding the distribution network and deeply exploiting its current market share In such circumstances, the negotiation process is taking more and more time to be done Mails requesting for price quotation are being replied late Whenever a mail requesting for quotation is sent by C-Food’s Purchasing Manager, colleagues in Vietnam branch have

to call the related suppliers to remind the latter of answering The Vietnamese colleagues sometimes have to make several phone calls to guarantee that any price requesting mail will be responded

Moreover, the suppliers’ process of handling the orders placed by C-Food has not been done in line with C-Food’s distributing process Shipments are being delayed dramatically, which not only damages C-Food’s reputation but also costs C-Food’s money to deal with the results of shipment delaying Such sluggishness has negatively affected the overall performance of C-Food

Except for the economic reasons, the project would aim at identifying cultural elements which affect the negotiation process Once the elements are discovered, the project will try to provide some remedies for minimizing the negative effects of these elements

THE OBJECTIVES OF THE STUDY

Research objectives: The problem to be raised in this research is

• To evaluate how cultural differences cause the ineffectiveness in negotiation

• To suggest the measures to reduce the effects of the causes

Research questions:

• How do cultural differences affect business negotiation?

• How to reduce the effects of the cultural differences

RESEARCH MODEL

The twelve main variables7 influencing cross-culture negotiation of Vora were taken into consideration in five steps of negotiation process, i.e the offer, informal meeting, strategy formulation, negotiation and implementation8 These variables were:

1 Basic conception of the negotiation process – strategic versus synergistic

2 Negotiator selection criteria

3 Significance of types of issues – substantive versus relation

4 Concern with protocol – formal versus informal

5 Complexity of the language – high context versus low context

6 Nature of persuasive argumentation – emotional versus logical

7 Role of individuals’ aspirations

8 Bases of trust – cognitive versus affective

9 Risk-taking propensity – high versus low

10 Value of time – monochronic versus polychronic

11 Decision-making system – authoritative versus consensual

12 Form of satisfactory agreement – written versus oral

Moreover, the legal regulations of Vietnam and C-Food’s clients’ countries, religion as well as the practices of doing business of C-Food were also examined in this research

RESEARCH METHODOLOGY

The research was started with an in-depth interview The interviewee was C-Food’s Purchasing Manager The aim of this interview was to get an inside view of the difficulties faced by C-Food side And the results of the interview would be served as the base to construct the questionnaire for the email survey stage

Next, email survey was conducted The questionnaire for email survey would be designed by comparing the viewpoints of C-Food’s Purchasing Manager with those of C-Food’s suppliers’ The receivers of the questionnaire were import – export managers, sales managers or deputy sales managers Moreover, open-ended questions were also used in the email survey to get deeper understandings about the suppliers’ thinking By comparing two sources of comments, the actually causes for preventing effective negotiations would be drawn

After that, telephone interview was carried out with each supplier The purpose of this method was to reconfirm what had been answered by the suppliers as well as to clarify the unclear points in the answered forms

During study, observation was also employed to discover things that cannot be found

in previous methods

SCOPE AND LIMITATIONS OF THE STUDY

Cross-culture business negotiation is a large field of study In this project, the study is confined in the business cooperation between C-Food and its Vietnamese suppliers In other words, the study focuses on the business relationship of C-Food and its Vietnamese partners Another issue is the willingness to respond of the respondents –

Vietnamese suppliers Vietnamese people in general and suppliers in particular tend to

be not so straightforward Hence, there may be a risk mis-interpretation of the data collected

STRUCTURE OF THE STUDY

Introduction

Chapter 1:

Literature review provides the knowledge of recent studies on culture, organizational culture, business negotiation and the possible problems in cross-culture business negotiation

CHAPTER 1: LITERATURE REVIEW

In this chapter, some definitions of culture, negotiation and cross-culture negotiation will be revisited

1.1 CULTURE

Culture can be defined as “complex whole which includes knowledge, belief, art, morals, laws, custom, and any other capabilities and habits acquired by a man as a member of a society” It includes everything that people have, think and do as members of a society9 According to Czinkota & Ronkainen (1998), all definitions of culture agree on that culture is learnt, shared, and transmitted from one generation to the next “Culture is primarily passed on from parents to their children but also by social organizations, special interest groups, the government, the schools, and the church.”10

