We live in tough times. For example, the State of Greece’s insolvent economic-bubble bursting may bemuse certain high-level German or IMF officials, but in reality the situation is no laughing matter. The unrelenting fact is, that negotiations matter. Whether parties plan to negotiate terms of future business, or getting out of a serious nationwide financial scrape or collapse, best practices in negotiations is a critical part of the world today. The task of this research paper must convey an adequate summary of the Greek current financial crisis in correlation of the Lewicki, Barry, and Saunders (2015) Section 7, entitled “Best Practices in Negotiations,” reading, while trying to present a correlation to the current event that connects to the ideas discussed.
First, the reading on negotiations covers three main parts reviewing ten best practices, theory versus implementation, and a guide to four pillars which include: Relationships, Outcomes, Solutions, and Fairness. The situation in Greece is indeed a tragic one, not only stunning the global community, but one that has the rest of the Western hemisphere worried. Amadeo (2015) explains the crisis began when the Greek Gross Domestic Product (GDP) overshot the EU’s budget deficit amount by four times, reflecting 12.9% - obviously way past the 3% allowed (“Greece Debt Crisis”). Future loan costs were sky-jacked, and several years before the excrement hit the fan, the IMF extended an over-200-billion Euros in emergency funding. Banks were not able to stay capitalized, as the urgent IMF provisions barely sufficed for interest payments. How does a nation get into such trouble, and how does it correlate to negotiation best practices?
It seems as though the State of Greece opted to claim value, rather than create value as it endeavored to dig its way out of its national debt problems. Early preparations to negotiate a way to alleviate the troubles before they escalated, and the formation of pro-active coalitions might have helped ease or lessen the severity of the blow. University of Chicago scholars describe the unfolding drama as starting back in the 1990s, when the country was outspending its reserves, so Greece had to borrow against deficit spending to “cover the shortfalls and its debt burden was steadily rising” (“Primer on Greek Crisis,” 2015). Sound familiar? The same source continues to expound, that by 2009 with a new government, Greece anticipated and even greater deficit of 13.6 percent. When 2010 came around, a new negotiation with landed the country a fresh infusion of cash, but German central-bank head Karl Otto Pohl noted it was used to try and keep up with repayments already owed. In this way, Greece was scrambling to be a deal-maker, instead of seeking to reach a true implementation, as the class reading suggests. Thus, failing to align its problems into a single message of a business process, and secure a solid preparation and negotiate credibility – panic set in.
Of course, when dealing with an entire country’s financial coffers, this situation admittedly is much more complex. But the principles are basically the same. The reason why the lending attempts failed to bail Greece out of her capitalization troubles, according to University of Chicago academics, is that the drastic cuts made did “actually cut their deficits substantially,” but it was too little too late, and the anticipated level of growth did not occur (“Primer on Greek Crisis,” 2015). Meanwhile by 2012, the European Central Bank was ‘deeply’ committed to the stabilization of money markets although banks were allowed to continue using Greek debt as collateral. It was a mess.
An article written by the former Greek Finance Minister, Yanis Varoufakis, it was indicated that negotiations stalled because the nation’s creditors would not work with them to implement a “tangible debt restructuring” (“Germany won’t spare Greek Pain”). Lewicki et al. (2015) say that bargaining for money and contracts are not the only commodities parties can broker or negotiate for, and that the individuals in negotiations should pave the way by aligning problems (p. 482). Keeping Greek in the Euro now seems a last ditch effort, but Varoufakis told The Guardian (2015) that after “five months of negotiations,” and “an induced bank-run” instigated by the European Central Bank, the “fear of God” started to build in their hearts (“Germany won’t spare Greek Pain”). So, in terms of negotiations, Greek kept getting rebuffed – their pleas falling on deaf ears and in conclusion to the matter the ex-Finance Minister of Greece believes Germany wanted Greece out of the single-Euro-currency.
According to a report appearing in the Harvard Negotiation Law Review, getting leverage has a direct connection to the negotiation process. Kirgis (2014) writes “negotiation’s prime mover,” gives power for those to “reach agreement” on their terms, but at the same time coercion in the process is a consequence that has not been explored very much in the research literature (p. 69). Also, according to the text’s authors Lewicki et al. (2015) the Four Pillars part of Section 7 recommends a useful checklist of strategies, the top of the list which is relationships. It seems as though Greece is not well regarded in terms of great affections from the larger European socio-political and financial system. Therefore, this hints at a poor relationship which is critical for even a reasonable BATNA level of negotiation engagement.
In conclusion, the example of Greek’s latest financial tragedy and over-spending woes correlates to procurement management (chain-supply logistics) since supply sourcing and capital balance, keeps businesses running. It makes no difference if the business is an IBM, Hewlett Packard, or mom-and-pop enterprise because as noted by the 92nd Annual International Supply Management Conference Proceedings (2007), as Hofner-Saphiere and Fischer support, “There is no escaping the fact that supply management professionals require effective intercultural negotiation skills” (“Navigating Rough Seas of Intercultural Negotiation”). Procurement requires getting the best alternative to an agreement, while making sure a concrete way to implement actions – as the text’s authors express – long after the ink has dried on a contract. While it may be true that negotiations are far more complex in public agencies and governments, the foundation of relationships can trickle down affecting outcomes, solutions, and fairness. The situation has had a terrible impact, with the Greek people finding food shelves empty. But, a valuable lesson highlights how important a negotiating approach can be.
References
Amadeo, K. (2015). What is the Greece debt crisis? US Economy. Retrieved from http://useconomy.about.com/od/Europe/p/What-Is-The-Greece-Debt-Crisis.htm
Kirgis, P.F. (2014). Bargaining with consequences: Leverage and coercion in negotiation. Harvard Negotiation Law Review, 19. Retrieved from http://www.hnlr.org/wp-content/uploads/19HarvNegotLRev69-Kirgis.pdf
Hofner-Saphiere, D., & Fischer, M. (Prinicpal Consultant & Logistics). (2007). Proceedings from Navigating the Rough Seas of Intercultural Negotiation: 92nd Annual International Supply Management Conference, May 2007. Las Vegas, NV: Texas Instruments.
Lewicki, R., Barry, B., & Saunders, D. (2015). Negotiations: Readings, Exercises, and Cases: 7th Revised: Edition (eText ed., pp. 468-510). London: MCGRAW HILL HIGHER EDUCATION.
Varoufakis, Y. (2015, July 10). Germany won’t spare Greek pain – it has an interest in breaking us. The Guardian. Retrieved from http://www.theguardian.com/commentisfree/2015/jul/10/germany-greek-pain-debt-relief-grexit
