Mahmoud has opened a small Turkish grocery shop and quickly things went pretty well. So well that he now needs to increase his purchases from his Dutch supplier Joost.
Mahmoud: I wanted to negotiate further and deepen my relationships with Joost, so I tried to get to know him better. If I establish a trusting relationship with Joost, our businesses may both benefit. So I asked about Joost’s family, talked about football and just made small talk.
Joost: Mahmoud is a new customer in our town with his new shop. He is doing well and I always liked to deal with him, he is reliable and serious about his business . But recently, he started talking about my family and about sports. What was he trying to get at? We do business, nothing else. I backed off and left.
Coming from Turkey, Mahmoud’s perception is that he has to establish a friendly, trusting relationship before negotiating better terms for his business, such as lower prices. In his world, doing business may be compared to people doing favors for each other, and the favors get better if they know each other better.
In Joost’s Dutch world, doing business has nothing to do with a personal relationship, it is a business transaction between two parties. Personal and business relationships are usually not mixed and Joost is probably wondering why Mahmoud is being a bit intrusive.
What are some possible solutions?
If Mahmoud wants to negotiate better prices, he can just ask Joost under what circumstances he would offer discounts and Joost will give him a fair answer. Doing business in the Netherlands, Mahmoud should understand that usually commercial relationships, terms, discounts etc. are not negotiated individually based on relationships, like in Mahmoud’s country, but on straightforward company-wide procedures, strictly based on volume. Joost, on his turn, may realize that it can be interesting to get to know Mahmoud, as he offers to talk about things outside work. He may then also explain that this does not affect their business because relationships are clearly defined and separated in the Netherlands.
In an individualistic culture, people interact and do business based on the specific need or task at hand. A business transaction does not require or involve any interaction on a personal level. Any business-related interaction takes place at the shop and business is not discussed at social encounters, as the Dutch like to keep their business interactions separate from their personal relationships.
In collectivistic cultures, a personal relationship will facilitate any business transaction – the selection of the business partner is determined by the social network and so are the terms of the transaction. Trusting those who you do business with is very important, because if the transaction goes wrong, there is not much faith that a regulatory body will be able to help the victimized party. Also, If you want better terms, you need a better social relationship with your business partner. So business and private interaction is deeply intertwined.