Trompenaars et al., (1997) have written a memorable description about culture: “A fish only discovers its need for water when it is no longer in it Our own culture is like water to a fish It sustains us We live and breathe through it What one culture may regard as essential, a certain level of material wealth for example, may not be so vital

Francesco, A.M & Gold, B.A (1998), International Organizational Behavior: Text readings, cases, and

skills, London: Prentice-Hall International Limited

Language

Language is a multidimensional element of culture that can be divided into verbal language and non-verbal language Verbal language is about what words are used and how they are pronounced Language has the capability to convey different meanings to different people Non-verbal language is about the relation people have to time, space, material possessions, friendship patterns, and business agreements which are important parts of non-verbal language For example, in some parts of the world time is seen as flexible and coming late to an appointment is acceptable whereas in other countries this is considered extremely impolite

Religion

Religion defines the ideals for life, and these are reflected in the values and attitudes of individuals and societies The behavior and practices of institutions and members of cultures are then shaped by the values and attitudes that individuals and groups of people have Religion thus affects international business, but the size of impact depends on how strong the dominant religions in the culture in the question are

Values and Attitudes

Shared beliefs or group norms that have been internalized by individuals are known as values An attitude is a person’s evaluation of alternatives based on his/her values One has to be more careful about one’s approach in a foreign culture

Manners and Customs

It is very important to understand manners and customs in negotiations, as all types of communication should be read correctly in order to negotiate effectively If a person only uses his or her own frame of reference to interpret behavior of other people, he or she may come to a totally wrong decision

Businessmen: A Case Study of Two Swedish Businessmen, Master Thesis, Lulea University of Technology

Material Elements

Technology forms what is known as material culture This element of culture is related

to how the economic activities of a society are organized The economic activities are expressed in the form of availability and adequacy of basic economic, social, financial and marketing infrastructures

Aesthetics

Color forms and music as well as the arts are used by a culture to express what it considers to be good taste Colors are often used for brand identification, feature reinforcement, and differentiation

Education

How culture is passed on and shared, is to a large extent affected by both informal and formal education It is important for international firms to be familiar with the extent

to which a culture emphasizes on particular skills and the overall level of education

1.1.2 Hofstede’s dimensions of culture

In the late In the late 1970s Geert Hofstede conducted a survey over 40 countries in which IBM had its affiliates to develop the so-called four dimensions culture They areconducted a survey over 40 countries in which IBM had its affiliates to develop the so-called four dimensions culture They are power distance index, uncertainty avoidance index, individualism and masculinity.13

Power distance index (PDI)

Power distance refers to the extent to which the members of a nation are willing to accept an unequal distribution of power, weath and prestige Lower distance

13

Mary Jo Hatch, 1997 Organization Theory: Modern, Symbolic and Postmodern Perspective p.206-210 Oxford

University Press

characterizes countries, like Denmark, where such inequalities are difficult to accept

Uncertainty Avoidance Index (UAI)

Uncertainty avoidance involves the ways in which human societies have learned to cope with uncertainty In low uncertainty cultures people are more of accepting innovative ideas and eccentric or deviant behavior, whereas in high uncertainty avoidance cultures, these are resisted Hofsted finds that uncertainty avoidance is high

in Greece, Portugal, and Japan, while it is low is in Singapore, Hongkong, and Sweeden

Individualism (IDV)

Individualism involves the degree to which individuals in a culture are expected to act independently of other members of the society Relationships between members of individualistic culture are loose and individuals are expected to take care of themselves By contrast, in collectivist culture, cohesive groups give individuals their sense of identity and belonging, demanding considerable loyalty in return for the sense

of security that they impart Hofstede points out that, in some cultures such as the US, individualism is seen as a source of well-being, whereas in others like Chinese or Mexican cultures, it is seen as undesirable and alienating

Research by Michael Bond and colleagues among students in 23 countries led him in

1991 to adding a fifth dimension called Long- versus Short-Term Orientation In 2010, research by Michael Minkov allowed to extend the number of country scores for this dimension to 93, using recent World Values Survey data from representative samples

of national populations.14

Long-term orientation

Long- term oriented societies foster pragmatic virtues oriented towards future rewards,

in particular saving, persistence, and adapting to changing circumstances Short-term oriented societies foster virtues related to the past and present such as national pride, respect for tradition, preservation of "face", and fulfilling social obligations.15

