Negotiation occurs in business

1. Executive summary

The thirst for power, growth and global recognition has made countries source for wealth and power through the process of Negotiating with each other. The term Negotiation can be said to be a dialogue. Resolving disputes to reach an agreement upon course of action or to bargain for individual or collective advantage. Negotiation occurs in business, non-profit organizations, and government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. Nigeria, the most populous country in the whole of Africa with a population of about 140million, is a multi-cultural country where large multi-ethnic groups negotiate everyday for the growth of the country. In this report you will see the pattern in which Nigeria communicates and negotiates when it comes to doing business and how its culture affects its decision making and life style.

1.1 Communication and Negotiation style in Nigeria:

• Personal relationship is very important to them
• Trust is required to conduct business
• Age is considered indicative of wisdom
• An older business person is always put in a negotiating plan
• Titles are always used depending on the status of that person. E.g. Chief, Mr, Mrs, Engineer etc.
• Companies are hierarchical
• Ultimate decision-making rests with the CEO
• Decisions are reached slowly
• If one is not patient with decision making you will give offence and that alone can put your business relationship at risk
• Getting decisions from government officials can be extremely protracted
• Nigerians can be tough bargainers
• They state their position clearly and may get into heated decisions
• One is expected to honour any promise made
• Initial agreement is generally verbal-followed by contract
• Nigerians expect flexibility in working out the details. This is due to the fact that they are not time conscious. It can take longer than proposed or expected to get the job done

2. Terms of reference

As a reporter by name Sarah Aghorighor born in Nigeria, I was approached by an investor from china who has invested in so many companies. He would like one of his firm which deals with electronics to do business with a Nigerian importer.

My client, Mr Young Chan a successful investor, who owns over 30 firms in China wants me to write a brief on how Nigerians communicates and negotiates with other countries and if culture affect their way of doing business.

3. Overview of the situation

Living in Nigeria requires one with survival instinct, the ability to multi – task, strong business orientation, self confidence and a fearless heart. Living in Nigeria change ones attitude towards life, work and its environment either good or bad but I think in this case it changes it for good. Nigerian life style is governed by cultural values that “make up” its society. These values govern how they live, work and interact. However, culture is not just about us but the people we live with.

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Ferraro (1997) shared his view on culture as everything that people have, think, and do as members of their society. His view considers material objects, values and beliefs as well as behavioural patterns of a people to be components that define culture. However, culture is not in born; it is acquired through learning and interacting with one’s environment.

Nigeria is situated on the gulf of Guinea in west Chad. Its neighbours are Benin, Niger, Cameroon and Chad while the lower course of the Nigeria river flows south through the western part of the country into the gulf of Guinea swamps and mangrove forest border the south coast inland are hardwood forest. The country gained its independence October 1st 1960 becoming members of commonwealth of nation and joining the United Nation. Although Nigeria has had its up and down in the past, it is still known as one of the richest country in the world. Trading on cassava, woods, fishing etc is one of Nigeria fastest way of growing economically and making wealth apart from its’ oil business.

Nigeria has a very strong tradition which governs the land and its business. In addition, Nigeria is known for a strong tradition in literature, theatre, arts and craft and is now coming up in its music which is culturally tide to a particular style and also the film industries. Nigeria has good and natural resources, when investment is made on its land there is always a positive result, provided rules are obeyed. As a Nigerian through this research it was brought to my attention that Nigeria and China are like brothers. They share a lot in common and above all their negotiating style is the same irrespective of the fact that they are both from different parts of the world. One major factor is that both countries are cultural.

4. Analysis of the situation

In my years of practise as a reporter I have come to realise that certain issues affects man and its environment. This can affect them socially, economically and even politically and when it does things changes in that country, living them in a state of confusion. Everyone negotiates one way or another known and unknown to us, this makes us live together as one. While negotiating before making / taking any decision we must consider the feasibility of the intended action or business to be embarked upon. With this in mind, we would like to examine, by way of analysis, our options in order to resolve these issues.

The principle tool used for this research is PEST analysis. PEST stands for Political, Economic, Social and Technological factors of the external environment. That is, the external factors that is usually beyond the firm’s control that may constitute threats to the organization. Thus, PEST analysis is found suitable for this paper because it is expected to unveil issues that may arise during negotiation process and offers possible suggestion that will fast-track the process.

Each of the factors considered in PEST analysis is composed of several other issues for analysis, but the ones chosen for this research are as follow:

• Political analysis: we considered the political and the democratic processes in Nigeria; the risk of military invasion; trade and price regularization.
• Economic analyses: we considered the poverty level and inflation rate.
• Social analysis: we considered the demographics.
• Technological analysis: we considered the recent technological developments; the rate and diffusion of telephone or Internet services.

4.1 Political Analysis

Due to the long years of military rule which lasted for about 30 years out of 47 years of independence, the rate of development in Nigeria has remained low. This reign was classified as an economic depression, lack of vision, inadequate infrastructural development etc. I think it was just plain illiteracy from the military, but ever since the civilians took over there has been transformation throughout their journey. Since 1999 when military regime handed over to civilians, Nigeria has witness great developments in technology, economy and politically. Since then the nation aimed to sanitize the economy and polity in general such as: Bank recapitalization which reduced from 89 weak banks to 25 strong ones, making 12 of them listed among the first 1000 banks in the world. This feat has never been achieved before (Soludo 2007); also telecom has made the country be the fastest growing telecommunication JIB August 2008, Vol. 13, No. 2. In the major sector of the economy such as transportation, mineral resources, oil and gas, there is high hopes for foreign investments.

