Chap7 - BUS353-01 CHAPTER 7 Economic Issues I. Industrial...

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BUS353-01 CHAPTER 7 Economic Issues I. Industrial Wage Differentials A. Competition in Product Market 1. monopoly a. can increase price with no effect on sales b. can pass on wage increase by increasing price 2. competitive industry a. increase in price lowers sales b. cannot pass on wage increase by increasing price 3. global economy a. low cost foreign competition b. harder for US employers to pass on labor cost increases by raising product prices B. Value added by employees 1. value added refers to contribution of factors of production to the value of a final product 2. high value added industry – petroleum refinery 3. low value added industry – sawmill C. Labor costs as a percentage of total costs 1. degree of labor intensiveness a. high – large % of total cost is labor cost b. low – small % of total cost is labor cost 2. high degree of labor intensiveness a. increases mgt resistance to union proposal to increase wage rate b. increase in wage rate has major impact on total costs II. Occupational Wage Differentials, Job Evaluation, and Wage Surveys A. Evaluating jobs within the organization 1. maintain fair wage relationship among jobs 2. measure job factors for all jobs skill / effort / responsibility / work conditions 3. determine minimum amount of factor to do job 4. rank jobs on the factors (point system) B. Job Analysis 1. systematic process 2. secure information and facts about a job to be evaluated
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C. Employer and Union Preferences 1. Employer prefers to do job evaluation in designing wage structure (without union participation) 2. Union a. union leaders do not favor job evaluation in designing wage structure because it tends to i. limit bargaining opportunities
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This note was uploaded on 06/17/2011 for the course BUS 353 taught by Professor Henrynovak during the Spring '11 term at St. Xavier.

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Chap7 - BUS353-01 CHAPTER 7 Economic Issues I. Industrial...

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