1.1.3 High context cultures versus low context cultures

A society that uses a lot of non-verbal signals is said to be a highly complex one that is high context in nature The difference between high context cultures and low context cultures is in the amount of information conveyed by words or by body language In a high context culture the context is at least important as what is actually said In a low context culture most of the information is carried out in the spoken words However, it

is not always obvious how to classify high or low context cultures It is easy to characterize those cultures where gestures and body languages are used extensively as high context cultures and those cultures where body language is almost invisible as low context cultures, and this classification is not always correctly done If one is not aware of the basic difference between high context cultures and low context cultures, messages and intentions can easily be misunderstood.16

Elliott Jaques (1952: 251) defines the culture of the factory is its customary and traditional way of thinking and doing things, which is shared to a greater or lesser degree by all its members, and which new members must learn, and at least partially accept, in order to be accepted into service in the firm.17

1.3 NEGOTIATION

1.3.1 Definitions of negotiation

Nilsson Molnar (1997) claims that negotiations occur in all societies, and on all levels between various parties in various situations These situations can be of a social, economic or political art18 Deresky (2000) defines negotiation as “the process of discussion between two or more parties aimed at reaching a mutually acceptable agreement”19 In Winning Negotiations That Preserve Relationships, Harvard Business

School Press, 2004 Series HD58.6.W566 2004, negotiation isn’t about outwitting or taking advantage of others It’s about arriving at a shared solution to a problem – a solution that benefits all parties involved It’s also about a lot more than just getting the best possible price on a deal The most effective negotiations result in mutually beneficial, enduring relationships in which the parties trust one another and share

expectations about how their deals will work out in practice as well as on paper

Nilsson Molnar, 1997, extracted from Johan Lintzen & Anne Svedjehlm (2006), The Impact of Culture on

Business Negotiations between Swedish and US Businessmen: A Case Study of Two Swedish Businessmen,

p.2, Master Thesis, Lulea University of Technology

19

Deresky, H (2000), International Management: Managing Across Borders and Cultures, p.168 New

Jersey: Prentice Hall Inc

20

Holley, et al (2005) extracted from Arazi Idrus, Azzuin Amer, & Chritiono Utomo (2007), A Study of

Negotiation Styles in Malaysian Construction Industry, p.1 & 2 Civil Engineering Department, Universiti

Teknologi PETRONAS 31750 Tronoh, Perak, Malaysia

Collaborating

Acting with high concern for self and others with the objective of achieving an outcome that satisfies both parties requires collaboration and open exchange of information The nature the integrating style, therefore, is one of being both assertive and cooperative It follows a mixture of tactics is employed in the integrating style, as resolution needs identifying and analyzing the various differences between the parties and the exploration of new solutions

Accommodating

Being unassertive and cooperative indicates the accommodating style, where the outcome is a lose-win situation Here, a person acts with low concern for self and a high concern for others, emphasizing shared aims and de-emphasizing differences

Competing

A person whose actions in a conflict situation are determined by a high regard for self and a low concern for others (being assertive and uncooperative) is considered to be using a competing (dominating) style

Compromising

A give-and-take attitude demonstrating an intermediate level of concern for self and others denotes the compromising style, where assertiveness and cooperation are both present, but in a diluted form

Avoiding

The avoiding style is unlikely to resolve the conflict in a negotiation Its elements arethat of having a low concern for self and low concern for others In this style, the player is both unassertive and uncooperative and exhibits the attitude of being unwilling to deal with the issue at hand

1.3.2.1 Price negotiation

According to oàn Th H ng Vân et al (2009), there are four types of buyers in price

negotiation They are price, relationship, value, and convenient buyers.21

Price buyers

They are big corporations and governmental bodies who have broad relationship with other companies as well as have many alternatives They accept the lowest price with acceptable goods quality In negotiation with these buyers, suppliers should draw the buyers’ attention to uniqueness of the goods or service to increase the willingness to buy of the buyers In case the suppliers cannot convince these buyers, “selection participation” strategy should be used In other words, the suppliers have to take in consideration the benefits in short-term and long-term, and only accept the buyers’ counter-offer on condition that profitability is guaranteed and that future operation of the company will not be affected by this acceptance

