Seminar in Global Business- Greece and Turkey - Case Study Example

 Seminar in Global Business- Greece and Turkey Introduction For the last two or more decades ago, the countries of Europe have been faced with the economic crisis. For instance, Turkey encountered many financial crises in the years of from 1990 to 2001 (Vaughan Whitehead, 2012). Turkey has two extremes which are east and west that have the high bridge. The culture of Turkey indicates the beauty and charm of the two sides. The economy of Turkey has shown the challenges being experienced by the two sides, where the East has been experiencing the political turmoil and the West had the financial instability (STOREY, 2012). For many decades ago, the Turkey's economy has been glowing bright and its growth was phenomenal. Though there was a crisis in the recent past, current Turkey has the top GDP ranking among its neighbours even ahead of the rich oil exporters, Saudi Arabia. Taking into a comparison of the Turkey's GDP with the rest of Europe it ranks eighth position (Parlar, 2014). The country has managed to do without an oil export and it relies on imports of gas and oil for its 97% energy needs. The country has invested heavily in middle-class entrepreneurs and reduced the state's involvement in basic industry, communication, transportation, and banking significantly. The export market diversified to electronics, automobile, mechanical pieces of equipment and construction industries (Vaughan Whitehead, 2012). This diversification occurred after lifting the restriction of traditional clothing and textile exportation. The global recession that occurred in opening years of millennium hit greatly the Turkey’s economy that led to 2001 financial crisis (STOREY, 2012). The setback turned to be a re-grouping(Jimmakos). After financial and fiscal reforms with the help of IMF, Turkey came out of the crisis with greater force that propelled them to the top of charts with annual growth of 6% from 2002 to 2008. Turkey again succumbed to 2008/2009 global crises but emerged strongly with unmatched robustness, which clocked 9.2% GDP growth in 2010 (Ciro, 2013). The nation used to depend greatly on foreign investments, but have reduced significantly as the west and east sides have been faced with liquidity shortfalls. In 2012, the GDP of Turkey fell to 3%, in combating that the central bank raised the interest rates on seventy-five basis (Parlar, 2014). The major concern with the high-interest rates is that they will lead to the slow growth rate of the economy. In Greece, there has also been an ongoing debt crisis that has resulted from Great Recession. The Greece economy has undergone structural deficits that have been triggered by structural weaknesses of the economy of Greece. In later stages of 2009, great fears developed on debt crisis among various investors concerning the ability of Greece to meet debt obligations. As a result of the recorded severe increase of the government debts together with the continued occurrence of the great structural deficits (STOREY, 2012). These structural deficits led to confidence crisis that was shown by the widening bond spreads and valuation of risk insurance on default swaps as compared to other nations in Euro zone especially Germany (STOREY, 2012). In April 2010, the news emerged that the Greek economy had been hard hit by three recessions since 2007 (Ciro, 2013). The ratio of debt to GDP rose significantly to 127% in the year of 2009 and further rose to 146% in 2010 (Schweiger, 2014). The credit agencies lowered the Greek debt to junk bond status, where the risk of default was very high such that very few investors were willing to purchase the Greek bonds (Jimmakos). In 2011, the recession worsened due to delayed implementation of structural reforms by the Greek government on the agreed conditions of the bailout programme. The second bailout issue was finally ratified by the concerned parties in 2012 and led to the extension of the initial programme (Ciro, 2013). At that time, the private creditors were supposed to sign deals to accept the extended maturities and lower interest rates. Greece has a weaker economy as compared to many other nations in Europe (Parlar, 2014). The political-financial struggles that the nation has faced have greatly hit the economic growth of the nation. Many investors were lost when the stock exchange fallen. The largest wealth redistribution occurred in the country, which marked the biggest loss ever to have been witnessed in the nation (Ciro, 2013). The country’s prime minister had an upper hand in terms of responsibility for the dramatic rise and fall of the Greek economy due to fluctuations of the stock exchange (Vaughan Whitehead, 2012). The recession in Greece and Turkey had various impacts to the large businesses. As sales profits and revenue declined the manufacturers cut their hiring of newer employees and others frozen the hiring process (Jimmakos). Then expenditures for marketing and advertising were reduced, where this cost cutting effects affected other businesses both small and big ones. The following are other impacts of the downturn and recovery of the economy of Greece and Turkey (Parlar, 2014). Slumping Dividends and Falling Stocks When the revenues declined that led to the stock price of the manufacturer to also decline. When the dividends slumped or disappeared completely because of the revenue decline. Much internal marketing and advertising departments faced personnel shakeup. Much of the manufacturer's stock fallen which led to dividends decline and the investors sold their stocks and others invested in other businesses (Vaughan Whitehead, 2012). Bankruptcy and Credit Impairment The recession led to the credit impairment where customers were slowly paying their dues to the company (Ciro, 2013). Due to reduced finances, the companies were affected such that they paid bills more slowly and the delinquent payments reduced the valuation of the debts of the corporation together with the bonds and the capability of obtaining the finances. The ability of companies to serve their debts was affected in a way that they could not be able to pay them (Schweiger, 2014). Benefit Reductions The businesses in Turkey and Greece cut their employees and more work was done by fewer individuals (Vaughan Whitehead, 2012). The productivity of the workers increased but morale suffered a lot as they used to work for longer hours and getting a lesser pay compared to the work done (Jandieri, 2014). Cut of quality