Maximizing Multiparty Outcomes - Essay Example

In this case, the main parties involved in this negotiation are the management from General Motors, German Government, Opel’s Labor Council and also the German Policy Makers. The management of General Motors includes Chief Executive Officer Rick Wagoner, Chief Operating Officer Frederick Henderson, and GM Europe President Carl-Peter Forster. The main party involved in the German Government includes the Economics Minister Karl – Theodor zu Guttenberg.

This is a case of Integrative Negotiation as the “parties are aiming to achieve maximum benefits by integrating their interests into an agreement while also competing to divide the value” (Luecke, 2005, p. 51).

Due to this economic slowdown, General Motors has been forced to take these decisions which are completely in contrast to the policies of its Chief Executive Officer. This has weakened the condition of GM among the other parties. Statements from the Chief Operating Officer, such as ‘We need support’, etc. have portrayed GM as very vulnerable to the oncoming negotiations. It is very challenging to arrive at an accurate BATNA (Best Alternative to Negotiated Agreement), as GM’s only choice is to shut down its operations across four plants as planned. GM expects to get at least $ 4.18 million from Germany and the other countries in the region. This will be the target or the aspiration point for General Motors. This will enable GM to effectively overcome its liquidity issues in Europe.

It is also very essential for GM to continue to have a controlling interest and stakes in the functioning of Opel in Germany. The board of GM should continue to own at least 50% of the stakes in Opel to have a controlling interest in the company. Hence any claims by the German Government to own more than 50% of Opel will be the walking away point for General Motors. The Government, on the other hand, though has a higher hand, has to consider the main consequence of shutting down the Opel plant in Germany. It has been estimated that around 25,000 jobs would be lost as a result of closing Opel. This will add to the country’s unemployment rate in this global economic recession period. However, the country has another option to invest in the overall infrastructure and other sectors within the country which will create more jobs in the country. However, the Government also has to face the Opel Labor union, which has the only goal of retaining their jobs and obtaining job security for the current employees of Opel. Hence the pressure on the German government is high and it has to come up with a solution in case the 25,000 jobs are lost as a result of shutting down Opel.

The situation is very dynamic, more so after the German Economics Minister has declared that it is very uncertain that the Government will fund the Opel plant. This statement has been the result of GM’s aspirations to continue to keep Opel in the global vehicle portfolio. In this multiparty negotiation, it is imperative to note that the degree of complexity is very high as many possible decision rules exist (Bazerman, Mannix and Thompson, 1988). All the parties have to agree to solve at the end of the negotiation.

The key issue that has to be addressed is the power delegation or the ownership control of Opel, in case the parties conclude. The German Government expects to be given a controlling interest and does not want General Motors to use the funding to strengthen its position in the United States and other countries, either directly or indirectly.

General Motors has responded effectively by offering investors to take between 25% and 50% of Opel. This move is to gain support for General Motors, so that it can form a coalition with some of the investors and can strengthen the position of GM in this negotiation.

As Chancellor Angela Merkel has explained, liquidity guarantees are the main expectations of GM and hence GM can turn towards any other feasible European country that is ready to fund the company’s operations on Opel. Moreover, the company has plans to launch Chevrolet Spark and hence might give financial leverage in the minds of the investors. This will provide GM with further options, in case the negotiation does not end up favourable. General Motors should enter negotiations with the labour council on their side. The labour council expects the company to continue its operations in Germany and hence will expect the Government to render funds.

The one thing that GM could have done better was to enter into a mutual understanding with the labour council. The main reason behind this is that GM and the labour council have common interests in continuing operations in Germany. This would have added to the pressure on the German government to arrive at a decision more favourable to GM. GM also runs the risk of this coalition not working out in its best interest. In case the parties were not able to arrive at an integrative solution, it would have created more problems for GM. The company will have to provide jobs to the people and would have to suffer more liquidity issues. The German government also has the option of investing this $ 4.18 billion in other infrastructure-related industries in Europe which would have resulted in new jobs being created as well as value being added to the country’s economy.