4.2 The Economic Analysis

4.2.1 Poverty Level

Nigeria with great wealth still has economic issues. There is poverty amongst household and in the land. In 1996, the poverty rate was 46% instead of going down to 21% but sadly to say poverty sky-rocketed to 76%. The urban slums dwellers in Nigeria are about 77% while issues to be solved under the Millennium Development Goals (MDG) are located in urban settlement which is around 99%. In general, two-thirds if the household in Nigeria are poor, but there is hope for tomorrow.

4.2.2 Inflation Rate

The inflation rate as at present:

Due to militants’ destructive activities in Niger Delta region, the total federal revenue collection dropped 44% between 2008 and 2009 which brought the need to develop infrastructures. But overall, the economy’s output continues to improve as GDP rose 6.73% compared to 5.56% during the corresponding period of the previous year. Through these contributions the GDP got significant growth: agriculture, wholesale and retail trade but from the oil sector there was a decline in growth to about 4.5%.

Nigeria at this point seems risky but the outlook for this country prospects for investments remain positive.

4.3 Social Analysis

Nigeria is a very large country filled with lots of social activities. Yes indeed the country is over populated but it does have its wonderful side. This social analysis will be based on Lagos which is the principal port of Nigeria. The largest market in cloths, vegetables, meat and poultry, enamel and earth ware, herbs, fancy goods and fruits are located within its surroundings. It’s got lots of site seeing, places to go, people to see and activities round it. Most of the people are traders and they make their living from the commerce of the city by trading, importing and exporting, shop keepers, drivers, watchmen, clerks or craftsmen etc. There is always something to be done and ways to make money.

4.3.1 Demographic

Nigerians life expectancy was estimated to have increased from 40 to 51 years. Much of this is due to the decline in mortality among infants younger than one year and children ages one to four. At 1990, maternity deaths excluding deaths resulting from illegal abortions exceeded 75,000 per year. Regardless of the countries decline in fertility in the 1990s, the country’s population was expected to double by next century. Less than Nigerian’s 1990 population was less than fifteen thus the country expects to deal with a population of more than 200 million probably within the next twenty-five years.

4.4 Technological Analysis

This is based on infrastructure, use of telephone and the level of internet usage in Nigeria. Nigeria has witnessed a commendable growth in telephone service from 2001 till date, moving from a density of 0.73 to above 37.05. Nigeria is currently rated the fastest growing telecoms industry in African (Nigeria2Day, 2007).

4.5 Environmental Factors

Nigerian soil is rich in minerals which help grow crops. Despite the pollution on the environment such as oil spillage, over population and neglect of government on the land, it is still a rich place to do business. Due to the over population of the country there is cheap labour which will help facilitate the business.

4.6 Legal Factors

5. Solutions and recommendations

1. I would suggest that before negotiating you should look closely into Nigerians way of negotiating and top companies that deals in such business and has good reputation. These people should be your target market people.
2. With an increase in unemployment currently at its highest, labour cost is low. Larger number of unemployed skilled workers can be employed to work. If possible employ both Chinese and Nigerian citizens.
3. Understanding cultural diffusion. This concept identifies that most innovations introduced into a culture are as a result of borrowing from other culture. Therefore, appreciating other people’s culture is imperative.
4. Actual negotiation should be decided on its handling methods. E.g. the extents at which you adjust your style to their culture and still remain credible.
5. Typical behaviour of patterns, attitudes, values of your negotiator should be understood.
6. Invest in research. Employ effective use of the internet by creating a website that will facilitate purchase and delivery during both importing and exporting of goods.
7. A good communication skill is needed.
8. Multiple offers should be made simultaneously.

6. Forecast and outcome

There will be some form of cultural differences during and after negotiation, but so long as deadlines are met and both parties work hand in hand the business will flow.

Due to government and immigration rules there might be some difficulties during importation and exportation of goods. With good research and also foreigners at both ends there shouldn’t be too much trouble.

There should be Constant communication back to Directors to know the situation of things.

7.References

Soludo C. (2007): Strategic Agenda for the Naira, accessed date, Aug. 17, 2007.

Lothar Katz. (March 2008): The Negotiator’s Reference Guide to 50 Countries around the World

http://www.onlinenigeria.com

Nigeria2Day (2007): Nigeria celebrates Six Years of GSM Mobile Phones, accessed date, Sept. 3rd, 2007.

Kimmel, Paul. Cultural Perspectives on International Negotiations, Journal of Social Issues, 50, (1), 1994, PP. 179-196 and Weldon,

Elizabeth and Karen A. Jehn. Examining Cross-Cultural Differences in Conflict Management Behaviour: A Strategy for Future Research.

The International Journal of Conflict Management 1995, 6, (4) October, pp. 387-403.

Guirdham M, 2002, Interactive Behaviour at Work (3rd Edition), Essex, Pearson Education Ltd. ISBN 0-273-65590-6