Relationship buyers

These buyers are on the contrary to the price buyers They value the quality of the goods or service and have confidence in the suppliers They do not want to try a new alternative For these buyers, maintaining the existing relationship by reminding the past performance is critical The attitude in negotiation with this group should be open and focus on the mutual benefits

Value buyers

They do not find out either the highest quality goods or service or the cheapest ones Instead, they decide to buy after considering the quality of the goods or service and evaluating the relationship between the quality and the price of goods or service These buyers are aware of the quality for each option for each price Unlike the price buyers who focus only on price, value buyers take into consideration the cost of marginal

21

òan Th H ng Vân, Kim Ng c t (2009), àm phán trong kinh doanh qu c t , p.250-252 NXB Lao

đ ng – Xã h i

satisfaction Therefore, they accept high price for high quality goods or service With these buyers, the sellers can make a big profit if they can well communicate the superior quality of their goods or service to the buyers However, these buyers always have their own alternatives

Convenient buyers

This group of buyers only appears in a special circumstance Negotiators of this group focus only on the convenience They do not pay much attention to comparing the cost, price, and quality of the goods or service They belong to the so-called “let’s get it done” type of negotiators who would like to close a negotiation as soon as possible

It is noticed that the negotiators of this group are not careless at al although they prefer

a fast-ending deal They understand so well what they are doing In some case, these negotiators take the advantage of “let’s get it done” to get a deal in favor of them Therefore, the sellers should not hurriedly close a deal with these buyers

1.4 CROSS-CULTURE IN BUSINESS NEGOTIATION

1.4.1 Cross-culture negotiation

According to Adler (1986) a negotiation becomes cross-cultural when the parties involved belong to different cultures and therefore do not share the same way of thinking, feeling and behaving22 Rodriguez (2001) claims that negotiations including two or more cultures are far more complicated than negotiation within a culture, because the negotiators simultaneously have to take both different styles of negotiating and cultural variables into consideration.23

1.4.2 International negotiation process

22

Adler (1986) extracted from Johan Lintzen & Anne Svedjehlm (2006), The Impact of Culture on

Business Negotiations between Swedish and US Businessmen: A Case Study of Two Swedish Businessmen,

p.5 Master Thesis, Lulea University of Technology

23

Rodriguez (2001) extracted from Johan Lintzen & Anne Svedjehlm (2006), The Impact of Culture

on Business Negotiations between Swedish and US Businessmen: A Case Study of Two Swedish

Businessmen, p.2 Master Thesis, Lulea University of Technology

According to Gulbro & Herbig (1995), the classical view of the cross-culture negotiation process undergoes four stages: non-task, task, persuasion and agreement.24

Non-task sounding

This stage includes all those activities which might be described as establishing a rapport or getting to know one another, but does not include information related the business of the meeting

Task

It concerns the information exchanged regarding to the parties’ needs and preferences

of parties

Persuasion phase and compromise

The third stage focuses on efforts to modify the views of other parties and sway them

to our way of thinking through the use of various persuasive techniques Persuasion is typically used to compromise on certain conditions so that the two sides can close a deal If not handled properly, failure becomes almost certain

Concessions and agreement

The final stage is the culmination of the negotiating process at which an agreement is reached

To reach an agreement that is mutually acceptable, each side must frequently give up something Therefore, concessions by both sides are usually necessary to reach an agreement

Czinkota & Ronkainen (1998) argue that the international negotiation process can be divided into five steps They are the offer, informal meetings, strategy formulation,

24

Gulbro & Herbig (1995) extracted from Johan Lintzen & Anne Svedjehlm (2006), The Impact of

Culture on Business Negotiations between Swedish and US Businessmen: A Case Study of Two Swedish

Businessmen, p.9 Master Thesis, Lulea University of Technology

negotiations, and implementation Which step is most important and how long it takes

is strongly affected by which culture the negotiators come from.25

The offer

The first stage allows the parties to analyze each other’s needs and degree of commitment The initiation and development of the process to a high degree determined by the background factors (such as goals) of the involved parties, and by the general atmosphere