goods and services In both countries, the aspects of the services and goods produced during the recession period were impacted severely in terms of the quality. Many companies opted to cut costs by producing low-quality products (Parlar, 2014). In many ways, this was manifested and was a common reaction of the many big businesses. Reduced Customer access Many firms were impacted by the economic downturn as companies spend less cash on marketing and advertising (Schweiger, 2014). This reduced advertising aspects made the companies’ products not to be known by the customers thus reducing access to them. The Greek economy has achieved high growth levels up to 2008; there were recession impacts in 2009 resulting from the global financial crisis. A noticeable improvement in development trends of the indicators of the economic are expected to increase the following year (Vaughan Whitehead, 2012). The unemployment rates in Greece were about 7.6% as at 2008, which is the Euro zone expectations (Jandieri, 2014). After the crisis, the unemployment rates have significantly raised up to 27.3 % in 2013, which is a very greater rate. As at now the unemployment rates are expected to reduce by the following years to come. The Turkey’s economy is better placed compared to Greece economy. Turkey has nominal GDP that is ranked 17th in the world (Vaughan Whitehead, 2012). Turkey has managed to recover from the global financial recession, unlike many other countries that are still struggling with their economic downturn. In early 2009, Turkey introduced different economic stimulus measures so as to boost their country’s per capita. The stock exchange and the credit agencies also have responded very well to the recession. Their industrial part has been a big player in the growth of the economy (Parlar, 2014). The politics in Greece occurs in parliament representation where Prime Minister is the head of the government of Greece, which is a multi-party system. The legislative power is bestowed by the Hellenic government and the central government (Hatzidakis, 2013). The Greek politics are dynastic with some major families that control the power of the positions. The families control the prime minister but for the members of parliament and other ministers the families do not control much (Schiek, 2014). The Turkey politics have a framework that is a strictly secular parliamentary representation. The prime minister is the head of the government and it is under the multiparty state system led by the president who commands the largest ceremonial role with substantial powers. The executive power is demonstrated by the council of ministers. The power of legislation is vested in the National Assembly of Turkey. There is a complete independence of the judiciary from other forms of government (Hatzidakis, 2013). The popularity of the leaders of politics has an independent impact on the party preference and politics Turkey (Schiek, 2014). The Turkey’s culture is a combination of heterogeneous elements and diverse factors derived from many cultures of Eastern Mediterranean region, Caucasian S. Europe and Central Asian. The traditions were brought by Ottoman Empire, which is a multi religious state and multi-ethnic state. At the early years of Turkey invested many resources to the fine arts like paintings (Jandieri, 2014). The Greece culture has developed over the years up to the Classical Greece under the influence of the Roman Empire together with its successors (Jandieri, 2014). In olden days, Greece was the birthplace of all western cultures and democracy. Modern democracies have a big debt to the Greek beliefs about what democracy means. The Greece pioneered many fields of ordered and systematic thought which entails the biology, philosophy, physics, history, poetry and geometry. The crisis greatly affected the shipping industry in Greece; this led to many people losing their jobs (Kriemadis, 2014). Thus, increasing unemployment rate since many were left jobless. The other industries that were affected negatively were the tourism industry and the construction industry (Jandieri, 2014). These industries suffered severely financially and were not able to maintain their employees. In Turkey the recession affected a number of industries; cargo industry was greatly impacted negatively. The tourism industry was not left unscathed by the crisis (Schiek, 2014). The other industries that were greatly affected negatively were machinery and construction industry. These industries were left in dire financial crisis which led to the unsustainability of the employees. Many people as the case of Greece lost their jobs and were left in poverty levels. In both nations, there was a greater negative impact on the banking, technology, banking, retailing franchising industry (Kriemadis, 2014). These industries were left with a lot of debts that they were not able to offset. They ended up being assisted by the IMF and central banks to restore their status. Turkey has managed so fast to move on and re-establish its status of the economy and is growing faster than that of Greece (Kriemadis, 2014). Conclusion Greece has large and elaborate rich cultures that date back thousands of years ago. Many factors have contributed to the much-endowed culture of Greece. Turkey and Greece have governments that seem similar since they are headed by prime ministers. Though in Turkey there is the President, who is ceremonial. Turkey has been hit by the crisis but has so quickly and recovered much and regained its initial status. The recovery was a result of a programme that was strategized during the crisis. The reforms were introduced that led to macroeconomic growth in various phases. Turkey has been lucky not to have experienced the effects of the crisis financial wise like other Europe countries. Greece has been hit greatly by the crisis which led to reduced economy growth and decreased in the expansion of the banking and financial sectors. Greece has strived to recover from the financial crisis but it has not managed to fully re-establish its economy. References Ardigó, I. A. (2015). Transparency International by Country. Retrieved 3 27, 2015, from http://www.transparency.org/country#TUR Chaulia, S. (2014). Politics of the Global Economic Crisis: Regulation, Responsibility, and Radicalism. London: Routledge. Ciro, T. (2013). The Global Financial Crisis: Triggers, Responses, and Aftermath. London: Ashgate Publishing. Eichengreen, B. J. (2012). 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