'TEMBA Participants in Singapore Learn How Cultural Differences Affect Negotiations'

  • April 21, 2005

The South Indian man kept shaking his head from left to right.

He was indicating that he was happy with the deal.

But the American who was negotiating it thought otherwise. He didn't know that this was the way South Indians said 'yes'.

He kept lowering the interest rate to appease his client to try and clinch the deal.

The South Indian managed to get the interest rate reduced to about 3 per cent before the two sides shook hands.

'We saved a few hundred thousand dollars because of the cultural misunderstanding,' recalled executive MBA professor Shyam Kamath, who was present at the business deal between an Indian multinational corporation and an American company.

You may laugh, but this a real example of how cultural differences can affect business deals, said the California State University East Bay (CSU East Bay) professor.

Still, the deal survived the cultural clash.

Others aren't so lucky.

Almost half struggle, and up to a third break down due to cultural differences, said Dr Dirk van den Berghe, another CSU East Bay professor.

The two professors were in town along with 20 transnational executive MBA (Temba) students early this month to explore Singapore's business practices.

Temba team members, who are accomplished business executives from the US, were here to see how Singapore executives conduct business deals.

To show how cultural idiosyncrasies threaten deals, the visiting students took part in a mock negotiation exercise with Singapore students. The local students are under an American executive MBA programme offered here by private school Hartford Institute.

In groups of five, the Singapore teams faced off the American teams.

Both sides aired their cultural attitudes while negotiating the contract.

LOST THEIR COOL

There was this 'arrogant' American, who enjoyed talking only about his own product

Also trying to get his own way was the 'meticulous' Singapore executive who was interested in talking only about the price.

Some teams lost their cool while others patiently worked through the differences.

At the end of the discussions, the teams walked out with a better understanding on how to deal with different cultures.

Said Hartford Institute student Helen Yap, a project manager with General Electric: 'It's important to talk about and identify these differences so they don't work against us.

Explained Professor Kamath: 'Once you know your partners' attitudes, you can push past them and focus on the business aspect.'

Other students agreed.

Said another Hartford Institute student Mr Bong Cabling: 'The exercise will help future cross-cultural negotiations run more smoothly.'

The local EMBA programme, which started in 2000, has had 300 students.


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