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PharmaDeals Business Commentary

The Culture of Deal Making (2006-08-01)

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The pharmaceutical industry is international so the chances of negotiating a deal with someone from a different culture are very high. When I ask negotiators if they think culture has an important impact on negotiation most will answer 'Yes it does, and that impact is significant.'

But what do we mean by 'culture'? The most obvious answer is the different ethnic cultures that have evolved through centuries of history and language development. We understand that there is a difference in the cultures of the Far East and the West. We recognise that Japan has a different culture to the US and that Europeans have a different culture to the Chinese. In fact, these differences are obvious. The real challenge for negotiators, however, is when the differences are subtle. For example, would most business people be aware of the differences between Swedish and Danish business cultures? The inclination would be to assume that since they are both Scandinavians, with apparently similar cultures, their business cultures should be the same. So would most negotiators be aware of any differences?

Key to negotiation is the understanding of how decisions are made inside organisations. Understanding how companies make decisions and the culture that determines the process is essential for anyone negotiating a deal. Here we find that the Swedish approach to decision making is more consensus based. The Swedes will spend longer considering the views of others within the organisation and provide time to discuss the issues before making a decision. In Denmark, they appear more decisive: the decision maker will spend less time seeking consensus, and will respond much more quickly, on the basis that if a mistake has been made, the decision can always be changed later. In this respect the Danes appear to be greater risk takers.

" In the end, negotiation is a form of communication. Making sure you are clearly understood is essential, and understanding the body language of other cultures is vital. "

Most of us are aware of the differences in culture within our own countries. Some are subtle, but as international negotiators we may miss some of these subtleties. In the end, negotiation is a form of communication. Making sure you are clearly understood is essential, and understanding the body language of other cultures is vital. Another thing that is often overlooked when considering culture is its corporate aspect. How decisions are made in publicly quoted pharmaceutical companies can be quite different to the procedures in family-owned companies. In other words, culture does not have to be just ethnically based.

Ultimately, truly knowing who you are negotiating with will help you enormously, and understanding the processes of decision making, and ensuring that you are being clear and polite, will assist you greatly.

Fintan Walton

Chief Executive Officer

PharmaVentures Ltd