Negotiation
Attitudes and Styles -Leveraging relationships is an important element when negotiating in Peru. Nevertheless, Peruvians often employ distributive and contingency bargaining. While the buyer is in a superior position, both sides in a business deal own the responsibility to reach agreement. They expect long-term commitments from their business partners and will focus mostly on long-term benefits. The primary negotiation style is cooperative, but people may be unwilling to agree with compromises unless it is their only option to keep the negotiation from getting stuck. Nevertheless, one important function of the bargaining exchange is to build and strengthen the relationship. Since Peruvians believe in the concept of win-win, they expect you to reciprocate their respect and trust. You may be able to leverage the fact that many Peruvian businesspeople are eager to receive foreign business investments. However, it is strongly advisable to avoid aggressiveness and open confrontation, remaining calm, polite, patient, and persistent.
Should a dispute arise at any stage of a negotiation, you might be able to reach resolution by leveraging personal relationships and emphasizing long-term benefits. Patience and creativity will pay strong dividends.
Sharing of Information – Even when personal relationships are strong, your Peruvian counterparts may be reluctant to share information openly. Many believe that privileged information creates bargaining advantages. At the same time, information that may seem irrelevant may be reviewed over and over.
Pace of Negotiation – Expect negotiations to be slow and protracted. Peruvians do not hurry and dislike people who do. Be prepared to make several trips if necessary to achieve your objectives. Relationship building, information gathering, bargaining, and decision making may take considerable time. Attempts to rush the process are unlikely to produce better results and may be viewed as offensive. Throughout the negotiation, be patient, control your emotions, and accept the inevitable delays.
Most Peruvians prefer a very polychronic work style. They are used to pursuing multiple actions and goals in parallel. When negotiating, they often take a holistic approach and may jump back and forth between topics rather than addressing them in sequential order. Negotiators from strongly monochronic cultures, such as Germany, the United Kingdom, or the United States, may find this style confusing, irritating, and even annoying. In any case, do not show irritation or anger when encountering this behavior. Instead, keep track of the bargaining progress at all times, oft en emphasizing areas where agreement already exists.
If your counterparts appear to be stalling the negotiation, assess carefully whether their slowing down the process indicates that they are evaluating alternatives or that they are not interested in doing business with you. More likely, this behavior either represents an attempt to create time pressure in order to obtain concessions, or it simply reflects the slow decision process in the country. Again, patience and persistence are vitally important.
Bargaining – Peruvians are used to hard bargaining and haggling. The bargaining exchange can be extensive. Although people in the country may show interest in new ideas and concepts, they may find it difficult to change their position. Be respectful throughout the bargaining exchange. Rather than pushing for concessions, it may be better to re-address disagreements in follow-up meetings, which gives your counterparts the opportunity to reconsider their position without overtly losing face. Prices may move by about 25 to 35 percent between initial offer and final agreement. Leave yourself sufficient room for concessions at diff erent stages. After making one, always ask the other side to reciprocate. Throughout the process, remain cool and respectful, avoid confrontation, and frequently reaffirm the relationship.
Although Peruvians generally prefer a straightforward negotiation style, they also use deceptive techniques, such as telling lies and sending fake non-verbal messages, pretending to be disinterested in the whole deal or in single concessions, misrepresenting an item’s value, or making false demands and concessions. Your Peruvian counterparts may play stupid or make other attempts to mislead you in order to obtain bargaining advantages. Do not take such tactics personally and refrain from lying at or grossly misleading your counterparts, as doing so might damage business relationships. Even when you can see right through a lie, it would be a grave personal insult to state or even hint that your counterpart is not telling the truth. It is advisable to verify information received from the local side through other channels. ‘Good cop, bad cop’ is a tactic that Peruvians rarely use, though it could be effective on either side of the negotiation table. However, it could be devastating if the other side recognized this as a tactic, and your team will need to exclude any ‘bad cop’ member from future negotiation rounds. Businesspeople may claim limited authority, stating that they have to ask for their manager’s approval. This could be a tactic or the truth.
Negotiators in the country may use pressure techniques that include making fi nal off ers, showing intransigence, or nibbling. Final offers may come more than once and are rarely final. Be careful when trying to open with your best offer. Peruvians may consider this inappropriate or even insulting. Silence can be a very effective way to signal rejection of a proposal or to obtain further concessions. Do not use pressure tactics such as applying time pressure or making expiring offers as these may be taken as signs that you are not willing to build a long-term relationship. Your counterparts may even choose to terminate the negotiation.