Informal meeting

After the buying party has received the offer, the parties meet to discuss the terms and get to know each other, i.e informal meetings In many parts of the world negotiations fail because the informal meeting was a disappointment for one or both the parties In some cultures, business people like to be assured of that the people they are going to

do business with are sympathetic and trustworthy In some cases, it is necessary to hire consultants in order to establish contact with the other side

The final step in negotiation process is the implementation

According to Czinkota & Ronkainen (1998) the negotiation process often varies between cultures and international business negotiators therefore have to adapt the way they make contact, exchange information, persuade, and make concessions, to the culture they operate in

1.4.3 Possible problems in cross-culture negotiation

Lewis (1999) says that problems in cross-culture negotiations derive from two sources: the professionalism of the negotiation team, and cross-culture bias Usually negotiating teams of companies do not consist of professional or trained negotiators This is especially apparent in small and medium-sized firms The often send the same people that handle the company’s domestically, to negotiate with people from other cultures

If the negotiators completely lack foreign experience, they may have large difficulties understanding the logic, intent and ethical standpoints of the other side.26

According to Rodriguez (2001), people who are negotiating in an unfamiliar culture often do reach the goals the had set up, either because they have not learned how to adjust to the other culture or because the other side has taken more time trying to learn how the obstacles that can normally be associated with international negotiations He also claims that a company will most probably not be successful in another culture if it lacks understanding of and or disregard the cultural variables.27

According to Czinkota & Ronkainen (1998), culture is one of the most challenging elements of the international marketplace Cultural differences that might cause problems in the communication between business partners is a major consideration for companies since cultural clashes are often underlying motivations for failure in many

Rodriguez, C (2001), International Management: Cultural Approach, 2nd edition, Cincinnati, Ohio:

South-Western College Publishing

international activities They also think that cultural competence should be recognized

as an important management skill Being incompetent when it comes to culture can easily result in jeopardizing large sums of money, as negotiations, potential purchases, sales and contracts, and customer relations are negatively affected by this incompetence

Areas, in which business people from one culture may not be prepared when trying to

do business with people from another culture, according to Czinkota & Ronkainen (1998) are:28

• Insufficient understanding of different ways of thinking

• Insufficient attention to the necessity to save face

• Insufficient knowledge and appreciation of the host country in terms of history, culture, government, and image of foreigners

• Insufficient recognition of the decision-making process and the role of personal relations and personalities

• Insufficient allocation of time for negotiation

CHAPTER 2: INTRODUCTION TO C-FOOD INTERNATIONAL GROUP

C-Food International group founded in 2003 in Lebanon is the biggest seafood distributor in Middle East, Africa and Eastern Europe Since the early stage of establishment, it has targeted Vietnam as its major source of seafood supplies Malaysia, Indonesia, Thailand and China are also the other sources of supplies To facilitate its business activities in these countries, the branch in Ho Chi Minh city – C-

Food International Vietnam – was established in 2004 The coordinating mechanism is

as the figure1

Figure 1:

2.1 PRODUCTS AND SERVICE

C-Food has a wide range of seafood products ranging from the farmed-raised to caught shrimps and fish The products can be classified into three main categories They are canned tuna, frozen seafood and value added products

wild-2.1.1 Canned tuna: accounting for one third of our export volume from

2.1.2.3 Seafood mix: a mixture of cuttlefish, clam, octopus and shrimps

2.1.3 Value added products: spring rolls, stick rolls, Shaomai, Dumplings

2.2 BUSINESS PERFORMANCE

With the market share of 49% in Middle East, C-Food is the biggest seafood distributor in this area Moreover, the brand name Siblou has reached 27 countries in the areas and become the most recognizable brand name in these countries

2.3 PROBLEM IN NEGOTIATION PROCESS

More than 70% of C-Food’s products are being bought from Vietnam to export to its markets Despite of being a creditable account and having cooperated with Vietnamese suppliers since 2004, C-Food is still facing difficulties in negotiating to buy goods from them For the newly-cooperated suppliers, the difficulties are becoming tougher and tougher These difficulties strongly are strongly affecting the efficiency of C-Food’s supply chain