Chapter 4 - Chapter 4 The role of the Environment...

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Chapter 4: The role of the Environment Conceptual Framework to Analyze the Environment Industrial Relations env classified into three main influences: o Economic context o Technological context o The locus of power o Social context o Demographic context Underlying theme: labor and management can influence the env and the env also influences them External env provides incentives and constraints to labor and management in their effects to meet their bargaining goals o Since the 1920s a lot of textile, apparel, and other small soft goods employers have migrated from the northeast to the south to take adv of a favorable economic env (lower labor costs) o Manufacturing firms have opened production facilities overseas Bargaining Power Total Power: Total profits (economic rents) that are available to labor and management o The greater the total power, the more profit that are available for labor and management to divide up Both sides prefer situations with total power Relative Power: relative strength of labor and management o Ability of either side to gain a larger share of a given amount of profit Interest of labor and management conflict The Determinants of Total Power of Labor and Management Total power influenced by two factors o Degree of competition facing the employer Affected by domestic and international competitors Firms that face few competitors and exert maker power earn greater profits Have more resources for labor and management to divide up If a firm is a monopoly its total power is at a maximum and bargaining is easier because high wages and high profits can be funded o State of the economy Influences total power by affecting the level of demand & profits (i.e., sales) Labor and management both prefer less competition and strong economy The determinants of the Relative Bargaining Power of Labor and Management Enjoyed by union by its ability to strike o Ees more likely to get higher wages and other gains the more they are
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willing and able to sustain a strike o Strikes are more likely to succeed the greater the cost to the er ER’s relative bargaining power influenced by their ability to withstand a strike Easiest measure of relative bargaining power is the amount of strike leverage each party holds There are other ways to withdraw labor that are less extreme o Working to rule—don’t work effectively o Blue flu—great absenteeism o Slow production How strike leverage influences bargaining power o Strike leverage: relative degree to which workers are willing and able to sustain a strike The Economic Context Microeconomic influences on Total Bargaining Power o Micro factors influence TBP through effects competitive conditions exert on a firm The greater the market power of the firm, the greater will be the profits earned by the firm (i.e, the less competition the firm faces) o Firms market power affected by… Degree of domestic and international competition
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This note was uploaded on 06/06/2011 for the course ILRCB 2050 taught by Professor Givanr during the Fall '06 term at Cornell.

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Chapter 4 - Chapter 4 The role of the Environment...

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