Peruvian negotiators avoid openly aggressive or adversarial techniques. While they may make indirect threats and warnings or subtly display anger, they will be careful not to appear aggressive when doing so. Extreme openings are not frequently used since they may adversely affect the relationship, so be very cautious when using the tactic yourself. Never walk out or threaten to do so in an aggressive fashion as your counterparts will likely take this as a personal insult and may end all talks. However, threatening a ‘friendly walkout’ while strongly emphasizing the relationship may be very eff ective.
Emotional negotiation techniques, such as attitudinal bargaining or attempting to make you feel guilty, are frequent and can be effective. Be cautious not to hurt someone’s personal pride when employing any of these tactics, though. Pleas to personal relationships and other emotional ap-peals, such as emphasizing how your proposal will add to your counterparts’ personal satisfaction or heighten their honor, can be very powerful. Peruvians may frequently employ defensive tactics such as blocking or changing the subject, asking probing or very direct questions, making promises, or keeping an infl exible position.
Corruption and bribery are quite common in Peru’s public and private sectors. However, people may draw the line differently, viewing minor payments as rewards for getting a job done rather than as bribes. Also, keep in mind that there is a fine line between giving gifts and bribing. What you may consider a bribe, a Peruvian may view as only a nice gift. It may help if you introduce and explain your company’s policies early on, but be careful not to moralize or appear to imply that local customs are unethical.
Decision Making – Most companies are hierarchical, and people expect to work within clearly established lines of authority. Decision makers are usually senior executives who will consider the best interest of the group or organization. They may consult with others and prefer to reach consensus before making the final call. Consequently, subordinates may strongly infl uence the fi nal decision and maintaining good relationships with them can be crucial to your success. Decision making can be a slow process that requires much patience. Attempts to rush or put pressure on the process are not likely to succeed.
When making decisions, businesspeople may not rely much on rules or laws. They usually consider the specific situation rather than applying universal principles. Personal feelings and experiences weigh more strongly than empirical evidence and other objective facts do. Peruvians are oft en uneasy with change and reluctant to take risks. If you expect them to support a risky decision, you may need to find ways for them to become comfortable with it first, for instance by explaining contingency plans, outlining areas of additional support, or by offering guarantees and warranties.
NegotiationAttitudes and Styles -Leveraging relationships is an important element when negotiating in Peru. Nevertheless, Peruvians often employ distributive and contingency bargaining. While the buyer is in a superior position, both sides in a business deal own the responsibility to reach agreement. They expect long-term commitments from their business partners and will focus mostly on long-term benefits. The primary negotiation style is cooperative, but people may be unwilling to agree with compromises unless it is their only option to keep the negotiation from getting stuck. Nevertheless, one important function of the bargaining exchange is to build and strengthen the relationship. Since Peruvians believe in the concept of win-win, they expect you to reciprocate their respect and trust. You may be able to leverage the fact that many Peruvian businesspeople are eager to receive foreign business investments. However, it is strongly advisable to avoid aggressiveness and open confrontation, remaining calm, polite, patient, and persistent.Should a dispute arise at any stage of a negotiation, you might be able to reach resolution by leveraging personal relationships and emphasizing long-term benefits. Patience and creativity will pay strong dividends.Sharing of Information – Even when personal relationships are strong, your Peruvian counterparts may be reluctant to share information openly. Many believe that privileged information creates bargaining advantages. At the same time, information that may seem irrelevant may be reviewed over and over.Pace of Negotiation – Expect negotiations to be slow and protracted. Peruvians do not hurry and dislike people who do. Be prepared to make several trips if necessary to achieve your objectives. Relationship building, information gathering, bargaining, and decision making may take considerable time. Attempts to rush the process are unlikely to produce better results and may be viewed as offensive. Throughout the negotiation, be patient, control your emotions, and accept the inevitable delays.Most Peruvians prefer a very polychronic work style. They are used to pursuing multiple actions and goals in parallel. When negotiating, they often take a holistic approach and may jump back and forth between topics rather than addressing them in sequential order. Negotiators from strongly monochronic cultures, such as Germany, the United Kingdom, or the United States, may find this style confusing, irritating, and even annoying. In any case, do not show irritation or anger when encountering this behavior. Instead, keep track of the bargaining progress at all times, oft en emphasizing areas where agreement already exists.If your counterparts appear to be stalling the negotiation, assess carefully whether their slowing down the process indicates that they are evaluating alternatives or that they are not interested in doing business with you. More likely, this behavior either represents an