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The chinese business negotiation process: a socio-cultural analysis

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  • Ghauri, Pervez N.
  • Fang, Tony

    (Groningen University)

Abstract

Hoogovens Steel (HS) is a vertically integrated steel company, which until 1995 was functionally structured. During the eighties the steel market became saturated and more heterogeneous. In order to remain a flexible, market-oriented company, HS changed its organizational structure, by introducing business units responsible for their own financial results. Nevertheless, it remained a vertically integrated steel producer. With the functional structure HS had used cost-based transfer prices. But following the introduction of the business units the question was raised as to whether the transfer pricing system should be changed. A business unit structure implies a decentralization of authority and the delegation of certain activities to the units, but vertically integrated production requires close relations between the various stages. This paper discusses the extent to which the tensions between decentralization and integration can be resolved through the coordination of internal transactions. After introducing the relevant theoretical concepts, the issues which emerged in discussions about the coordination of internal transactions at HS are discussed. Some possible solutions are evaluated on the basis of criteria derived from the theoretical concepts, and the choice made within HS is described. Finally, some conclusions are drawn regarding the significance of the theoretical concepts.

Suggested Citation

  • Ghauri, Pervez N. & Fang, Tony, 1999. "The chinese business negotiation process: a socio-cultural analysis," Research Report 99B15, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  • Handle: RePEc:gro:rugsom:99b15
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    File URL: http://irs.ub.rug.nl/ppn/182359190
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    References listed on IDEAS

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    1. James A Brunner & George M Taoka, 1977. "Marketing and Negotiation in the People's Republic of China: Perceptions of American Businessmen Who Attended the 1975 Canton Fair," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(2), pages 69-82, June.
    2. Asha Rao & Stuart M Schmidt, 1998. "A Behavioral Perspective on Negotiating International Alliance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(4), pages 665-694, December.
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    Cited by:

    1. Jitka Odehnalová, 2008. "Specifics of Chinese Business Negotiation Practices," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 10(24), pages 283-296, June.
    2. Jitka Odehnalová, 2009. "The Nature of Chinese Business Negotiation Behaviour: A Battlefield or a Gentlemen's Club? [Povaha čínského obchodního jednání: Na válečném poli či mezi gentlemany]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2009(6), pages 52-62.

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