attempt to create time pressure in order to obtain concessions, or it simply reflects the slow decision process in the country. Again, patience and persistence are vitally important.Bargaining – Peruvians are used to hard bargaining and haggling. The bargaining exchange can be extensive. Although people in the country may show interest in new ideas and concepts, they may find it difficult to change their position. Be respectful throughout the bargaining exchange. Rather than pushing for concessions, it may be better to re-address disagreements in follow-up meetings, which gives your counterparts the opportunity to reconsider their position without overtly losing face. Prices may move by about 25 to 35 percent between initial offer and final agreement. Leave yourself sufficient room for concessions at diff erent stages. After making one, always ask the other side to reciprocate. Throughout the process, remain cool and respectful, avoid confrontation, and frequently reaffirm the relationship.Although Peruvians generally prefer a straightforward negotiation style, they also use deceptive techniques, such as telling lies and sending fake non-verbal messages, pretending to be disinterested in the whole deal or in single concessions, misrepresenting an item’s value, or making false demands and concessions. Your Peruvian counterparts may play stupid or make other attempts to mislead you in order to obtain bargaining advantages. Do not take such tactics personally and refrain from lying at or grossly misleading your counterparts, as doing so might damage business relationships. Even when you can see right through a lie, it would be a grave personal insult to state or even hint that your counterpart is not telling the truth. It is advisable to verify information received from the local side through other channels. ‘Good cop, bad cop’ is a tactic that Peruvians rarely use, though it could be effective on either side of the negotiation table. However, it could be devastating if the other side recognized this as a tactic, and your team will need to exclude any ‘bad cop’ member from future negotiation rounds. Businesspeople may claim limited authority, stating that they have to ask for their manager’s approval. This could be a tactic or the truth.Negotiators in the country may use pressure techniques that include making fi nal off ers, showing intransigence, or nibbling. Final offers may come more than once and are rarely final. Be careful when trying to open with your best offer. Peruvians may consider this inappropriate or even insulting. Silence can be a very effective way to signal rejection of a proposal or to obtain further concessions. Do not use pressure tactics such as applying time pressure or making expiring offers as these may be taken as signs that you are not willing to build a long-term relationship. Your counterparts may even choose to terminate the negotiation.Peruvian negotiators avoid openly aggressive or adversarial techniques. While they may make indirect threats and warnings or subtly display anger, they will be careful not to appear aggressive when doing so. Extreme openings are not frequently used since they may adversely affect the relationship, so be very cautious when using the tactic yourself. Never walk out or threaten to do so in an aggressive fashion as your counterparts will likely take this as a personal insult and may end all talks. However, threatening a ‘friendly walkout’ while strongly emphasizing the relationship may be very eff ective.Emotional negotiation techniques, such as attitudinal bargaining or attempting to make you feel guilty, are frequent and can be effective. Be cautious not to hurt someone’s personal pride when employing any of these tactics, though. Pleas to personal relationships and other emotional ap-peals, such as emphasizing how your proposal will add to your counterparts’ personal satisfaction or heighten their honor, can be very powerful. Peruvians may frequently employ defensive tactics such as blocking or changing the subject, asking probing or very direct questions, making promises, or keeping an infl exible position.
Corruption and bribery are quite common in Peru’s public and private sectors. However, people may draw the line differently, viewing minor payments as rewards for getting a job done rather than as bribes. Also, keep in mind that there is a fine line between giving gifts and bribing. What you may consider a bribe, a Peruvian may view as only a nice gift. It may help if you introduce and explain your company’s policies early on, but be careful not to moralize or appear to imply that local customs are unethical.
Decision Making – Most companies are hierarchical, and people expect to work within clearly established lines of authority. Decision makers are usually senior executives who will consider the best interest of the group or organization. They may consult with others and prefer to reach consensus before making the final call. Consequently, subordinates may strongly infl uence the fi nal decision and maintaining good relationships with them can be crucial to your success. Decision making can be a slow process that requires much patience. Attempts to rush or put pressure on the process are not likely to succeed.
When making decisions, businesspeople may not rely much on rules or laws. They usually consider the specific situation rather than applying universal principles. Personal feelings and experiences weigh more strongly than empirical evidence and other objective facts do. Peruvians are oft en uneasy with change and reluctant to take risks. If you expect them to support a risky decision, you may need to find ways for them to become comfortable with it first, for instance by explaining contingency plans, outlining areas of additional support, or by offering guarantees and warranties.
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